Q.1. Discuss the degrees of Price Elasticity of Demand
Ans : In Economics five cases of elasticity of demand are studied depending upon their degrees :
(1) Perfectly Elastic, (2) Perfectly Inelastic,(3) Unit Elastic, (4) More than unit Elastic or Elastic, (5) Less than unit Elastic or Inelastic.
(1) Perfectly Elastic Demand : A perfectly elastic demand refers to the situation when demand is infinite at the prevailing price. It is a situation where the slightest rise in price causes the quantity demanded of the commodity to fall to zero. Fig 4 is a diagrammatic representation of perfectly elastic demand. CD is perfectly elastic demand curve which is parallel to OX-axis. It shows that if price is slightly increased from Rs. 4/- the consumer may buy 10 or 30 units or any quantity that the desires. In this condition, elasticity of demand (Ed) is infinite ∝ or Ed = ∝. It may be noted that under perfect competition demand curve facing a firm is perfectly elastic.
(2) Perfectly Inelastic Demand : A perfectly inelastic demand is one in which a change in price causes no change in the quantity demanded. It is a situation where even substantial changes in price leave the demand unaffected.
Fig 5 represents perfectly inelastic demand. DD demand curve is parallel to OY-axis. When price is Rs. 2 demand is for 4 units. When price rises to Rs. 4 or to Rs. 6 the demand remains the same i.e. 4 units. Thus, change in price evokes no response in demand. In this case, elasticity of demand (Ed) is zero or Ed= 0 (zero).
(3) Unitary Elastic Demand : It is a situation when change in quantity demanded in response to change in price of the commodity is such that total expenditure on the commodity remains constant.
Total expenditure = Quantity purchased Price. In Fig 6, when price is OP Quantity demanded is OB total expenditure is
OB (Quantity) ´ OP (Price) = Area OBTP.
Likewise, when price is P1 total expenditure is Oc (Quantity) ´ OP (Price) = Area OCRP1
Area OBTP = Area OC RP1 implying that total expenditure remains constant even after change in price of the commodity. Hence, Elasticity of demand is unity.
(4) Greater than Unitary Elastic : Demand is greater than unitary elastic when change in quantity demanded in response to change in price of the commodity is such that total expenditure on the commodity increases when price decreases, and total expenditure decreases when price increases.
In Fig. 7, when price is OP, quantity demanded is OB, total expenditure is OB ´ OP = Area OBTP. Likewise when price falls to OP1 , quantity demanded is OC, total expenditure is OC ´ OP1= area OCRP1. A glance at the diagram shows that Area OCRP1 > Area OBTP. It implies that total expenditure increases in response to decrease in price of the commodity. Hence, Ed = greater than unity > 1.
(5) Less than Unitary Elastic : Demand is less than unitary elastic when change in quantity demanded in response to change in price of the commodity is such that total expenditure on the commodity decreases when price decreases, and total expenditure increases when price increases.
At price OP quantity demanded is OB, total expenditure is OB × OP = Area OBTP. Likewise, when price is OP1 quantity demanded is OC, total expenditure is OC × OP1 Area OCRP1. Clearly area OCRP1 is smaller than area OBTP. It implies expenditure is reduced in response to decrease in price of the commodity. Hence, Ed = less than unitary < 1.
Q.2. What is increasing returns to a factor ?
Ans : Increasing returns to a factor refers to the situation in which total output tends to increase at the increasing rate when more of the variable factor is combined with the fixed factor (s) of production. In such a situation, marginal product of the variable factor must be increasing. Inversely, the marginal cost of production must be diminishing.
Returns to a Factor and Returns to scale - The Basic Difference - In case of returns to a factor, we study the behaviour of output when only variable factor of production is increased, fixed factor (s) remaining constant. Obviously it will cause a change in the ration of variable and fixed factors used in production.
In case of returns to scale, we study the behaviour of output when input of all the factors in increased keeping the factor ration as constant.
Q.3. 'No definite principle can be laid down in respect of supply of factors.' Discuss.
