Prasanna

Students can Download Tamil Nadu 11th Accountancy Model Question Paper 2 English Medium Pdf, Tamil Nadu 11th Accountancy Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Accountancy Model Question Paper 2 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 3:00 Hours
Maximum Marks: 90

PART – I

Answer all the questions. Choose the correct answer: [20 × 1 = 20]

Question 1.
Which one of the following is not a branch of accounting?
(a) Financial accounting
(b) Management accounting
(c) Human resources accounting
(d) None of the above
Answer:
(d) None of the above

Question 2.
Financial position of a business is ascertained on the basis of ……………………….
(a) Journal
(b) Trial balance
(c) Balance sheet
(d) Ledger
Answer:
(c) Balance sheet

Question 3.
The profounder of double entry system of book – keeping?
(a) J.R. Batli boi
(b) Luca Pacioli
(c) Old Kesal
(d) Menhar
Answer:
(b) Luca Pacioli

Question 4.
The concept which assumes that a business will last indefinitely is ………………………..
(a) Business entity
(b) Going concern
(c) Periodicity
(d) Conservation
Answer:
(b) Going concern

Question 5.
A firm has assets of ₹1,00,000 and the external liabilities of ₹60,000. Its capital would be ………………………….
(a) ₹1,60,000
(b) ₹60,000
(c) ₹1,00,000
(d) ₹40,000
Answer:
(d) ₹40,000

Question 6.
The incorrect accounting equation is ………………………
(a) Assets = Liabilities + Capital
(b) Assets = Capital + Liabilities
(c) Liabilities = Assets + Capital
(d) Capital = Assets – Liabilities
Answer:
(c) Liabilities = Assets + Capital

Question 7.
J.F means ………………………….
(a) Ledger page number
(b) Journal page number
(c) Voucher number
(d) Order number
Answer:
(b) Journal page number

Question 8.
The process of finding the net amount from the totals of debit and credit columns in a ledger is known as ……………………….
(a) Casting
(b) Posting
(c) Journalising
(d) Balancing
Answer:
(d) Balancing

Question 9.
The trial balance contains the balances of ………………………..
(a) Only personal accounts
(b) Only real account
(c) Only nominal accounts
(d) All accounts
Answer:
(d) All accounts

Question 10.
Which of the following is/are the objective(s) of preparing trial balance?
(a) Serving as the summary of all the ledger accounts.
(b) Helping in the preparation of final accounts.
(c) Examining arithmetical accuracy of accounts.
(d) (a), (b) and (c)
Answer:
(d) (a), (b) and (c)

Question 11.
Sales book is used to record ……………………..
(a) All sales of goods
(b) All credit sales of assets
(c) All credit sales of goods
(d) All sales of assets and goods
Answer:
(c) All credit sales of goods

Question 12.
The total of the sales book is posted periodically to the credit of ………………………
(a) Sales account
(b) Cash account
(c) Purchases account
(d) Journal proper
Answer:
(a) Sales account

Question 13.
When a firm maintains a simple cash book, it need not maintain ………………………..
(a) Sales a/c in the ledger
(b) Purchases a/c in the ledger
(c) Capital a/c in the ledger
(d) Cash a/c in the ledger
Answer:
(d) Cash a/c in the ledger

Question 14.
Debit balance in the bank column of the cash book means …………………………
(a) Credit balance as per bank statement
(b) Debit balance as per bank statement
(c) Overdraft as per cash book
(d) None of the above
Answer:
(a) Credit balance as per bank statement

Question 15.
The difference in trial balance is taken to ……………………….
(a) The capital a/c
(b) The trading a/c
(c) The suspense a/c
(d) The Profit and loss a/c
Answer:
(c) The suspense a/c

Question 16.
Under the written down value method of depreciation, the amount of depreciation is …………………………
(a) Uniform in all the years
(b) Decreasing every year
(c) Increasing every year
(d) None of the above
Answer:
(b) Decreasing every year

Question 17.
Interest on bank deposits is ………………………..
(a) Capital receipt
(b) Revenue receipt
(c) Capital expenditure
(d) Revenue expenditure
Answer:
(b) Revenue receipt

