CBSE Class 11 Economics Sample Paper - 1

Time : 3 Hours
Maximum Marks : 80
General Instructions:

1. This question paper contains two sections:
   Section A - Statistics for Economics 
   Section B - Introductory Microeconomics
2. This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
3. This paper contains 4 Short Answer Questions type questions of 3 marks each to he answered in 60 to 80 words.
4. This paper contains 6 Short Answer Questions type questions of 4 marks each to he answered in 80 to 100 words.
5. This paper contains 4 Long Answer Questions type questions of 6 marks each to he answered in 100 to 150 words

Section - A

Q1: Read the following Assertion (A) and Reason (R) and choose the correct alternative: [1 Mark]
Assertion (A): The Class Interval needs to be continuous while drawing a Histogram.
Reason (R): Histogram is a rectangular diagram using frequency distributions which are joined to one another.
(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A)

(b) Both Assertion (a) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

(c) Assertion (A) is true, but Reason (R) is false.

(d) Assertion (A) is false, but Reason (R) is true.

Ans: (b)
Explanation:
(i) Assertion: The class interval needs to be continuous while drawing a histogram - True. Continuous class intervals ensure that the entire range of observations is represented without gaps between adjacent bars.
(ii) Reason: A histogram is a rectangular diagram using frequency distributions whose bars are adjacent - True. This describes the appearance of a histogram.
(iii) Justification: Although both statements are true, the reason does not directly explain why class intervals must be continuous; it only describes that bars are adjacent. Continuity of class intervals is required so that adjacent bars correctly represent adjoining ranges of a continuous variable. Hence R is not the correct explanation of A.

Q2: The investigator appoints local persons or correspondents at different places. They collect information in their
own way and furnish the same to the investigator. [1 Mark]
Identify the above source of data.
(a)Primary Data Source
(b)Secondary Data Source
(c) Both (a) & (b)
(d) Neither (a) Nor b)
Ans: (a)
Explanation: Primary data are collected first-hand for a specific purpose. When an investigator appoints local persons or correspondents to gather information directly from different places and send it to the investigator, that information is primary because it is original and collected for that particular study.

Q3:  An index number which accounts for the relative importance of the item is known as________ . [1 Mark]
(a)Simple Index Number
(b)Weighted Index Number
(c)Aggregate Index Number
(d)Average Index Number
Ans: (b)
Explanation: A weighted index number gives different weights to different items according to their relative importance. It is effectively the weighted average of price or quantity changes across items, where more important items have larger weights.

Q4: There are two statements given below, marked as Statement (I) and Statement (II). Read the statements and
choose the correct option: [1 Mark]
Statement - I The Arithmetic Mean is the amount secured by dividing the sum of value of the items in a series by their numbers.
Statement - II An Average is a figure that represents the whole group.
(a) Only I is true
(b) Only II is true
(c) Both I & II are true
(d) Both I & II are false.
Ans: (c)
Explanation: Statement I correctly defines the arithmetic mean. Statement II is also true because an average is a single representative value that summarises or stands for the whole group.

Q5: Which of the following facts is statistics: [1 Mark]
(a)Ram secured 66% marks in English.
(b)Ram secured 80% marks in Mathematics.
(c)Ram secured 90% marks in Economics.
(d)Ram secured 90% marks in Economics, this year, whereas he secured 80% marks in Economics previous year.
Ans:(d)
Explanation: A single observation (like 90% in a subject) is a fact, but statistical facts typically involve comparison or change over time. Option (d) compares marks across two years and therefore qualifies as a statistical fact because it shows change and can be used for analysis.

Q6: Identify the following diagram: [1 Mark]

(a) Pie Diagrams

(b) Deviation Bar Diagram

(c) Percentage Bar Diagram

(d) Subdivide Bar Diagram

Ans: (b)

Explanation: A deviation bar diagram shows positive and negative deviations from a baseline. In such diagrams bars extend above (positive) and below (negative) the base line to represent deviations. The given picture shows deviations drawn both above and below a base line, which is characteristic of a deviation bar diagram.

Q7: Which of the following is not a method to measure correlation: [1 Mark]
(a) Karl Pearson's Coefficient of correlation.
(b) Spearman's rank difference method.
(c) Scatter diagram method.
(d) Step Deviation Method
Ans:d)
Explanation: The common methods to measure correlation are Karl Pearson's coefficient, Spearman's rank difference method and the scatter diagram method. The step deviation method is a technique used for simplifying mean calculation in grouped data, not for measuring correlation.