Ans : Supply of different factors of production refer to the number of units of the factor available for in the market at a given price. Each factor show a distinct characteristic, as discussed below :
(i) Supply of Land : Supply of land, from the point of view of an economy, is perfectly inelastic. It means that total supply of land, in an economy, cannot be increased. Supply of land is free for an economy, as it has no cost of production. Supply of land for an industry depends on its opportunity cost. If opportunity cost of land increases in one industry compared to another industry then more of it will be used in the former industry than the latter. Thus, supply curve of land for an industry will slope upward. It means supply of land will increase with rise in its price and decrease with fall in its price. Supply of land is perfectly elastic so far as a firm is concerned. It means at the price fixed by industry, a firm can use as much land as it requires.
(ii) Supply of Labour : Supply of labour means the number of hours for which a labourer is willing to sell his services at a given wage rate. There is no definite relation between supply of labour or hours of work and wage-rate. Ordinarily it is observed that upto a limit supply of labour increases with the increase in wages. But after a given level of wages, as the wage rate increases labour prefers leisure to work. As such,rise in wage rate is followed by decrease in the supply of labour. Supply curve of labour at this stage become backward sloping.
(iii) Supply of Capital : According to the classical view, supply of capital depends on the amount of saving. Price of capital is called interest. Classical economists were of the view that with rise in rate of interest the supply of saving (capital) will increase and with the fall in rate of interest the supply of saving (capital) will decrease. Thus, supply curve of capital will slope upward.
(iv) Supply of Entrepreneurship : There is also no definite relation between supply of an entrepreneur and his price or profit. Besides profit, supply of an entrepreneur depends upon many no-economic factors.
In short, it can be maintained that no definite principle can be laid down in respect of supply of factors. But ordinarily, for the sake of simplicity of analysis it is assumed that supply curve of a factor slopes upward (positive) from left to right.
Q.4. List some principal types of public expenditure.
Ans : (1) Development Expenditure: This relates to growth and development activities of the Government. This includes expenditure on education, health, industry, agriculture, transport, roads, canals, rural development, water works and generation of power.
(2) Non-Development Expenditure: Non-development expenditure of the Government relates to non-development activities of the Government. This includes expenditure on administration, police and military, law and order, collection of taxation, interest on loans, payment of old age pensions etc.
(3) Plan Expenditure: Plan expenditure refers to that expenditure which is incurred by the Government within the preview of its planned development programmes. This includes both consumption as well as investment expenditure by the Government or Planning commission of the Government. Expenditure on agriculture, power, communication, industry, transport, public utilities. health and education are some of the notable examples of plan expenditure.
(4) Non-plan Expenditure: This refers to all such Government expenditures which happened to be beyond the preview of its planned development programmes. This includes both consumption as well as investment expenditure by the Government. This includes expenditure on subsidies, defence, law and order as well as payment of interest on loans by the Government.
(5) Transfer Expenditures: These are the expenditures by the Government which are not related to the production of goods and services or generation of income in the economy. These expenditures cause transfer of income from Government to the individuals and households. Accordingly these expenditures tend to change the distribution of income in the society. Scholarships and unemployment allowance by the Government are two notable examples of transfer expenditures.
(6) Non-Transfer Expenditure: These are the expenditures which result in the exchange of goods and services for money. Prof. Pigou calls these expenditures as real expenditures. These include mainly the payments made by the Government on the use of factor services for productive activities. Expenditure on armaments, education, post and telegraph, agricultural development and railways are some important examples of non-transfer expenditures. “
Q.5. What were the aims and objectives of the third plan? What was its performance?
Ans : The Third Plan was conceived at a time when it was felt that Indian economy had entered the take-off stage. Therefore the aim of Third Plan was to make India a 'self reliant' and 'self generating economy'. Also, it was realised from the experience of first two plans that agriculture should be given the top priority for India's economic development. Hence the main objectives of the Plan were : (i) to secure a 5% growth rate in national income; (ii) achieve self sufficiency in foodgrains production; (iii) expand basic industries like steel, chemicals, fuel and power etc. to meet the requirements of industry and export; (iv) create substantial employment opportunities and utilise manpower resources to the maximum; and (v) reduce economic disparities.