Question 18.
Net profit of the business increases the …………………………
(a) Drawings
(b) Receivables
(c) Debts
(d) Capital
Answer:
(d) Capital

Question 19.
Closing stock is valued at ………………………
(a) Cost price
(b) Market price
(c) Cost price or market price whichever is higher
(d) Cost price or net realisable value whichever is lower
Answer:
(d) Cost price or net realisable value whichever is lower

Question 20.
Which one is not a component of computer system?
(a) Input unit
(b) Output unit
(c) Data
(d) CPU
Answer:
(c) Data

PART – II

Answer any seven questions in which question No. 21 is compulsory. [7 × 2 = 14]

Question 21.
Mention two objectives of Accounting?
Answer:

1. To keep a systematic record of financial transactions and events.
2. To ascertain the profit or loss of the business enterprise.

Question 22.
What is Compound entry?
Answer:
Compound entry is an entry in which more than two accounts are involved. Either more than one account is debited or more than one account is credited or both.

Question 23.
What is Balance method?
Answer:
In this method, the balance of every ledger account either debit or credit, as the case may be, is recorded in the trial balance against the respective accounts. The balance method is widely used, as it helps in the preparation of financial statements.

Question 24.
Who is drawee?
Answer:
The person who has to make the payment or who accepts to make the payment is called the drawee, i.e., a debtor.

Question 25.
What are the types of petty cash book?
Answer:

1. Simple petty cash book
2. Analytical petty cash book.

Question 26.
Write two examples for error of principle?
Answer:

1. Sale of old furniture on credit for ₹500 was entered in the sales book.
2. Wages of ₹600 paid for installation of a new machine is debited to wages account,

Question 27.
Write any two objectives of providing depreciation?
Answer:

1. To find out the true profit or loss.
2. To present the true and fair view of financial position.

Question 28.
Write any two examples of revenue receipt?
Answer:

1. Rent received
2. Proceeds from sale of goods.

Question 29.
What is outstanding expenses?
Answer:
Expenses which have been incurred in the accounting period but not paid till the end of the accounting period are called outstanding expenses.

Question 30.
Write any four features of computerised accounting system (CAS)?
Answer:

1. Simple and integrated
2. Speed
3. Accuracy
4. Reliability

PART – III

Answer any seven questions in which question No. 31 is compulsory. [7 × 3 = 21]

Question 31.
Explain the meaning of accounting?
Answer:
Accounting is the systematic process of identifying, measuring, recording, classifying, summarising, interpreting and communicating financial information. Accounting gives information on;

1. The resources available
2. How the available resources have been employed, and
3. The results achieved by their use.

Question 32.
Show accounting equation from the following information:

1. Started business with cash ₹80,000.
2. Goods bought on credit from Raj ₹10,000.
3. Purchased furniture for cash ₹6,000.

Answer:

Question 33.
Enter the following transactions in a single column cash book of Pandeeswari for the month of June, 2017?

Answer:

Question 34.
Prepare a Sales Account from the following transactions?

Answer:

Question 35.
From the following balances of Arjun, prepare the Trial Balance as on 31^st March, 2018?
Answer:

Question 36.
From the following particulars of Siva and Company, prepare a bank reconciliation statement as on 31^st December, 2017?

1. Credit balance as per cash book ₹12,000.
2. A cheque of ₹1,200 issued and presented for payment to the bank, wrongly credited in the cash book as ₹2,100.
3. Debit side of bank statement was undercast by ₹100.

Answer:

Question 37.
The following errors was detected before preparation of trial balance. Rectify them?

1. The total of rent received account is carried forward ₹900 short.
2. The total of salary account is carried forward ₹1,100 short.
3. Sales returns book is over cast ₹800.

Answer:

1. Rent received account is to be credited with ₹900.
2. Salary account is to be debited with ₹1,100.
3. Sales returns account should be credited with ₹800.