Q8: Find out the mode value from the following data: [1 Mark]
8,5,10,8,5,11,9,6,5,8,5,3,5,3,8,5,8,9,5,8
(a) 8
(b) 6
(c) 5
(d) 11
Ans: (c)
Explanation: Mode is the value that occurs most frequently. On inspection, 5 occurs more often than any other number in the series; therefore, the mode is 5.

Q9: There are two statements given below, marked as Statement (I) and Statement (II). Read the statements and choose the correct option: [1 Mark]
Statement (I) - If we measure the weight of students of class 10th, then the weight of the student will be called variable.
Statement (II) - A variable may also be called a data item.
(a) Statement I is true and statement II is false
(b) Statement I is false and statement II is true
(c) Both statements I and II are true
(d) Both statements I and II are false
Ans: (c)
Explanation: A variable is a characteristic that can take different values (for example, the weights of students). Each individual measurement (a single student's weight) is a data item. Thus, both statements are true.

Q10: What type of correlation is present between happiness and death anxiety? [1 Mark]
(a) Positive
(b) Negative
(c) Neutral
(d) Cannot be determined
Ans: (b)
Explanation: Generally, as death anxiety increases, happiness tends to fall, and vice versa; therefor,e the relationship is negative (inverse).

Q11: In how many groups, different commodities have been divided while constructing Wholesale Price Index in
India? [3 Marks]
Ans: In India for the construction of the Wholesale Price Index (WPI), goods are classified into three broad groups:
(i) Primary Articles: These include agricultural and extracted commodities and are often subdivided into Food Articles (e.g., cereals, pulses, vegetables, fruits, milk, eggs, meat and fish) and Non-food Articles (e.g., oilseeds, minerals, crude petroleum).
(ii) Fuel & Power: This group covers energy-related items such as coal, electricity, petrol, diesel, LPG, CNG, etc.
(iii) Manufactured Products: This group includes processed and manufactured goods such as textiles, machinery, chemicals, metal products, etc. These three groups together form the structure of the WPI in India.

Q12: Calculate mean from the following series: [3 Marks]

An inquiry into the budget of the middle class families in a certain city gave the following information:

What is the cost of living index of 2004 as compared with 1995? [3 Marks]
Ans:

Q13: Construct a pie-diagram to represent the cost of construction of a house in Delhi: [4 Marks]

Ans:

Q14: Find out Median value of the following distribution: [4 Marks]

Ans:

Median value = Size of (N/2)^th Items
= Size of (161/2)^th Items
Size of 80.5th item (which lies in 20 - 30 wage group)
By Interpolation:
Median = 

Where L₁ = 20, C.F = 60 f = 46 i = 10
Thus, put the above value in formula
Median = 20 + 80.5-60 / 46 × 10
= 20 + 4.45
= 24.45

Q15: "An index number is a statistical device for measuring changes in the magnitude of a group of related variables. It represents the general trend of diverging ratios, from which it is calculated."
Elaborate how index number measures the changes in the magnitude of variables. [4 Marks]

What is the importance of Statistics in economic planning?
Ans: An index number summarises the average change in a group of related variables between two situations (usually two time periods). It expresses the change as a ratio or percentage with respect to a base period, enabling us to measure how much aggregate prices, quantities or values have risen or fallen over time. Index numbers help to:

• Compare changes over time or across regions.
• Convert many individual changes into a single representative figure.
• Track inflation (price index), cost of living, or production changes for policy decisions.

Importance of Statistics in Economic Planning:Statistics provide the data and analytical tools required for planning. They help in collecting and organising information on resources (human and natural), production, consumption and incomes; enable forecasting; assist in allocating resources efficiently; and help monitor and evaluate plan outcomes.

Q16: (a) Draw a frequency polygon of the following distribution of the students obtaining marks in Economics: [3 Marks]

(b) Economics is a science. Give reasons. [3 Marks]

(a) Explain the relationship between statistics and economics. [3 Marks]
(b) Describe in brief three main characteristics of statistics. [3Marks]
Ans:(a)

(b) Economics qualifies as a science because:

• It has a systematic body of knowledge made up of concepts, principles and laws that explain economic behaviour.
• It seeks to establish cause-and-effect relationships (for example, how price changes affect quantity demanded).
• It uses logical reasoning and empirical observation to test theories and make predictions.