The Third Plan was a complete failure due to certain unforeseen misfortunes. Because of the Chinese aggression (1962) and the Indo-Pak War (1965) , defence needs superseded the developmental needs. Further the wars led to delays and uncertainties in the external aids. The country suffered one of the severest famines in hundred years during 1964-65 due to poor monsoons during the Plan period. This led to failure in agriculture. Industry also did not fare well. The Plan suffered from heavy shortage of power and transport. Employment generation was well below the target. Disparity in income and wealth increased. Prices increased by 36% in five years and the balance of payments crisis depened. Hence the Third plan miserably failed in nearly every respect.
Q.6. What is the characteristic feature of un-employment in India?
Ans : A few characteristic features of the unemployment in India are :
(i) The incidence of unemployment is much higher in urban than in rural areas.
(ii) Unemployment rates for women are higher than those for men.
(iii) A larger difference between the 'usual' and 'weekly' status unemployment rates on one hand, and 'daily status' unemployment rates on the other, in the case of women and then of men suggests that underemployment is of much higher proportion among the former than the latter.
(iv) Incidence of unemployment among educated is much higher at about 12 percent than the overall usual status unemployment of 3.77 percent.
(v) There has been a shift from the state of widespread underemployment towards greater open unemployment.
Q.7. Bring out the significance of Art. 53(2) of the Constitution.
Ans. Although the President, as the Supreme Commander of the Defence Forces, is competent to declare war/peace, Parliament will regulate the exercise of such powers.
Q.8. Mention two implied powers of the President of India.
Ans. (i) To warn and be informed, to encourage the Government and the nation.
(ii) He is not bound by the advice of a P.M. defeated in the House.
Q.9. Briefly summarise the judicial powers of the President.
Ans. The judicial powers of the President consist of granting pardons, reprieves, respites or remissions of punishment or suspending, remitting or commuting sentences in certain cases.
Q.10. Outline briefly the procedure for the removal of the Vice-President from office.
Ans. The Vice-President can be removed by a resolution adopted by a majority of all the members of Rajya Sabha, subject to the concurrence of the Lok Sabha.
Q.11. Art. 212 of the Constitution is often described as a 'curative measure'. How?
Ans. Courts are not to inquire into proceedings of the legislature of a State. This immunity is, however, restricted to matters of "irregularity of procedure".
Q.12. Outline the powers of Union Parliament with regard to Union Territories.
Ans. Parliament retains exclusive legislative power over Union Territories. Parliament may create for any Union Territory, a body to function as a legislature or a Council of ministers, or both.
Q.13. Which Union Territory has a separate High Court of its own? When was it established?
Ans. Delhi, Delhi High Court was established in 1966.
Q.14. Discuss the powers of the Executive in the matter of dissolution of Parliament.
Ans. Under the Indian Constitution, as it stands, the President has no discretion to reject the advice of his Prime Minister for dissolution of Parliament.
[Explanatory Note : in the U.K. dissolution is a royal prerogative, but, by convention, this power is normally exercised by the Crown, only according to the advice of the Cabinet, tendered through the Prime Minister.]
Q.15. Can the President nominate any member to the Lok Sabha?
Ans. Yes, he nominates two members to represent the anglo-Indian community.
Q.16. Discuss the Composition,Tenure, Function and Power of the Minority Commission.
Ans. The word ‘Minority’ is not defined in the Constitution; It must be held that any community, religious or linguistic, which is numerically less than 50 per cent of the population of a state is entitled to the fundamental rights guaranteed by Article 30 as minority.
The Commission shall consists of a Chairperson, a Vice-Chairperson and five members to be nominated by the Central Government from amongst persons of eminence, ability and integrity, provided that five members including the Chairperson shall be from amongst the minority communities.
Tenure and Removal
(a) The Chairperson and every members shall hold office for a term of three years from the date he assumes office.
(b) The Chairperson or a Member may, by writing under his hand addressed to the Central government, resign from the office of Chairperson or as the case may be, of the member at any time.