Question 38.
Find out the rate of depreciation under straight line method from the following details: Original cost of the asset ₹10,000; Estimated life of the asset 10 years; Estimated scrap value at the end ₹2,000?
Answer:

Question 39.
State whether they are capital and revenue:

1. Construction of buildings ₹10,00,000.
2. Repairs to furniture ₹50,000.
3. White – washing the building ₹80,000.

Answer:

1. Capital expenditure
2. Revenue expenditure
3. Revenue expenditure

Question 40.
Pass adjusting entries for the following?

1. The Closing stock was valued at ₹5,000;
2. Outstanding salaries ₹150;
3. Insurance prepaid ₹450;

Answer:

PART – IV

Answer all the questions. [7 × 5 = 35]

Question 41 (a).
Bragathish is a trader dealing in electronic goods who commenced his business in 2015, for the following transactions took place in the month of March, 2018. Pass Journal entries?

Answer:

[OR]

(b) The following errors were located after the preparation of the trial balance. Assume that there exists a suspense account. Pass journal entries to rectify them?

1. The total of purchases book was undercast by ₹100.
2. The total of the discount column on the debit side of cash book ₹575 were not posted.
3. The total of one page of the sales book for ₹5,975 were carried forward to the next page as ₹5,795.
4. Salaries ₹1,800 were posted as ₹18,000.
5. Purchase of goods on credit from Mukilan for ₹150 have been posted to his account as ₹1,500.

Answer:

Question 42 (a).
Show the effect of following business transactions on the accounting equation:

1. Anbu started business with cash ₹20,000; goods ₹12,000 and machine ₹8,000.
2. Purchased goods from Ramani on credit ₹7,000.
3. Payment made to Ramani in full settlement ₹6,900.
4. Sold goods to Raj an on credit costing ₹5,400 for ₹6,000.
5. Received from Raj an ₹5,800 in full settlement of his account.

Answer:

(b) A furniture costing ₹5,000 was purchased on 01.01.2016, the installation charges being ₹1,000. The furniture is to be depreciated @ 10% p.a. on the diminishing balance method. Pass Journal entries for the first two years?
Answer:

Question 43 (a).
Journalise the following transactions and past them to the ledger?

Answer:

[OR]

(b) Classify the following receipts into capital or revenue?

1. Sale proceeds of goods ₹75,000
2. Loan borrowed from hank ₹2,50,000
3. Sale of investment ₹1,20,000
4. Commission received ₹30,000
5. ₹1,400 wages paid in connection with the erection of new machinery

Answer:

1. Revenue
2. Capital
3. Capital
4. Revenue
5. Capital

Question 44 (a).
Prepare trail balance as on 31^st January, 2017?

Answer:

(b) From the following information, prepare Trading and Profit & Loss A/c of Abdul Rahuman for the year ending 31^st December, 2016 and Balance Sheet as on that date. The closing stock on 31^st December, 2016 was valued ₹2,000?

Answer:

Question 45 (a).
Prepare purchase book and Purchase returns book from the following of Robert Funiture Mart?

Answer:

[OR]

(b) The following trial balance was extracted from the books of Arun Traders as on 31^st March, 2018?

Adjustments:

1. Depreciate plant & machinery @ 20%.
2. Wages outstanding amounts to ₹750.
3. Half of repairs and maintenance paid is for the next year.
4. Closing stock was valued at ₹15,000.
   Prepare Trading and Profit and Loss A/c for the year ending 31^st March, 2018 and Balance sheet as on that date.

Answer:

Question 46 (a).
Prepare Three Column Cash book in the books of Thiru Durairaj?

Answer:

[OR]

(b) Enter the following transactions in Ahamed’s Cash book discount and Cash columns?

Answer:

Question 47 (a).
From the following particulars of Raheem traders, prepare a bank reconciliation statement as on 31^st March, 2018?

1. Overdraft as per cash book ₹2,500.
2. Debit side of cash book was undercast by ₹700.
3. Amount received by bank through RTGS amounting ₹2,00,000 omitted in the cash book.
4. Two cheques issued for ₹1,800 and ₹2,000 on 29^th March 2018. Only the second cheque is presented for payment,
5. Insurance premium on car for ₹1,000 paid by the bank as per standing instructions not recorded in the cash book.