(a) Statistics and economics are closely linked: statistics provide the data and methods to measure, analyse and test economic theories and to make informed decisions in policy and business.
(b) The characteristics of statistics are:
(i) Statistics present facts in numerical form.
(ii) Statistics simplify complex information for decision-making.
(iii) Statistics are collected and organised systematically for a definite purpose.

Q17: (a) Calculate mean value from the following data: [3 Marks]

(b) Discuss any three properties of Correlation Coefficient. [3 Marks]
Ans: (a)

(b) The correlation coefficient measures the strength and direction of a linear relationship between two variables. Its properties include:

1. The value lies between -1 and +1. A value of +1 indicates perfect positive linear relationship, -1 indicates perfect negative linear relationship, and 0 indicates no linear relationship.
2. It is dimensionless, so it does not depend on the units of measurement.
3. It remains unchanged under linear changes of scale (for example, if all values are multiplied by a positive constant).

Q18: Identify the correct pair of items from the following Columns I and II: [1 Mark]

(a) A - 1
(b) B - 2
(c) C - 3
(d) D - 4
Ans: (d)
Explanation: In the given matching, option (d) pairs the correct items. For example, complementary goods are related so that an increase in demand for one tends to raise demand for its complement; thus the matching in (d) is correct.

Q19: Which of the following has elastic demand: [1 Mark]
(a) Matchbox
(b) Water
(c) Medicine
(d) Air conditioners
Ans: (d)
Explanation: Air conditioners are a luxury item and have close substitutes and discretionary demand; therefore demand is relatively responsive to price changes and is considered elastic.

Q20: A form of market in which "sellers become price taker instead of price maker" firm. Identify the above form of market: [1 Mark]
(a) Perfectly competitive market
(b) Monopoly market
(c) Monopolistic form of market
(d) Oligopoly market
Ans: (a)
Explanation: In a perfectly competitive market there are many sellers offering homogeneous products; no single seller can influence the market price, so each firm is a price taker and accepts the market price determined by aggregate supply and demand.

Q21: Total utility is ______ at the point of satiety. [1 Mark]
(a) Minimum
(b) Maximum
(c) Zero
(d) None of these
Ans: (b)
Explanation: At the point of satiety a consumer has reached the highest level of satisfaction from consumption; therefore total utility is maximum at that point. Beyond satiety additional consumption will not increase total utility.

Q22: Identify the stage of production from given circumstances according to the law of variable proportion. [1 Mark]
"Average production continues to decrease, total production starts decreasing and marginal product become negative"
(a) First stage
(b) Second stage
(c) Third stage
(d) None of these
Ans: (c)
Explanation: This description corresponds to the third stage of production under the law of variable proportions: marginal product becomes negative, and total product falls; average product also decreases.

Q23: There are two statements given below, marked as Assertion (A) and Reason (R). Read the statements and choose
the correct option: [1 Mark]
Assertion (A): Demand for salt is inelastic.
Reason (R): In case of elastic demand, percentage change in price of a commodity causes relatively less than percentage change in quantity demanded.
(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Ans: (b)

Explanation:

(i) Assertion: Demand for salt is inelastic - True. Salt is a necessary good with few substitutes; quantity demanded changes very little when its price changes.

(ii) Reason: "In case of elastic demand, percentage change in price of a commodity causes relatively less than percentage change in quantity demanded." - True. For elastic demand, the percentage change in quantity demanded is larger than the percentage change in price.

(iii) Justification: Although both statements are true, the reason refers to the property of elasticdemand and does not explain why salt has inelastic demand. Therefore R is not the correct explanation of A.

Q24: There are two statements given below, marked as Statement (I) and Statement (II). Read the statements and
choose the correct option: [1 Mark]
Statement - I: The society faces a number of difficulties in the production of commodities.
Statement - II: The whole society sacrifices for the production process.
(a) Statement I is true and Statement II is false
(b) Statement I is false and Statement II is true
(c) Both statements I and II are true
(d)Both statements I and II are false
Ans:(c)
Explanation: Both statements are true. Production requires real resources and efforts, and society must make sacrifices (real costs) to produce goods and services. These sacrifices and difficulties are part of the production process.

Q25: Law of demand states the _______ relationship between price and quantity demanded. [1 Mark]
(a)Direct
(b)Inverse
(c)Proportional
(d)None of the above
Ans:(b)
Explanation: The law of demand states that, ceteris paribus, when the price of a commodity increases the quantity demanded decreases, and when price decreases quantity demanded increases; thus the relationship is inverse.