Functions of the Commission
The Commission shall perform all or any of the following functions, namely;
(a) Evaluate the progress of the development of minorities under the Union and States.
(b) Monitor the working of the safeguards provides in the constitution and in laws enacted by Parliament and the State Legislatures;
(c) Make recommendations for the effective implementation of safeguard for the protection of the interests of minorities by the Central government or the State government;
(d) Look into specific complaints regarding deprivation of rights and safeguards of the minorities and take up such matters with the appropriate authorities;
(e) Case studies to be undertaken into problems arising out of any discrimination against minorities and recommend measure for their removal;
(f) Conduct studies, research and analysis on the issues relating to socio-economic and educational development of minorities;
(g) Suggest appropriate measure in respect of any minority to be undertaken by central government on any matter pertaining to minorities and in particular difficulties confronted by them; and (i) Other matter, which may be referred to it by Central Government of India.
Q.17. Discuss the Composition,Tenure, Removal, Function and Power of the National Commission for women.
Ans : The National Commission for women plays an important role in empowerment of women.
The Commission shall consist of -
(a) A Chairperson, committed to the cause of women to be nominated by the Central Government;
(b) Five members to be nominated by the Central Government from amongst persons of ability, integrity and standing who have had experienced in law or legislation, trade unionism, management of an industry or organization committed to increasing the employment potential of women, women voluntary organization (including women activists), administration, economic development, health, education or social welfare, provided that at least one Members each shall be from amongst person belonging to the Scheduled Castes and Scheduled Tribes respectively.
(c) a Member-Secretary to be nominated by the Central government, who shall be (i) Either an expert in the field of management, organizational structure or sociological moment, or (ii) an officer who is a member of civil service of the Union or of all-India service or holds a civil post under the Union with appropriate experience.
Tenure and Removal
(1) The Chairperson and every member shall hold office for a period exceeding three years, the terms and conditions of which may be specified by the Central Government in this behalf.
(2) The Chairperson or a member (other than the Member-Secretary who is a member of civil service of the Union or of an all India service or holds a civil post under the Union) may, by writing and addressed to the Central government, resign from the office of Chairperson or, as the case may be, of the members at any time.
(3) The Central Governmental shall remove a person from the office of chairperson or a Member.
Functions and Powers
The Commission shall perform all or any of the following functions, namely;
(a) Investigate and examine all matters relating to the safeguard provided for women under the Constitution and other laws;
(b) present to the Central Government, annually and at such other times as the commission may deem fit, reports upon the working of those safeguards;
(c) Make in such reports, recommendation for the effective implementation of those safeguard for improving the conditions of women by the Union or any State;
(d) Review, from time to time, the existing provision of the Constitution and other laws affecting women and recommend amendments there to so as to suggest remedical legislative measures to meet any lacuna, inadequacies or shortcomings in such legislation,
(e) Take up the case of violation of the provisions for the Constitution and of other laws relating to women with the appropriate authorities.
Q.18. What are the qualifications and disqualifications for membershuip of the State Legislature?
Ans : A person shall not be qualified to be chosen to fill a seat in the Legislature of a State unless he
Q.19. Write a short notes on Sericulture in India.
Ans : Sericulture is included under cottage industry. The two sectors of sericulture are mulberry cultivation and silkworm rearing. Mulberry for the production of cocoons is raised as bushes in regular fields in the multivotine (breed) areas of Karnataka, West Bengal, Uttar Pradesh and Bihar. A pound of worms may consume a tonne of mulberry leaves in a year.
The muga, tasar and eri are reared on leaves like castrol, oak, asan and gurjan. After China, India is the second largest producer and exporter of silk.
Chief producers are Karnataka, J&K, Andhra Pradesh and Assam. Bihar leads in tasar production.
Q.20. Distinguish between Alluvail fans and Alluvial cone plain.
Ans : Alluvial fans are formed along the foothills. A river descending from the hills deposits its load due to sudden reduction in river velocity. It is triangular and resembles a fan in shape.