XI Economic Important Questions and Answers 2021

 XI economic Important Questions and Answers 2021

“XI= ECONOMICS NOTES”

                                 ( By Sir-Tariq )

                           Question / Answer

 Question 01) Define a trade cycle ?

Answer)  A trade cycle is composed of periods of good trade

 characterised by rising price  and law employment, percentage,

 altering with period of bad trade characterised by talking prices 

and high un-employment percentages.                                                                     

Question 02) What are sources of public revenue ?

Answer) There are two main  sources of public revenue.

TAX REVENUE :

                               The revenue which is managed through

 various taxes is known as tax revenue . A tax is compulsary

 constribution imposed by the government . It is , infact  a 

legal as well as a personal obligation of a tax-payer to pay

his due taxes regularly. Taxes are main sources of revenue.

 They effect consumtion, production and distribution.

NON-TAX REVENUE:

                                           The revenue which is collected through

 administration, commercial enterprices, grants and gift etc is 

known as non-tax revenue.

 Question 02) Explane the canons of taxation given by 

Adam Smith ?

Answer)  Acording to adam smith ,

                                                               A good taxation system is that

 one which is comprised of following four canons or principles.

CANON OF CERTAINITY :

                                                          The tax payer should be well 

informed about,

1) The time of payment.

2) The amount to be paid. 

       AND

3) The method of payment of the tax.

CANON OF ECONOMY:

                                                     The canon of economy suggest

 that there should not be made un-necessory expenditure 

while collecting and administrating taxes.

CANON OF EQUALITY OR EQUITY:

                                                 The conon of equality or 

equity Suggest that the burden of taxation must be

 distributed equally or equitably regarding to the 

ability of the tax payer.

CANON OF CONVENIENCE:

                                             The canon of convenience

 suggest that the sum, time and manner of payment should 

not only be certain but it must also be convenient to the

 tax payer.

Quwstion 04) Differentiate between direct and 

indirect tax ?

Answer) A direct is one whose impact and incidenc are on

 the same person . It canot be shiffted to someone else. 

Income tax is a good example of a direct tax Because the

 person, Whose it is collected has tu bear its final burden.

INDIRECT TAX: 

                        Indirect tax is that one whose impact on

 one Person but the incidence on the other. Sales tax is a

 good example Of an indirect tax , because it is collected

 initially from producers Of goods but they do not pay it

 from their own pockets . they add the tax to selling prices

 of their goods and recoverfrom the buyers of the goods .

Question 05) State the function of money ?

Answer ) The main function performed by the money are 

as following :

1) It act as medium of exchange .

2) It act as a common measure or yardstisk of value.

3) It act as a standard of deferred payment.

4) It act as a store of value .

5) It act as a transfer of value .

6) It act as an important instrument of economic policy.

7) It act as a tool of monetary management.

8) It act as an instrument of saving and investment.

9) It influence the level of income and consumption .

10) It act to facilate the economic growth .

Question 06) Define money,list the characterstics of 

Good money ?

Answer ) Professor crowther offered the best definition of money.

Which nearly includes all the function of money,

                                    “ Money is anything that is generally acceptable 

As a means of exchange and at the same time acts as a measure

 and store of value” 

characterstics of good money,

1) Generally acceptability.

2) Stability of value.

3) Portability.

4) Cognizability.

5) Divisibility.

6) Durability.

7) Homogeneity.

8) Malleability.

9) Storability.

Question 07) State the difficulties of barter system ? 

Answer)  In the barter system , people have to face a large

 number of difficulties of the following nature.

01) Difficulties of lack of double confidence.

02) Difficulties of lack divisibility of good.

03) Difficulties of common measure of value.

04) Difficulties of lack of store of value.

05) Difficulties of deffered payment.

06) Difficulties of transfer of wealth  from one place to another.

07) Difficulties of revenue collection by the government.

Question 08) Describe the type of money?

Answer)  Following are the three types of paper money,

CONVERTIBLE PAPER MONEY:

                                                    This type of paper money can be 

Converted into standard money on demand and the equal 

Value of metallic reserves are not kept behind it.

INCONVERTIBLE PAPER MONEY :

                                          This type of paper money cannot

 be converted into standaerd money on demand. It is generally 

acceptable by the people due to its legal protection.

REPRESENTATIVE PAPER MONEY:

                                                     This type of paper money is fully

backed by 100% surety metallic reserves.

Question 09) What is monopoly? State the key features

 Of monopoly OR explain the characterstics of 

monopoly? 