Q26: Given the PPF illustrated, what is the opportunity cost of moving from B to A? [1 Mark]

(a)5 coconuts

(b)10 fishes

(c)5/10 fish

(d)10/5 coconuts

Ans: (b)

Explanation: Moving from B to A reduces fish from 30 to 20 (a loss of 10 fish) while increasing coconuts from 20 to 25 (a gain of 5 coconuts). The opportunity cost of gaining coconuts is the number of fish given up, i.e., 10 fishes.

Q27: There are two statements given below, marked as Statement (I) and Statement (II). Read the statements and choose the correct option: [1 Mark]
Statement - I : Supply function refers to the functional relationship between supply of a commodity and its determining factors.
Statement - II: The supply function is used to measure price elasticity demand for goods and services.
(a)Statement I is true and Statement II is false
(b) Statement I is false and Statement II is true
(c) Both statements I and II are true
(d) Both statements I and II are false
Ans:(a)
Explanation: Statement I is correct: a supply function describes how supply depends on its determinants (price, costs, technology, etc.). Statement II is incorrect because the supply function is used to study supply behaviour and to calculate price elasticity of supply, not price elasticity of demand.

Q28: (a) Average product increases only when marginal product increases. [3 Marks]
(b) Total cost can never be constant.
Do you agree with the above statements? Justify your answer with valid argument.
Ans: (a) False. Average product (AP) rises whenever marginal product (MP) is greater than AP. MP can be falling but still greater than AP; in that case AP increases. Thus AP increasing does not require MP to be increasing; it requires MP > AP.
(b) True. Total cost (TC) comprises total fixed cost (TFC) and total variable cost (TVC). Since TVC changes with output and TFC is a positive constant, TC cannot remain constant as output changes. For TC to be constant across output, marginal cost would have to be zero over a range, which is not feasible in normal production.

Q29: What are the characteristics of a perfectly competitive market? [3 Marks]

Explain the implications of the feature "homogeneous product" in a perfectly competitive market.
Ans: Perfect Competition: This market structure has many buyers and sellers, homogeneous outputs and free entry and exit. No single firm can influence the market price; firms are price takers.
Characteristics of a Perfectly Competitive Market:

• Large number of buyers and sellers: No individual buyer or seller can affect the market price; competition is perfect.
• Homogeneous products: All firms produce identical products that are perfect substitutes for each other.
• Free entry and exit: Firms can enter or leave the market in the long run, leading to normal profits in equilibrium.
• Perfect knowledge: Buyers and sellers know market prices and conditions; no one has an information advantage.
• No transport costs: Products are assumed freely accessible across the market so that prices are uniform.
• Perfect mobility of factors: Factors of production can move freely across uses and regions.

When products are homogeneous, buyers have no preference for one seller's output over another's. This implies a single market price; if any firm charges more, buyers will purchase from other sellers. Hence each firm faces a perfectly elastic (horizontal) demand curve at the market price and is a price taker.

Q30: A consumer spends ₹1,000 on a good priced at ₹8 per unit. When price rises by 25 percent, the consumer continues
to spend ₹1,000 on the good. Calculate price elasticity of demand by percentage method. [4 Marks]
Ans:
Given: Initial price P₀ = ₹8, total expenditure (TE) initially = ₹1,000.
Initial quantity Q₀ = 1,000 / 8 = 125 units.
Price rises by 25% → New price P₁ = ₹8 × 1.25 = ₹10.
New quantity Q₁ = 1,000 / 10 = 100 units.
Change in quantity ΔQ = Q₁ - Q₀ = 100 - 125 = -25.
Change in price ΔP = 10 - 8 = 2.
To compute elasticity by the percentage (arc) method:
Average quantity Q̄ = (125 + 100)/2 = 112.5.
Average price P̄ = (8 + 10)/2 = 9.
Percentage change in quantity = ΔQ / Q̄ = -25 /112.5 = -0.2222 (-22.22%).
Percentage change in price = ΔP / P̄ = 2 /9 = 0.2222 (22.22%).
Price elasticity of demand = (%ΔQ)/(%ΔP) = (-22.22%)/(22.22%) = -1.
Therefore, the price elasticity of demand (in absolute terms) = 1 (unitary elastic). This also matches the intuition that total expenditure remains unchanged when elasticity is unitary.

