ISC CLASS XI — ECONOMICS (NEP Pattern)
Time Allowed: 3 Hours | Maximum Marks: 80
General Instructions:
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This question paper is divided into three sections: Section A (20 Marks), Section B (30 Marks), and Section C (30 Marks).
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All questions in Section A are compulsory.
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Section B contains short-answer questions with internal choices.
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Section C contains long-answer/case-based questions requiring analytical reasoning.
SECTION A: Competency & Objective Type (20 Marks)
Answer all questions. Each question carries 1 mark.
Q1. Multiple Choice Questions:
(i) A high-profile doctor keeps a car to reach medical emergencies quickly, while a factory worker owns the same model for occasional weekend trips. In economic terms, how is the car classified for the doctor and the worker respectively?
(a) Luxury, Necessity
(b) Necessity, Comfort
(c) Capital, Wealth
(d) Wealth, Capital
(ii) If a consumer's Total Utility ($TU$) function for a certain commodity is given by $TU = 20x - 2x^2$, at which unit of consumption will they reach the "Point of Satiety"?
(a) 4th unit
(b) 5th unit
(c) 6th unit
(d) 10th unit
(iii) During a severe economic recession, the Central Bank wants to inject liquidity into the banking system to stimulate demand. Which of the following policy actions should it take?
(a) Increase the Cash Reserve Ratio (CRR)
(b) Sell government securities via Open Market Operations (OMO)
(c) Decrease the Repo Rate
(d) Follow a "Dear Money Policy"
(iv) Individual thriftiness is generally viewed as a financial virtue. However, if every household in an economy simultaneously decides to drastically increase their savings, total aggregate demand falls, causing a recession. This economic phenomenon is known as:
(a) The Scarcity Principle
(b) The Paradox of Thrift
(c) Cost-Push Inflation
(d) Ordinal Utility
(v) Which school of economic thought shifted the core definition of the discipline from being an "inquiry into riches" to a study of "mankind in the ordinary business of life"?
(a) Wealth Definition (Adam Smith)
(b) Scarcity Definition (Lionel Robbins)
(c) Welfare Definition (Alfred Marshall)
(d) Growth Definition (Paul Samuelson)
Q2. Assertion-Reasoning Type:
Select the correct option for the following questions:
(a) Both Assertion (A) and Reason (R) are true and (R) is the correct explanation of (A).
(b) Both Assertion (A) and Reason (R) are true but (R) is not the correct explanation of (A).
(c) (A) is true but (R) is false.
(d) (A) is false but (R) is true.
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(i) Assertion (A): Real National Income is a far more reliable indicator of economic progress than Nominal National Income.
Reason (R): Nominal National Income is calculated at constant base-year prices and is completely adjusted for inflation.
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(ii) Assertion (A): The Law of Diminishing Marginal Utility does not strictly apply to a miser collecting money or a person pursuing a passionate hobby.
Reason (R): For the law to hold universally true, the units consumed must be homogeneous, standard in size, and consumed continuously without a time gap.
Q3. Short Answer Questions (Direct/Concept):
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(i) Differentiate between 'Value-in-Use' (Utility) and 'Value-in-Exchange' (Price) using a brief real-world example.
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(ii) Why does the problem of "Allocation of Resources" arise in an economy? State the three central questions it forces a society to answer.
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(iii) Identify the specific factor of production being described: "An active, inseparable, and highly perishable element that initiates production in exchange for wages."
SECTION B: Short Answer & Application (30 Marks)
Answer all questions. Each question carries 6 marks.
Q4. Construct a comparative table evaluating Microeconomics and Macroeconomics based on the following three parameters:
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Unit of study
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Central theme/core instruments
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Basic underlying assumptions
Q5. Read the statements below and classify the types of Utility being created in each scenario. Justify your classification in one sentence each:
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(a) A logistics company transports fresh apples from orchards in Himachal Pradesh to supermarkets in Mumbai.
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(b) A carpentry workshop transforms raw logs of mahogany wood into finely carved dining tables.
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(c) A government warehouse stores excess wheat harvested in the spring to distribute it to the market during the winter off-season.
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Q5. Briefly explain the concept of Factors of Production. Detail the primary functions of an Entrepreneur and name the economic reward they receive for taking calculated risks.
Q6. Imagine an individual whose nominal salary increased from ₹50,000 to ₹55,000 over a year. During that exact same period, the general price index (inflation rate) rose by 10%.
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(a) Calculate the percentage change in their nominal income.
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(b) Determine what happened to their Real Income and explain the practical difference between nominal and real values to a consumer.
Q7. State the Law of Diminishing Marginal Utility as popularized by Alfred Marshall. Detail any three critical assumptions that must be satisfied for this law to operate successfully in real life.
Q8. A country is experiencing an extended period of high Inflation due to "too much money chasing too few goods."
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(a) Identify whether this is demand-pull or cost-push inflation.
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(b) Suggest one Monetary Policy tool and one Fiscal Policy tool the authorities can implement to stabilize the general price level.
SECTION C: Long Answer & Case-Based Analysis (30 Marks)
Answer all questions. Each question carries 10 marks.
Q9. Data Interpretation & Analytical Reasoning:
Study the following utility schedule of a consumer consuming units of bread and answer the questions that follow:
| Units of Bread | Total Utility (Utils) | Marginal Utility (Utils) |
| 1 | 10 | 10 |
| 2 | 18 | 8 |
| 3 | 24 | Missing |
| 4 | 28 | 4 |
| 5 | 30 | 2 |
| 6 | 30 | 0 |
| 7 | 28 | -2 |
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(a) Calculate the missing Marginal Utility value for the 3rd unit.
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(b) Analyze the mathematical and graphical relationship between Total Utility ($TU$) and Marginal Utility ($MU$) across the three stages of consumption:
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When $MU$ is falling but positive.
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When $MU$ becomes exactly zero.
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When $MU$ drops below zero (negative).
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(c) What does negative utility signify for a rational consumer?
Q10. Case-Based Comprehensive Question:
Contextual Case Study: > Imagine an isolated island community that historically operated on a strict Barter System, where fishermen directly traded their catch for coconut harvests or hand-woven cloth. As the population grew, individuals spent hours trying to find a matching trading partner. A fisherman who needed cloth had to find a weaver who specifically wanted fish at that very hour. Due to the perishable nature of fish, savings were impossible, and long-term business contracts could not be drawn up. Last year, the island council introduced a standardized system using sea-shell tokens as official "Money." Within months, the time spent matching trades dropped to zero, a local market mechanism developed, and individuals began saving tokens to buy fishing nets (capital assets) for future production.
Based on the case study above and your knowledge of economic concepts, answer the following:
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(a) Identify the primary macroeconomic hurdle of the Barter System that the islanders faced initially. How did the introduction of money eliminate it?
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(b) Explain how the sea-shell tokens fulfilled the three core functions of money mentioned in the text.
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(c) Distinguish between the concepts of "Market" as a physical place versus "Market" as an economic mechanism, referencing how the island's trade evolved.
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Q10. Comparative Evaluation of Thought:
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(a) Trace the historical evolution of economic definitions across the centuries. Explain how the core theme of economics transitioned from Wealth (Adam Smith) to Welfare (Alfred Marshall), and finally to Scarcity and Choice (Lionel Robbins).
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(b) Why is Paul Samuelson's Growth Definition considered the most dynamic and modern approach to understanding economic problems today? Justify your answer by highlighting its key features.