Answer)  Monopoly refers to that market situation whose there

 is only one seller OR producer who has some kind of power OR

 control over the supply of a particular product which has no 

close subsitiute. The cross-elasticity of demand of the monopolist’s

 product is zero the monopolist has no rivals at all. A firm maybe

 characterized to the following main features,

01) Consisting of single firm industry.

02) Price maker capacity.

03) NO close subsitiute available .

04) Block entry of any other firm.

05) Discriminatory price is possible.

Question 10) What is consumption? Important of

 consumption?

Answer)   Consumption is ordinary sense, means eating OR

 using up goods and services, but in economics it has a particular

 meaning. Consumption can be defind as,

           “ All those human activities which are directly related to

 immediate satisfaction of wants are termed as consumption.”

Human want are satisfied  with wealth thus the act of applying 

Wealth for getting satisfaction of want is also termed as 

Consumption.

Question 11) Inflation  on consumers?

Answer)  CONSUMERS: 

                         Rising prices , as the result of inflation badly hit

 the consumers because there expenses exceed than their incomes.

 Saving are badly reduced OR almost came to zero . their standard

 of living adequately deteriorates and working efficiency also goes down.

Question 12) What are the scale of factor of production?

Answer) Following are the facto r that determined the scale of

 production.

01) Size of enterprices.

02) Ability of enterprices.

03) Availability of required raw-material.

04) Availability of  required technical know-how and skilled

 human resources.

05) Government policies.

06) Demand of product.

Question 13) Difference between demand and supply ?

Answer)  DEMAND : 

                        In common sense , the termed demand refers to a

 desire or a wish of a thing. But in economics ,this is used in a

 particular meaning. Demand unless these two conditions are met,

01) Willing to buy that thing at a particular price.

02) Having the ability OR purchasing power to buy it .

SUPPLY: 

                       The termed supply, just like the termed demand , the

 termed demand is a relative term.

It is related to time,place and price. It is therefore , defined as  

“ The quality of a good which is offered for sale at a given price,

 at a certain place in a particular period of time . Contrary to 

demand of a good, if the price of good increase quantity of supply

 expend and rise verse.

Question 14)  Difference between nominal wages and

 real wages?

Answer)  Nominal wages are those wages which are paid or receive

 in term of money . For example:      

NOMINAL WAGES :

                      A teacher receive r.s 6000 per month as his salary ,

 this is his nominal wages. Nominal wages do not determine the

 standard of living of a person.

REAL WAGES:

                      Real wages are the total sum of nominal wages plus 

other benefits, part time job opportunity , promotions, nature of 

work, working hours, enviorment, education and traning e.t.c. 

These are the real wages which give a respectable standard of living

 to a person .

Question 15) Describe the factors of production? 

Answer)  FACTORS OF PRODUCTION:

                  All those factors which are nessary for the production

 are known as factor of production. These factor play an important

 role in the process of production,the factor of production are

 as following.

LAND: 

                In ordinary language , land means simply the surface of

 earth but in economics, besides the surface of the earth all 

mineral resources hidden under the surface of the earth and

 all those minerals  which are found in the atmosphere are 

collective consider as land.

LABOUR: 

                 All physical and mental efforts made by human for

 the producton of goods and services undertaken in the expentation

 of reward are called labour.

CAPITAL:

                   The part of wealth which is used for the further production

 of wealth is called capital. It is the third and important factor of 

production. The production is not possible with out capital.

ORGANIZATION: 

                      The factor of production which bring together all other 

Three factor i.e Land,Labour and capital and makes the production

possible is called Organization. The person who makes the

 organization possible is considered as organization OR enterpreneus.

Question 16) Mention the digrees of elasticity of demand ?

Answer) DIGREES OF ELASTICITY OF DEMAND: 

01) Elastic demand.

02) Highly elastic demand.

03) Perfectly elastic demand.

04) Inelastic demand 

05) Perfectly elastic demand.

Question 17) Explicit cost and implicit cost ?

Answer) EXPLICIT COST:  

                         Explicit cost are paid out cost. They are those Money 

Expenses which a firm has to pay to out sider who supply a different

Inputs and services. They includes,

01) Wages and salaries.

02) Payment for raw-materials.

03) Payment for hiring transportation facilities.

04) Charges of using fuel, electricity and water etc.

05) Payment for insurance.

IMPLICIT COST: 

                                   Implicit cost consist of firm’s self-owned and 

Self-employed resources. These are the expenses which are not paid 

To out siders who supply different inputs and services rather paid to 

the owner of the firm for providing his self owned , self-employed

 resources. Implicit cost are also called inputed costs. They include,

01) Salary of the owner ,working as a manager.