Q31: Complete the following table: [4 Marks]

Giving reasons, state whether the following statements are true or false: [4 Marks]
(i) Average product will increase only when marginal product increases.
(ii) With increase in level of output, average fixed cost goes on falling till it reaches zero.
(iii) Under diminishing returns to a factor, total product continues to increase till marginal product reaches zero.
(iv) When there are diminishing returns to a factor, total product always increases.
Ans:

(i) False. Average product increases when marginal product is greater than average product; MP need not be rising for AP to increase.
(ii) False. AFC = TFC / Output. Since TFC is positive and constant, AFC falls as output rises but can never reach zero (it approaches zero asymptotically).
(iii) True. Under diminishing returns MP falls in value; total product continues to rise so long as MP remains positive, so TP increases until MP becomes zero.
(iv) False. When returns are diminishing, MP falls and may become small or negative; TP increases only while MP is positive, so TP does not always increase under diminishing returns.

Q32: Using a diagram explain what happens to the PPC of Kashmir if the widespread floods have led to the destruction
of human lives? [4 Marks]
Ans: The Production Possibility Curve (PPC) shows the maximum combinations of two goods that an economy can produce using given resources and technology. Loss of human lives reduces the available labour force, i.e. a fall in resources. This reduces the economy's productive capacity and shifts the PPC inward (leftward), indicating lower maximum possible production of both goods at every point. The curve moves from the original position (ab) to a new inner position (a′b′), showing that fewer goods can be produced due to the resource loss.

Q33: (a) Central problems arise because resources and scarce and have alternate uses and want are unlimited. Explain. [3 Marks]
(b) Describe the problem of "What to Produce?".

OR

(a) The central economic problem arises because resources are scarce but human wants are unlimited. Scarcity forces individuals, firms and societies to choose among alternative uses of limited resources. As a result three basic questions arise for every economy: What to produce, How to produce, and For whom to produce.
(b) The problem of "What to Produce" concerns the choice of the kinds and quantities of goods and services an economy should produce given limited resources. Since producing more of one good usually requires sacrificing production of another, the economy must decide which goods (consumer goods, capital goods, civil or defence goods) and in what amounts should be produced. This is essentially a question of resource allocation based on priorities and social objectives.

(a) A maximum price ceiling (price cap) is an upper limit set by the government below the equilibrium price; it may lead to excess demand and shortages and can encourage black markets. A minimum price floor is a lower limit set above equilibrium; it can lead to excess supply and unsold surpluses.
(b) Price ceiling is a legally imposed maximum price to protect consumers from excessively high prices. The common purpose is consumer protection when markets fail to provide essentials at affordable prices. A likely consequence is shortages and rationing because suppliers may not supply sufficient quantities at the capped price.

(b) Price Ceiling: Price ceiling means the maximum limit that the government imposes on the price of a commodity. Price ceilings are used by the government to prevent prices from rising too high; for example, to keep essential items affordable. A common consequence is shortage which may require rationing.

Q34: Read the passage given below and answer the questions that are followed:
Production, exchange and consumption of goods and services are among the basic economic activities of life. In the course of these basic economic activities, every society has to face scarcity of resources and it is the scarcity of resources that gives rise to the problem of choice. The scarce resources of an economy have competing usages. In other words, every society has to decide on how to use its scarce resources. Every society must decide on how mu(h of each of the many possible goods and services it will produce. Whether to produce more of food, clothing, housing or to have more of luxury goods.
(a) Why does the problem of 'what to produce' arise? Explain. [2 Marks]
(b) Human wants are unlimited in number. They are never ending and they can never be fully satisfied. Justify. [4 Marks]
Ans: (a)This problem involves selection of goods and services to be produced and the quantity to be produced for each selected commodity. Every economy has limited resources and thus, cannot produce all the goods. More of one good or service usually means less of others.
For example, production of more sugar is possible only by reducing the production of other goods. Production of more war goods is possible only by reducing the production of civil goods. So, on the basis of the importance of various goods, an economy has to decide which goods should be produced and in what quantities. This is a problem of allocation of resources among different goods.
(b) Human wants are unlimited for several reasons:

• Recurring and successive wants: When some wants are satisfied, new wants arise (for example, once basic food needs are met, demand for better nutrition or variety appears).
• Unlimited desires: People constantly wish for improved living standards, luxury goods, education and entertainment; wants develop and expand over time.
• Income and wants expand together: As income rises, people demand higher-quality and more diverse goods and services, creating new wants.
• Variety and novelty: Social and technological changes generate new wants (for example, demand for new electronic goods or services).

Because resources are limited while wants are unlimited, full satisfaction of all wants is impossible, which is why economics studies allocation and choice.