ECONOMICS

SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024

Q. 1. (A)
(i) – (3) Only c
(ii) – (2) Only d
(iii) – (1) a and b
(iv) – (4) Only b
(v) – (1) Only a
Q. 1. (B)
(1) Capital market
(2) Knowledge utility
(3) Direct demand
(4) Practical difficulties
(5) Balanced budget
Q. 1. (C)
(1) Odd word : Car
(2) Odd word : Weighted index number
(3) Odd word : Subsidies
(4) Odd word : D-mat A/c
(5) Odd word : Unemployment Allowance
Q. 1. (D)
(1) MU of the commodity becomes negative when TU of a commodity is falling.
(2) Symbolically, the functional relationship between demand and price can be expressed
as Dx = f (Px).
(3) Export trends of India’s foreign trade include engineering goods.
(4) Demand curve is parallel to ‘Y’-axis in the case of perfectly inelastic demand.
(5) Net addition made to the total revenue by selling an extra unit of a commodity is
marginal revenue.
Q. 2. (A)
(i)
(1) Identified concept : Unitary elastic demand.
(2) Explanation of concept : When the proportionate change in the price of a
commodity brings about exactly equal proportionate change in its quantity demanded,
the demand is said to be unitary elastic.
(ii)
(1) Identified concept : Direct tax.
(2) Explanation of concept : A tax which is levied on the income or property of an
individual and so in which the impact and incidence of tax is on same head is called
direct tax.

SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024 1

 (iii)
(1) Identified concept : Fixed deposit.
(2) Explanation of concept : A fixed deposit is a type of deposit in which the saver
deposits a certain amount in the form of deposit in a commercial bank for a fixed
period of time and he can withdraw the amount from the deposit after a specified
period.
(iv)
(1) Identified concept : Transfer income.
(2) Explanation of concept : If the expenditure incurred by another person/organisation
is received by an individual in the form of income without any form of productive
work, then such income is called ‘transfer income’.
(v)
(1) Identified concept : Import trade.
(2) Explanation of concept : Purchase of goods and services by one country from
another country is called import trade.

Q. 2. (B)

(i) Desire Demand

1. Meaning
Desire refers to a mere wish of a person Demand refers to a desire backed by the
to have a particular commodity. ability to pay and the willingness to pay
for a particular commodity.
2. Relation with price, place and time
Desire has no relation with price, place Demand has relation with price, place
and time. and time.

(ii) Internal Trade International Trade

1. Meaning
The sale and purchase of goods and The sale and purchase of goods and
services within the geographical services outside the geographical
boundaries of a nation is called internal boundaries of a nation (with other
trade. nations) is called international trade.
2. Use of Currency
Domestic currency is used for buying Foreign currency is used for buying and
and selling goods and services in internal selling goods and services in international
trade. trade.

2 SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024

(iii) Price Index Number Quantity Index Number
1. Meaning
Price index number is a type of index Quantity index number is a type of index
number derived by multiplying the ratio number derived by multiplying the ratio
of sum of the prices of various of sum of the quantities of the various
commodities of the current year and goods of the current year and sum of the
sum of the prices of various commodities quantities of various goods of the base
of the base year by 100. year by 100.
2. Formula
∑ p1 ∑ q1
Price Index Number P01 = × 100 Quantity Index Number Q01 = × 100
∑ p0 ∑ q0

(iv) Money Market Capital Market

1. Meaning
A type of financial market in which A type of financial market in which the
short-term finance is provided is called medium-term and long-term finance is
the money market. provided is called the capital market.
2. Constituents
The Reserve Bank of India, commercial Government securities market, industrial
banks, co-operative banks, development securities market, development financial
financial institutions, Discount and institutions, financial intermediaries, etc.
Finance House of India, indigenous are the constituents of capital market in
bankers, money lenders, unregulated India.
non-bank financial intermediaries, etc.
are the constituents of money market in
India.

