UPASANA LIONS ENGLISH MEDIUM SCHOOL

Date : 13-03-2025 STD 11 Commerce Economics Total Marks : 58

1 marks PRACTICE TEST

Section B

* Answer The Following Questions In One Sentence. [58]

1. Give the meaning and example of consumer goods.

Ans. : When a consumer consumes a good and the good is capable of directly
satisfying a particular want then it is called a consumer good. These goods have
passed the final stage of production. Example: Cooked food.
2. Give the meaning of wealth.
Ans. : Wealth is something which is useful, scarce, capable of getting exchanged,
and can only be owned by somebody.
3. Give the meaning of factors of production.
Ans. : The agents that help in a process of conversion or production are called
‘Factors of Production’. There are four factors of production. They are:
1. Land
2. Labour
3. Capital and
4. Entrepreneur.
4. State the meaning of value.
Ans. : The worth of a commodity in terms of other commodities, or in terms of
money i.e. price is called value of that commodity.
5. Give meaning and example of commodities which are universally and abundantly
available.
Ans. : Goods which do not have exchange value are called non-economic goods.
Such goods are abundant in supply. Example: Sunlight and air.
6. What is meant by perishable goods in economics?
Ans. : Goods that do not last long and can be consumed only once are known as
perishable goods. Example: Milk, fruits, meat, etc.
7. What is meant by individual wealth?
Ans. : Wealth owned by an individual and meant. for private consumption is called
individual wealth. For example, a house.
8. How many phases are there in a trade cycle? Which are those?
Ans. :
1. Boom

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 2. Recession
3. Depression and
4. Recovery.
9. Give the definition of trade cycle given by Heberler.
Ans. : According to Haberler, Trade Cycle is an interval that embraces alternating
periods of prosperity (good time) and depression (bad time).’
10. Why is the law of demand called as conditional law?
Ans. : The law of demand holds true only on the condition that the factors
influencing demand other than the price remains constant. Hence it is…
11. In which situation does demand decrease or increase?
Ans. : Assuming price as constant when consumers increase (or decrease) their
demand due to some other factors, it is known as increase (or decrease) in
demand.
12. When is there possibility of expansion – contraction of demand?
Ans. : Assuming other factors constant when the price falls or rises there is a
possibility of expansion – contraction of demand.
13. What is cross elasticity of demand?
Ans. : When the demand of the concerned commodity changes in response to the
change in price of its related good (either substitute or complementary good),
then the extent of such change in demand is called cross elasticity or cross-price
elasticity of demand. The cross-price elasticity may be a positive value or negative
value, depending on whether the goods are complementary or substitutes.
14. What is income elasticity of demand?
Ans. : The extent (degree) of change in demand for a good because of a change in
income of the consumer is called income elasticity of demand.
Income elasticity
Proportionate change in demand
(εy ) =
Proportionate change in income

15. What is demand?

Ans. : The quantity of a commodity which a buyer desires, is able and willing to buy
at a given price at a given point of time is called demand.
16. Why is the law of supply not applicable to rare articles?
Ans. : Rare articles do not have any current production. Hence…..
17. What is stock?
Ans. : The total available quantity of goods with a producer which can be offered
for sale in the market as per the ability and willingness of the seller is called stock.
18. Which are the two matters on, which law of supply is presented?
Ans. : On price and factors other than price.

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19. Define supply.
Ans. : The quantity of production which a producer is able and willing to sell in the
market at a given price and at a particular point of time is called supply.
20. What is supply schedule?
Ans. : A schedule is a data table that shows a seller’s willingness to sell a good at
various prices and is called the supply schedule.
21. How is the slope of supply curve?
Ans. : Positive slope.
22. Which types of commodities are an exception to the law of supply?
Ans. : Rare goods and perishable goods.
23. What is opportunity cost?
Ans. : The means of production have alternative uses i.e. more than one use. The
concept of opportunity cost is based on the particular characteristic of factor of
production which says that when a factor is used for a particular use, the other
use is left out or the same cannot be used for other purpose. Under such
circumstances, the best alternative which remains is called the opportunity cost of
production.
24. What is monetary cost?
Ans. : Generally, the amount that the producer pays monetarily for the process of
production is called its monetary cost. Thus, the cost of production in terms of
money is known as monetary cost. Monetary cost includes wages, rent, raw
material, fuel and the total of all the expenditure made by the producer.
25. What does the firm get when marginal cost is less than Marginal Revenue?
Ans. : When marginal revenue is less than the marginal cost of production, a
company is producing too much and should decrease its quantity supplied until
marginal revenue equals the marginal cost of production.
26. What is real cost?
Ans. : According to Marshall, the labourers, capitalists and entrepreneurs who are
involved in the process of production bear psychological and physical burden. Such
burden is called real cost.
27. Why does the average fixed costs decrease with the increase in production?
Ans. : When production increases the Total Fixed Cost (TFC) gets distributed among
more units and so Average Fixed Cost decreases with increase in production.
28. Give formula of Marginal cost.
Ans. : Marginal Cost (MCn) = Tcn – Tc(n-1), Here, n = no. of units produced and Tc =
Total cost.