Answer:

[OR]

(b) Prepare an analytical petty cash book under imprest system?

Answer:

Students can Download Tamil Nadu 11th Accountancy Model Question Paper 1 English Medium Pdf, Tamil Nadu 11th Accountancy Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Accountancy Model Question Paper 1 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 3:00 Hours
Maximum Marks: 90

PART – I

Answer all the questions. Choose the correct answer: [20 × 1 = 20]

Question 1.
Which one is the function of Accounting?
(a) Decision making
(b) Systematic records
(c) Legal evidence
(d) Preparation of balance sheet
Answer:
(a) Decision making

Question 2.
………………….. is the capability of a person or an enterprise to pay the debts.
(a) Solvency
(b) Creditor
(c) Bad debts
(d) Income
Answer:
(a) Solvency

Question 3.
The first step in the accounting process is …………………….. and recording.
(a) Book – keeping
(b) Identifying
(c) Accountancy
(d) Journal
Answer:
(b) Identifying

Question 4.
………………………. concept implies that only those transactions, which can be expressed in terms of money are recorded in the accounts.
(a) Money measurement concept
(b) Business entity concept
(c) Going concern concept
(d) Cost concept
Answer:
(a) Money measurement concept

Question 5.
CDM expands ……………………..
(a) Cash Deposit Machine
(b) Credit Debts Method
(c) Commerce Document Mode
(d) None of these
Answer:
(a) Cash Deposit Machine

Question 6.
Which one is the owner’s equity?
(a) Creditors
(b) Bank
(c) Capital
(d) Debtors
Answer:
(c) Capital

Question 7.
The process of recording in the ledger is called ………………………
(a) Journal
(b) Journalising
(c) Ledger
(d) Posting
Answer:
(d) Posting

Question 8.
Total of debit = Total of credit = ?
(a) Debit balance
(b) Credit balance
(c) Nil balance
(d) To balance bld
Answer:
(c) Nil balance

Question 9.
Which one is in correct order (ascending)?
(a) Journal, ledger, trial balance
(b) Trial balance, journal, ledger
(c) Ledger, journal, trial balance
(d) Trial balance, ledger, journal
Answer:
(a) Journal, ledger, trial balance

Question 10.
Subsidiary books (special journal) for entering ……………………..
(a) Cash transactions
(b) Non – cash transactions
(c) Both
(d) Journal proper
Answer:
(b) Non – cash transactions

Question 11.
………………………. serves as both journal and ledger.
(a) Cash book
(b) Sales book
(c) Purchases book
(d) All of these
Answer:
(a) Cash book

Question 12.
Cash book shows debit balance means ……………………..
(a) Favourable balance
(b) Overdraft
(c) Negative balance
(d) None of these
Answer:
(a) Favourable balance

Question 13.
The total of sales book ₹9,240 was debited in the sales account as ₹9,420.
(a) Error of commission
(b) Error of omission
(c) Error of partial omission
(d) Error of principle
Answer:
(a) Error of commission

Question 14.
……………………… assets have a long span of life.
(a) Bank
(b) Cash
(c) Debtors
(d) Fixed assets
Answer:
(d) Fixed assets

Question 15.
The amount of depreciation goes on decreasing year after year …………………….
(a) Revaluation method
(b) Written down value method
(c) Straight line method
(d) Depletion method
Answer:
(b) Written down value method

Question 16.
Overhaul expenses is an example for …………………………
(a) Capital expenditure
(b) Revenue expenditure
(c) Deferred revenue expenditure
(d) Capital receipts
Answer:
(a) Capital expenditure

Question 17.
……………………….. is the arrangement of various assets and liabilities in a proper order.
(a) Marshalling
(b) Balance sheet
(c) Assets
(d) Liabilities
Answer:
(a) Marshalling

Question 18.
Income tax paid by the business is not a business expenditure and is treated as ………………………..
(a) Capital
(b) Drawings
(c) Revenue
(d) Expense
Answer:
(b) Drawings

Question 19.
……………………….. is the programming software.
(a) DOS
(b) Windows
(c) UBUNTU
(d) PASCAL
Answer:
(d) PASCAL

Question 20.
………………………. is the application software.
(a) PASCAL
(b) COBOL
(c) DOS
(d) MS – Office
Answer:
(d) MS – Office

PART – II

Answer any seven questions in which question No. 21 is compulsory: [7 × 2 = 14]

Question 21.
Define Accounting?
Answer:
American Accounting Association has defined accounting as “the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information.”