(v) Oligopoly Monopoly

1. Meaning
A market where a few firms (sellers) A market where a single seller sells his
sell their homogeneous product or unique product and for which there are
heterogeneous product and for which a large number of buyers is known as
there are a large number of buyers is monopoly.
known as oligopoly.
2. Selling Cost
Sellers in oligopoly incur heavily on the Seller in monopoly incurs minimum on
selling cost. the selling cost.

SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024 3

Q. 3.
(i) Features of macroeconomics are as follows :
(1) Study of aggregates : Macroeconomics deals with the study of a nation’s economy
as a whole. It is the study of very large, economy-wide aggregates such as national
output or national income, total employment, aggregate demand, aggregate supply,
total investment, total consumption, general price level, etc.
(2) Known as Income Theory : Macroeconomics is also known as theory of Income
and Employment or Income Analysis. Macroeconomics explains the determination
of the level of national income and employment and what causes fluctuations in
them. Further it explains the growth of national income over a long period of time
and social accounting.
(3) Use of lumping method : Macroeconomics deals with the behaviour of aggregates,
i.e. total values of economic variables related to whole economy. It uses method of
lumping to deal with macro variables such as aggregate demand, aggregate supply,
national output, etc.
(4) Policy-oriented : Macroeconomics, according to Keynes, is a policy-oriented
science. Macroeconomic analysis helps in formulating suitable economic policies
to promote economic growth, to generate employment, to control inflation, to pull
the economy out of depression, etc.
(ii) 
The types of demand are as follows :
(1) Direct Demand : Commodities and services satisfying the human wants directly
are said to have direct demand. Direct demand is also called conventional demand.
For example, demand for clothes.
(2) Indirect Demand : Commodities and services satisfying human wants indirectly
are said to have indirect demand. Indirect demand is also called derived demand.
For example, demand for the factors of production.
(3) Joint Demand : Two or more commodities that are demanded together to satisfy a
single want are said to have joint demand. Complementary commodities have joint
demand. For example, demand for needle and thread.
(4) Composite Demand : Commodities that are used to satisfy several wants are said
to have composite demand. For example, demand for electricity.

(iii) The determinants of supply are as follows :

(1) Price : Price is the most important factor influencing the supply of a commodity.
Price and supply are directly related to each other, i.e. more is supplied at higher
price and less is supplied at a lower price.
(2) State of technology : Technological improvements reduce the cost of production,
which lead to an increase in production and supply. On the other hand, traditional
and outdated technology reduces the supply.

4 SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024

(3) Cost of production : Cost of production and supply have inverse relation. For
example, if the price of factors of production increases, the cost of production also
increases. This in turn decreases the profit margin of a supplier and this in turn
decreases the supply. On the other hand, fall in the cost of production increases the
supply.
(4) Government policies : Government policies on taxation, subsidies, industrial
policies, etc. influences the production process as well as supply. Inadequate
infrastructural facilities decrease the supply and vice versa.
(iv) The classification of public expenditure is as follows :
(1) Revenue expenditure : The expenditure which is incurred by the government for
carrying out day-to-day functions of the government departments and various
administrative services is called revenue expenditure. It is incurred regularly by the
government. For example, administration costs of the government, payment of
salaries, allowances and pensions of government employees, costs paid for providing
medical and public health services, etc.
(2) Capital expenditure : The expenditure which is incurred by the government for
boosting the economic growth and development of a country is called capital
expenditure. For example, huge investments in different development projects, loans
granted to the state governments and government companies, repayment of
government loans, etc.
(3) Developmental expenditure : The expenditure of government which yields direct
productive impact on the country is called developmental expenditure. Developmental
expenditure results in generation of employment, increase in production, price
stability, etc. For example, expenditure on health, education, industrial development,
social welfare, Research and Development (R & D), etc.
(4) Non-developmental expenditure : The expenditure of government which does not
yield any direct productive impact on the country is called non-developmental
expenditure. For example, administration costs, war expenditure, etc.
(v) The limitations of index number are as follows :
(1) Based on samples : Index numbers are generally based on samples. We cannot
include all the items in the construction of the index numbers. Hence, index numbers
suffer from sampling errors.
(2) Bias in the data : Index numbers are constructed on the basis of various types of
data which may be incomplete. There may be bias in the data collected. This is
bound to affect the results of the index numbers adversely.
Misuse of index numbers : Index numbers can be misused. They compare a
(3) 
situation in the current year with a situation in the base year. Hence, a person may
choose a base year which will be suitable for his purpose. For example, while
studying the trends in employment level, if a year of drought or recession is selected

SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024 5

 as a base year and the level of employment in the current year is checked with
reference to employment level in the base year, we may get the misleading results.
(4) Defects in formulae : There is no perfect formula for the construction of an index
number. It is only an average and so it has all the limitations of an average.
Q. 4.
  (i) I disagree with this statement.
Reasons : The following are some of the features of perfect competition :
Homogeneous product : In perfect competition, every firm produces and sells
(1) 
identical product, i.e. units of a commodity produced by each firm are uniform in
respect to their size, shape, colour, quality, etc. Therefore, the commodities sold
in perfect market are perfect substitutes to one another.
Free entry and free exit : In perfect competition, any firm can freely enter
(2) 
or can exit market without any restrictions. If three is a hope of profit, a new
firm can easily enter the market. Similarly, if there is possibilities of losses, the
existing firm can freely exit the market.
Single price : In perfect competition, all units of commodity are sold by different
(3) 
sellers have uniform price and it is determined by the equilibrium of the market
demand and market supply.
Perfect knowledge of market, perfect mobility of factors of production, absence
of transport cost, no government intervention are some other features of perfect
competition. Thus, large number of buyers and sellers is not the only feature of
perfect competition.
 (ii) I agree with this statement.
Reasons :
Meeting the short-term requirements of the borrower : Due to the money
(1) 
market, the short-term financial needs of the borrower are met at realistic interest
rates.
Liquidity management : Money market facilitates better management of
(2) 
liquidity and money in the economy by the monetary authorities. As a result, the
country enjoys economic stability and economic development.
Portfolio management : Money market deals with different types of financial
(3) 
instruments that are designed to suit the risk and return preferences of investors.
This enables the investors to manage portfolios to minimise the risks and to
maximise the returns.
Acting as an equilibrating mechanisms, meeting the financial requirements of the
government, helping government in the implementation of monetary policy,
economising the use of cash, promoting growth of commerce, industry and trade,
etc. are some of the other important roles played by money market in India. Thus,
In India the role of money market is very important.
6 SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024
 (iii) I agree with this statement.
Reasons :
(1) Efficiency in production : Efficiency in production means to produce maximum
possible amount of goods from the given amount of resources. Microeconomics
analyses how efficiency in production can be obtained.
(2) Efficiency in consumption : Efficiency in consumption means distribution of
produced goods and services among the people for consumption in such a way
as to maximize the total satisfaction of society. Microeconomics analyses how
efficiency in consumption can be obtained.
(3) Overall economic efficiency : Overall economic efficiency means producing
those goods which are most desired by people in society. Microeconomics
analyses how overall economic efficiency can be obtained.
Thus, the theory of welfare economics is studied in microeconomics.
(iv) I agree with this statement.
Reasons :
(1) According to the Law of Supply propounded by Dr. Alfred Marshall, “Other
things being constant, the higher the price of a commodity, greater is the quantity
supplied and lower the price of a commodity, smaller is the quantity supplied.”
(2) This statement can be explained with the help of the following diagram :
S
Y
T
P1

R
P
Price

M
P2

S
O Q2 Q Q1 X
Quantity Supplied

(3) From the diagram it can be seen that as price rises from OP to OP1 supply rises
from OQ to OQ1. Similarly, as price falls from OP to OP2 supply falls from OQ
to OQ2. Supply curve, i.e. SS indicates the direct relationship between the price
and the quantity supplied of a commodity.
Therefore, Supply curve slopes upward from left to right.
(v) I disagree with this statement.
Reasons :
(1) Index numbers measures the changes in an economic variable in present times
with reference to the year in the past. This year in the past is known as base year.

SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024 7

 (2) For the calculation of index numbers, the normal year from the past is selected as
the base year. The base year should be normal, i.e. it should be free from natural
calamities, warlike conditions, emergencies, etc. Similarly, it should not be too
distant in the past.
(3) While preparing index numbers with reference to the base year, it is denoted by
the suffix ‘0’. The base year’s index of a selected variable is assumed as 100. The
index numbers are measured for the current year on the basis of the past year.
Thus, index numbers cannot be constructed without the base year.
Q. 5.
(i)
(1) The short form for goods and services tax is GST.
(2) The percentage of SGST and CGST in the given bill is 6% each.
(3) The basic price of pen in the given bill is ` 8.
(4) The GST number of the seller is 27AAXPN3502E128.
(ii)
(1) Demand and Supply is represented on ‘X’-axis in the given diagram.
(2) Price ₹ 300 shows equilibrium price of demand and supply.
(3) Price is represented on ‘Y’-axis in the given diagram.
(4) ‘E’ point represents the demand and supply equilibrium point in the given diagram.
(iii)
(1) On-demand economy is sometimes referred as Access Economy.
(2) Two examples based according to on-demand economy are (1) Uber (2) Reliance
Jio Market.
(3) On-demand economy provides easy access to goods and services and therefore
nowadays it is used on a large scale by wholesalers, retailers and consumers. It is
growing at an unparalleled pace in India.
Q. 6.
(i) The methods of measuring national income are as follows :
(A) Income method : Income method of measuring national income is also known as
factor cost method. This method approaches national income from the distribution
side. This method can be explained with the help of the following points :
(1) According to this method, the income payments received by all citizens of a country,
in a given year are added up. The data pertaining to income are obtained from income
tax returns, reports, books of accounts as well as estimates from small income.
(2) In this method, the incomes accrued to land, labour, capital and entrepreneur in the
forms of rents, wages, interest and profits are all added together. The sum of factor
income is treated as Gross National Product. However, in this method, the income
received in the form of transfer payments is ignored.
(3) In India, the national income committee of the Central Statistical Organisation uses the
income method for adding up the income arising from trade, transport, professional
and liberal arts, public administration and domestic services.
8 SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024
(4) GNP according to income method is calculated as follows : NI = Rent + Wages +
Interest + Profit + Mixed Income + Net income from abroad.
(B) Expenditure method : Expenditure method of measuring national income is also
known as Outlay Method. According to this method, national income is calculated
by summing up all consumption expenditure and investment expenditure made by
all individuals, firms as well as the government of a country during a year. Thus,
gross national product is found by using the following formula : NI = C + I + G +
(X – M) + (R – P). The expenditure method can be explained with the help of the
following points :
(1) 
Private Final Consumption Expenditure (C) : Private final consumption
expenditure by households may be on non-durable goods such as food which are
used immediately, or on durable goods such as car, computer, television set, washing
machine, which are generally used for a longer period of time or on services such
as transport services, medical services, etc. National income takes into account the
private final consumption expenditure.
(2) Gross Domestic Private Investment Expenditure (I) : It refers to expenditure
made by private businesses on replacement, renewals and new investments. National
income takes into account the gross domestic private investment expenditure.
(3) Government’s Final Consumption and Investment Expenditure (G) :
Government’s final consumption expenditure refers to the expenditure incurred
by government on various administrative services like law and order, defence,
education, etc. Government’s investment expenditure refers to the expenditure
incurred by government on creating infrastructural facilities such as construction of
roads, railways, bridges, dams, canals, which are used by the business sector for
production of goods and services in any economy. National income takes into account
the government’s final consumption expenditure and investment expenditure.
(4) Net Foreign Investment/Net Exports (X – M) : It refers to the difference between
exports and imports of a country during a period of one year. National income takes
into account the value of net exports.
(5) Net receipts (R – P) : It refers to the difference between expenditure incurred by
foreigners in the country (R) and expenditures incurred abroad by residents (P).
National income takes into account the value of net receipts.