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29. What do you mean by fixed cost? How is the fixed cost curve?
Ans. : In a short period (run), the production may increase, decrease or become
zero i.e. no production, but the cost would remain same. Such a type of cost is
called the fixed cost. Fixed cost is also known as overhead cost. The fixed cost
curve is parallel to X-axis.
30. Which concept of revenue can be known as price?
Ans. : The Average Revenue curve shows the Average Revenue of a producer by
selling of commodity.
31. What do you mean by Marginal Revenue?
Ans. : The change in total revenue which results from the sale of one more unit of
a commodity is called the marginal revenue. Formula : MRn = Rn – R(n – 1)
32. What do you mean by short run?
Ans. : A short term (run) is a time period in which a producer cannot change
factors of production. Hence in this period all the factors of production such as
plant, heavy machinery, building of a factory, etc. remain fixed.
33. Define : Market.
Ans. : The system through which the buyers and sellers come in contact with each
other directly or indirectly for the sale or purchase of goods or services is called
market.
34. What is regional market?
Ans. : A market where in selling of the products and services is limited to a region
or a state is called regional market. Markets that exist in the various parts of the
state fall under the category of regional market. Example: Kite market of
Ahmedabad, a publisher selling his books only in Gujarat, Regional movies, etc.
35. What is national market?
Ans. : A market wherein selling of the products and services takes place
throughout the country is called a national market. This market is spread across
various states of nation. Example: Shoe company, Saree market, Hindi novels,
national newspapers like The Times of India, etc.
36. What is Perfect Competition?
Ans. : Perfect competition market is considered as an ideal market. A market based
on perfect competition is only a theoretical aspect. Such market does not exist in
reality because the terms and conditions to be a perfect competition market are
very stringent.
37. What is Monopoly?
Ans. : A market structure where in there is only one seller and numerous buyers is
called monopoly.

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38. What is Selling Cost?
Ans. : Expense incurred to sell a product is called the selling cost of that product.
Selling cost includes expense incurred on packing, making the product attractive,
sales tax, transportation, showroom expenses, money spent for selling, prizes,
gifts, advertisement cost, etc.
39. Define: Product differentiation.
Ans. : Product differentiation refers to a concept of differentiating a product from
another product in terms of form, quality and nature. For example, two different
models of bike but built on same basic structure.
40. Define Oligopoly.
Ans. : “Oligopoly is the market in which the firm decides its policy, according to the
behaviour of competitors.”
41. What is price taker?
Ans. : In a perfectly competitive market, a firm cannot influence the market price
by its own action and thus can sell any amount at a price given by the market.
Such a firm is called a price taker firm.
42. Which market has restriction of entry of new firms?
Ans. : Monopoly market
43. When was the public works department set up in India?
Ans. : In July 1854 by the British.
44. When was banking started in India?
Ans. : In 1770 A.D.
45. Which civilization originated in Ancient India?
Ans. : Indus Valley Civilization which is also known as Hara’ppan civilization.
46. How much was the employment in agriculture in the year 2011-12.
Ans. : 48.9 %
47. Who prepares the Human Development Report?
Ans. : The Human Development Report office of the United Nations Development
Programme (UNDP) prepares the Human Development Report.
48. What is imputed rent ?
Ans. : The estimate of probable rent of a building to be given to there is called
imputed rent.
49. Why the service of a house wife is not included in National Income ?
Ans. : The service of a house wife is done at home and it is not sold in the market
and its monetary value cannot be considered. So it is not included in national
 income. '
50. Whether the purchase of old building can be considered in national income or
not ? Why ?
Ans. : Purchase of old building is not considered in national income because its
value already been considered in past.
51. What are transfer payments?
Ans. : The payments made for any goods or services, the benefit of which is not
availed in current year, are called transfer payment. e.g. pension, unemployment
allowances etc.
52. Give the meaning of Net Domestic Product.
Ans. : The monetary value obtained after deducting depreciation from the market
value of final goods and services produced by citizen of a country or foreign
citizens within the boundary of the country during a year is called net domestic
product.
53. 'Per capita income is not the income of every citizen of the country.' ? How ?
Ans. : Per capita income is the average income of an individual. When there is
unequal distribution of income among rich and poor in the country then there is a
difference in per capita income.
54. Give formula of per capita income.
Ans. : Gross National Income Per capita income = Total Population
55. At which price monetary national income is measured ?
Ans. : Monetary national income is measured at current price.
56. What is called closed economy ?
Ans. : The economy in which there is no role of foreign trade, government and
economic transaction is called closed economy.
57. What is national income ?
Ans. : which they earn by production is called national income.
58. Name the institution which measures national income in India.
Ans. : Central Statistical Organization (CSO) measures the national income in India.
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