02) Interest of capital provide by the owner by his own sources.

03) Rent of land provided by the owner of the firm.

04) Normal profit of the enterprenous.

05) Depreciation charges of the machinery including obsolescent 

charges which the firm has to face in case a falls occurs in 

the value of machinery due to introduction of new one.

Question 18) What are the economic benefit of zakat?

Answer) Zakat has great economic as well as social importance as it 

is evident from the following advantages,

01) Helpful to fair distribution of wealth.

02) Helpful in attaning economic stability.

03) Helpful in lessening the class conflict.

04) Helps in capital accumulation.

05) Discourage antisocial activities.

 Question 19)Name of the laws of return and laws of cost?

Answer) LAWS OF RETURN :

                     There are three laws of return. They are;

01) Laws of increasing return.

02) Laws of diminishing return.

03) Laws of constant return.

LAWS OF COST:

                         There are three laws of cost ,They are;

01) Laws of decreasing cost.

02) Laws of increasing cost.

03) Laws of constant cost.

Question 20) State the laws of substitute ?  

Answer)LAWS OF SUBSITITUTE:

                           The law of equi-marginal utility is also known as the 

Laws of maximum satisfaction, the law of equi-marginal return, the 

law of substitution, ten law of indeffrence, the law of proportionate

rule and the gossen’s 2nd law. According to this law ;

                    “ A consumer can derive the maximum satisfaction by 

Spending his limited income on different goods in a manner that 

He gets equi-marginal utility from each of them”

Question 21)Explain the  relation between T.R(total

 revenue) in perfect Competition?  

Answer)TOTAL REVENUE, (T.R)

                       Total revenue is the total sale of a given quantity of

 a product and sold. Therefore, at zero output total revenue is zero.

In the revenue beginning when more quantity of output is produced 

And sold, total revenue (T.R) increase of marginal revenue is positive

For a few operating under perfect competition price is given and remain 

Constant.

Question 22) Defination’s of  economics by marshall and robin?

Answer) DEFINATION OF ECONOMICS: 

                      Both of the definition’s of economics given by marshall and 

Robin’s have some merit as well as some demerits. To decide which 

Definition is  comparatively better and why , we have to make a brief 

Comparative study of them.

DEFINATIONS BY MARSHAL :

01) Marshal consider only those activities as economic activities

which concern only with material welfare of the man.

02) Marshal definition in this regard is merely a classificatory 

As it divides the activities  of man into material , non-material and

 welfare categories .

03) Marshal definition lack universality because even two men

 may have different idea of material welfare of the same thing.

04) Marshal has confined the subject matter of economics into

 the narrow boundaries of material welfare.

05) In this regard , marshal definition is better one because it

 considers economics both positive as well as normative science. 

DEFINATION BY ROBIN’S: 

01) According to robin’s definition of economics , it studies all 

economics activities of man whether they are concern with

 material or non-material welfare .

02) Robin’s definition is more analytical and scientific as

 compared to marshal definition. Robin’s talk’s about

 the economics aspect of all the activities.

03) Robin’s definition is universal because sacristy is felt by 

 every body at any time and palace.

04) Robin’s definition is more comprehensive than marshal

 definition. Robin gives a more scientific and as such has 

removed such boundaries.

Question 23) explain the main course of inflation ?

Answer) Since inflation emerges when the aggregate demand exceeds

 the aggregate supply of goods and services, therefore we have to

 bring into light those factor which lead to increase in demand and 

cause to decries in supply of goods and services.

FACTOR LEADING TO INCREASING DEMAND :

01) Effect of increase in nominal money supply.

02) Effect of increase disposable income.

03) Effect of expansion of credit.

04) Effect of deficit financing policy.

05) Effect of black money spending.

 FACTOR REDUCING SUPPLY SIDE :

01) Effect of shortage of factor of production or input.

02) Effect of industrial dispute.

03) Effect of natural cilamates   

04) Effect of artificial scarcities.  

05) Effect of increase in export. 

 Question 24)  Types of taxes ? 

Answer)  The types of taxes are as following;

01) Proportional tax.

02) Progressive tax.

03) Regressive tax.

04) Digressive tax.         

Question 25) What are the advantages of large-scale 

production?

Answer)      Following are the advantages or merit of large-scale 

production,

01) Benefits of Internal economics.

02) Benefits of external economics.

03) Benefits of division labor.

04) Benefits of auxillary industries.

05)   Attainment of quality goods.

06) Economy of buying and selling.