(ii)
(A) Law of Diminishing Marginal Utility : The Law of Diminishing Marginal Utility
(DMU) can be explained with the help of the following points :
(1) The Law of DMU was first proposed by Mr. Gossen. However, this law was further
explained by Dr. Alfred Marshall in his famous book, ‘Principles of Economics’ in
1890.
SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024 9
 (2) Statement of Law : According to Dr. Alfred Marshall, “Other things being equal,
the additional benefit which a person derives from the increase in the stock of a
thing diminishes with every increase in the stock that he already has.”
(3) The Law of DMU can be explained with the help of the following schedule :

Units of Commodity MU

1 08

2 06

3 04

4 02

5 00

6  02

(4) From the schedule, it can be seen that as the stock of commodity increases from
1 to 6, the marginal utility diminishes from 8 to  02.
(5) The Law of DMU can be explained with the help of the following diagram :

MU MU curve
4

0 1 2 3 4 5 6 X
–2 Units of commodity

(6) In the diagram, the Y-axis represents the marginal utility and the X-axis represents the
units of consumption. It can be seen that, the consumer derives the maximum utility
from the first unit of the consumption. As consumer keeps consuming the further
units, the marginal utility keeps falling.
(7) On the consumption of the 5th unit, the marginal utility becomes zero. Therefore on
the consumption of 5th unit, the marginal utility curve touches the X-axis. At this
point the total utility is maximum. Therefore, this point is called the point of satiety.
(8) On the consumption of the 6th unit, the marginal utility becomes negative. As its
effect, the total utility also starts diminishing. From beginning to end, the marginal
utility curve slopes downwards from the left to the right.
10 SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024
(B) The assumptions of the Law of Diminishing Marginal Utility : The assumptions
of the Law of Diminishing Marginal Utility (DMU) are as follows :
(1) Rationality : The Law of DMU assumes that a consumer is a rational person and his
behaviour is normal. The law assumes that a rational consumer wants to maximise his
satisfaction.
(2) Cardinal measurement : The Law of DMU assumes that utility can be measured in
numbers. It also assumes that utility derived from each unit of a commodity can be
compared.
(3) Homogeneity : The Law of DMU assumes that units of a commodity consumed
by a consumer are identical. It means all units of consumption of a commodity are
perfectly uniform in respect of size, shape, taste, colour, quality, etc.
(4) Continuity : The Law of DMU assumes that all units of consumption are consumed
in quick succession, one after another. Thus law assumes that there is no time gap
between the consumption of any two units.
(5) Reasonability : The Law of DMU assumes that the size of unit of commodity of
consumption is neither too small nor too big. Thus the law assumes that the size of
unit of commodity of consumption is reasonable.
(6) Constancy : The law assumes that income, taste, habits, preferences, likings, etc. of
a consumer as well as the price of commodity remains constant.
(7) Divisibility : The law assumes that the commodity consumed by the consumer is
divisible.
(8) Single want : The Law of DMU assumes that the commodity is used to satisfy only
a single want, i.e. a want of consumption. Thus law assumes that a commodity is not
used for any other use except consumption.
(9) Constant marginal utility of money : The law assumes that when the consumer
spends his income on a commodity, the utility of remaining money income remains
the same as his total income.
(iii)
(A) Concept of price elasticity of demand :
(1) Meaning : Price elasticity of demand can be defined as the percentage change in
the quantity demanded of a commodity in response to a percentage change in the
price of a commodity only.
Q P
(2) Formula : Ed ×
Q P
(B) Types of price elasticity of demand : The types of price elasticity of demand are
as follows :
(1) Perfectly/Infinite Elastic Demand : When a proportionate change in the price of
a commodity brings infinite (unlimited) proportionate change in the quantity
demanded, the demand is said to be perfectly elastic.
SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024 11
 Y

P2

Price
P

P1 D

O Q X
Demand

Explanation of Diagram : From the diagram it can be seen that the original price

of a commodity is OP and the original demand of a commodity is OQ. When the
price of a commodity rises from OP to OP2, the demand of a commodity falls and
becomes zero. When the price of a commodity falls from OP to OP1, the demand of
a commodity rises up to infinity. In the case of perfectly elastic demand, the demand
curve is a horizontal straight line, parallel to X-axis.