Question 22.
What are source documents?
Answer:
Source documents are the authentic evidences of financial transactions. These documents show the nature of transactions the date, the amount and the parties involved. Source documents include cash receipts, invoice, debit note, credit note, pay-in-slip, salary bills, wage bills, cheque record slips etc.

Question 23.
What are the methods of preparation of trial balance?
Answer:

1. Balance method
2. Total method
3. Total and balance method

Question 24.
Mention four types of subsidiary books?
Answer:

1. Purchases book
2. Sales book
3. Purchases return book
4. Sales return book

Question 25.
What is meant by Bank overdraft?
Answer:
It is not possible to have unfavourable cash balance in the cash book. But, it is possible to have unfavourable balance in the bank account. When the business is not having sufficient money in its bank account, it can borrow money from the bank.

Question 26.
What is meant by rectification of errors?
Answer:
Correction of errors in the books of accounts is not done by erasing, rewriting or striking the figures which are incorrect. Correcting the errors that has occured is called rectification. Appropriate entry is passed or suitable explanatory note is written in the respective account or accounts to neutralise the effect of errors.

Question 27.
What is meant by depreciation?
Answer:
The process of allocation of the relevant cost of fixed asset over its useful life is known as depreciation. It is an allocation of cost against the benefit derived from a fixed asset during an accounting period.

Question 28.
What is meant by revenue expenditure?
Answer:
The expenditure incurred for day to day running of the business or for maintaining the earning capacity of the business is known as revenue expenditure. It is recurring in nature. It is incurred to generate revenue for a particular accounting period.

Question 29.
Prepare Trading account in the books of Siva Shankar from the following figures:
Opening Stock ₹1,500; Šales ₹4,600; Purchases ₹3,500; Closing Stock ₹1,300:
Answer:

Question 30.
What is CAS?
Answer:
Computerised Accounting System (CAS) refers to the system of maintaining accounts using computers. It involves the processing of accounting transactions through the use of hardware and software in order to keep and produce accounting records and reports.

PART – III

Answer any seven questions in which question No. 31 is compulsory: [7 × 3 = 21]

Question 31.
How can we classify the components of CAS?
Answer:

1. Hardware
2. Software
3. People
4. Procedure
5. Data
6. Connectivity

Question 32.
Classify the following items into capital or revenue?

1. ₹50,000 spent for railway siding.
2. Loss on sale of old furniture ₹200.
3. Carriage paid on goods sold ₹500.

Answer:

1. Capital
2. Revenue
3. Revenue

Question 33.
An asset is purchased for ₹50,000. The rate of depreciation is 15% p.a. Calculate the annual depreciation for the first two years under diminishing balance method?
Answer:
Caluculation of depreciation for first two years. (On diminishing balance method).

Question 34.
On 1^st January, 2016, provision for doubtful debts account had a balance of ₹3,000. On December 31, 2016 sundry debtors amounted to ₹80,000. During the year, bad debts
to be written off were ₹2,000. A provision for 5% was required for next year. Pass adjusting journal entries?
Answer:

Question 35.
The following errors were located after the preparation of the trial balance. Rectify them.

1. Paid ₹50 to Anitha was wrongly debited to Vanitha account.
2. Sale of furniture for ₹500 was credited to sales account.
3. Purchased goods from Natarajan on credit for ₹750 was wrongly passed through sales book.

Answer:

Question 36.
From the following particulars of Siva and company, prepare a bank reconciliation statement as on 31^st December, 2017.

1. Credit balance as per cash book ₹12,000.
2. A cheque of ₹1,200 issued and presented for payment to the bank, wrongly credited in the cash book as ₹2,100.
3. Debit side of bank statement was undercast by ₹100.