07) Benefits of  research and innovation.

08) Benefits of advertisement and salesmanship.

09) Facilitates the growth of joint stock companies and public

 corporation.

01) Question 26) State the law of diminishing marginal

02)   Importance to Uility? 

Answer) The law of diminishing marginal utility:

                        The law of diminishing marginal utility is a generalized

 statement of the behavior of a consumer in relation to satisfaction

 of his want, According to this law;

                The utility of a of a good to a consumer, while other thing

 remain the same decreases as the different unit of that good are 

consumed in succession.

Question 27) Describe the practical advantages of the

 study of economics?

Answer) Practical importance of the study  reflects the fruit

 bearing aspect of economics. Practical advantages are as following;

03) Importance to removing economics backwardness.

04) Importance to statesman.

05) Importance to  businessman.

06) Importance to  entrepreneurs.

07) Importance to  labor leader.

08) Importance to consumer.

Question 28) Explain the expansion and contraction in quality

 demand?

Answer) expansion and contraction in quality demand :

                       Demand represent the entire demand schedule or curve

 with shows the quantities of a good demanded at various price.

 Quantity demand ,at the other hand refers to that particular quantity

 which consumer buy at a particular price.

                          Quantity demanded of a good changes due to change

 in price of a goods when price of a good falls its quantity demanded 

increase and when its price rises , its quantity demanded decrease .

 Change in demand occurs due to the other factor then price a shift in

 the entire demand curve take place. Other factor than price are income

 of the consumer , change in price of substitute goods. Change in taste 

and fashion etc.

Question 29) Different between local and international

 trade?

Answer) local and international trade :

                     The fundamental principles governing domestic or home

 trade and international trade or foreign trade are the same but there 

are some important aspect, which makes  difference between the two

 are as  following,

01) Difference of  mobility of factor of production.

02) Difference of currencies.

03) Difference of natural resources.

04) Difference of geographical and climate condition.

05) Restriction on trade.

06) Difference of  markets.

07) Problem of balance of payments.

Question 30)  Explain the internal and external economics?

Answer) Internal economics :

                      Internal economics are, infact those advantages or

 benefit occurs to a firm itself when in enlarges its scale of production 

of expand its volume of output.   

                   The internal economics take place within a firm as a

 result of own expansion. They do  not depend on the size and the

 expansion of the industry. They occurs simply due to the increase

 in the scale of production

 external economics : 

                     External economics are those advantages or benefit

 which   aries to each member firm as a result of expansion of the

 industry as a whole expansion of industry may lead to newer and

 cheaper inputs like raw-material, tools and machinery etc.

 Moreover with the expansion of an industry certain specialized 

firms come into being , which use waste product of large firms.

 Further as industry flourishes, trade journals may appear which

 extend their services in the discovery and diffusion of technical 

know-how.            

Question 31)Difference between monopoly and monopolistic

 competition?

Answer) MONOPOLY:

01) A condition in market in which 9only or more seller

 has total over of the product is called monopoly.

          02)  Monopoly is an authority for the determination of the

                price of the product.

         03)  Monopoly makes the seller or producer unique in production.

        04)  In monopoly there are no rivals, so the monopolist keep

                the price high.

MONOPOLISTIC COMPETITION:

01) A state of competition in which  a single firms comes into

 existence and get the status of an industry is called 

monopolistic competition.

02) In monopolistic competition same or difference price can be

 taken from the buyers.

03) In monopolistic competition the buyer have to buy the product

 because close substitute are not available .

04) In monopolistic competition the price of product as far more

 than marginal. 

Question 32)  Relationship between marginal utility (m.u)

 and total utility (t.u) ?

Answer) When marginal cost (m.c) is less than average variable cost 

(avc) average variable cost decrease. When marginal cost is equal to 

average variable cost, average variable cost remain constant. When 

marginal cost is greater than average variable cost, average variable

 cost increase.

Question 33)  Advantages of direct and indirect tax?

Answer) Direct tax have the following good qualities in them, 

ADVANTAGES: 

01) Justify principle of equity.

02) Justify the canon of economy.

03) Justify the canon of elasticity.

04) Justify the canon of certainly.

05) Justify the distributive justice.

06) Create civic consciousness.

07) Help in sealing leakage.

08) Help[ in avoiding adverse effect of direct tax. 

DISADVANTAGES: 

01) Encourage large-scale evasion.

02) Unpopular and painful.

03) Arbitrary.

04) Inconvenience.

05) Create non-civic consciousness among non tax payer.

06) Non reliable source of revenue in a poor country.