Measurement of Elasticity :
Percentage change in Quantity Demanded 
Ed = = =
Percentage change in Price 0
 he numerical value of perfectly elastic demand is infinity. (Ed = ) Perfectly elastic
T
demand is only a theoretical possibility.

(2) Perfectly Inelastic Demand : When the proportionate change in the price of a

commodity brings no (zero) proportionate change in its quantity demanded, the
demand is said to be perfectly inelastic.
Y D

P2
Price

P1

O Q X
Demand

Explanation of Diagram : From the diagram it can be seen that the original price of

a commodity is OP and the original demand of a commodity is OQ. When the price
of a commodity rises from OP to OP2 (by 20 per cent) the demand remains constant
i.e. OQ. Similarly, when the price of a commodity falls from OP to OP1 (by 20 per
cent) the demand remains constant. In the case of perfectly inelastic demand, the
demand curve is a vertical straight line, parallel to Y-axis.
Measurement of Elasticity :
Percentage change in Quantity Demanded 0
Ed = = =0
Percentage change in Price 20

12 SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024

 The numerical value of perfectly inelastic demand is zero. (Ed  0) Perfectly inelastic
demand is also only a theoretical possibility.
Unitary Elastic Demand : When the proportionate change in the price of a
(3) 
commodity brings about exactly equal proportionate change in its quantity demanded,
the demand is said to be unitary elastic.

Y D PP1 = QQ1

P1
Price

O Q Q1 X
Demand

Explanation of Diagram : From the diagram it can be seen that the original price of
a commodity is OP and the original demand of a commodity is OQ. When the price
of a commodity falls from OP to OP1 (by 25 per cent) the demand of a commodity
rises from OQ to OQ1 (by 25 per cent). In the case of unitary elastic demand, the
demand curve is a rectangular hyperbola.
Measurement of Elasticity :
Percentage change in Quantity Demanded 25
Ed = = =1
Percentage change in Price 25
The numerical value of unitary elastic demand is one. (Ed  1)
(4) Relatively Elastic Demand : When the proportionate change in the price of a
commodity brings about greater than proportionate change in its quantity demanded,
the demand is said to be relatively elastic.
Y
PP1 < QQ1
D

P
Price

P1

O Q Q1 X
Demand

Explanation of Diagram : From the diagram it can be seen that the original price of
a commodity is OP and the original demand of a commodity is OQ. When the price
of a commodity falls from OP to OP1 (by 25 per cent) the demand of a commodity
rises from OQ to OQ1 (by 50 per cent). In the case of relatively elastic demand, the
demand curve is a flatter line.

SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024 13

 Measurement of Elasticity :
Percentage change in Quantity Demanded 50
Ed = = =2
Percentage change in Price 25
The numerical value of relatively elastic demand is greater than one. (Ed > 1)

(5) Relatively Inelastic Demand : When the proportionate change in the price of a

commodity brings about less than proportionate change in its quantity demanded, the
demand is said to be relatively inelastic.
Y D
PP1 > QQ1
P
Price

P1

D
O Q Q1 X
Demand

Explanation of Diagram : From the diagram it can be seen that the original price of

a commodity is OP and the original demand of a commodity is OQ. When the price
of a commodity falls from OP to OP1 (by 50 per cent) the demand of a commodity
rises from OQ to OQ1 (by 10 per cent). In the case of relatively inelastic demand, the
demand curve is a steeper line.

Measurement of Elasticity :
Percentage change in Quantity Demanded 25
Ed = = = 0.5
Percentage change in Price 50
The numerical value of relatively inelastic demand is less than one. (Ed  <  1)

__________

14 SOLUTION TO BOARD’S QUESTION PAPER : JULY 2024