Answer:
Bank Reconciliation Statement of Siva & company as on 31^st December, 2017

Question 37.
Enter the following transactions in a single column cash book of Seshadri for May, 2017?

Answer:

Question 38.
Prepare the trial balance from the following information:
Bank loan ₹3,00,000; Stock ₹2,70,000; Capital ₹2,50,000; Purchases ₹1,80,000; Debtors ₹4,00,000; ₹Sales 3,00,000.
Answer:

Question 39.
Prepare Anand’s account from the following data:

Answer:

Question 40.
Complete the followings:

Answer:
Completed informations:

PART – IV

Answer all the questions: [7 × 5 = 35]

Question 41 (a).
Mr. Vivek took a loan of ₹2,00,000 from State Bank of India, Chennai and number of installments is 84 months. Calculate the rate assuming payments ₹3,300 per month using appropriate function?
Answer:
Procedure:
1. Open a new spread sheet in MS – Excel

2. Enter values in the cells as given below

3. Compare RATE in the cell B6 by the formula
= RATE (B1, B2, B3, B4, B5) * 12
Answer 10%

[OR]

(b) From the following information, prepare bank reconciliation statement as on 31^st December, 2017 to find out the balance as per bank statement?

Answer:

Question 42 (a).
From the following information prepare an analytical Petty cash book under imprest system?

Answer:

[OR]

(b) Rectify the following errors assuming that the trial balance is yet to be prepared?

1. Sales book was undercast by ₹400.
2. Sales returns book was overcast by ₹500.
3. Purchases book was undercast by ₹600.
4. Purchases returns book was overcast by ₹700.
5. Bills receivable book was undercast by ₹800.

Answer:

1. Sales account should be credited with ₹400.
2. Sales returns account should be credited with ₹500.
3. Purchases account should be debited with ₹600.
4. Purchases returns account should be debited with ₹700.
5. Bills receivable account should be debited with ₹800.

Question 43 (a).
From the following transactions prepare three column cash book of Udhayakumar?

Answer:

[OR]

(b) Ramu Brothers purchased a machine on 1^st July 2016 at a cost of ₹14,000 and spent ₹1,000 on its installation. The firm writes off depreciation at 10% of original cost every year. The books are closed on 31^st December every year. Give journal entries and prepare machinery account and depreciation account for 2 years?
Answer:

Question 44 (a).
Prepare necessary subsidiary books in the books of Niranjan from the following transactions for the month of February, 2017?

Answer:

(b) Classify the following receipts into capital and revenue?

1. Sale proceeds of goods ₹75,000.
2. Loan borrowed from bank ₹2,50,000.
3. Sale of investment ₹1,20,000.
4. Commission received ₹30,000.
5. ₹1,400 wages paid in connection with the erection of new machinery.

Answer:

1. Revenue
2. Capital
3. Capital
4. Revenue
5. Capital

Question 45 (a).
Prepare the trial balance from the following balances of Babu as on 31^st March, 2016?

Answer:

(b) From the following information, prepare Profit & Loss account for the year ending 31^st December,2016?

Answer:

Question 46 (a).
Prepare Anand’s account from the following details?

Answer:

[OR]

(b) From the following adjustments, pass adjusting entries?

1. Outstanding wages ₹5,000.
2. Depreciation on machinery ₹1,000.
3. Interest on capital @ 5% on capital ₹20,000.
4. Interest on drawings ₹50.
5. Write off bad debts ₹500.

Answer:

Question 47 (a).
Pass Journal entries for the following transactions for the month of March, 2018?

Answer:

[OR]

(b) Prepare accounting equation from the following transactions and show balance sheet also?

1. Raj started business with cash ₹40,000.
2. Opened bank account with a deposit of ₹30,000.
3. Bought goods from Han on credit for ₹12,000
4. Raj withdrew cash for personal use ₹1,000.
5. Bought furniture by using debit card ₹10,000.

Answer:

Students can Download Tamil Nadu 11th Commerce Model Question Paper 5 English Medium Pdf, Tamil Nadu 11th Commerce Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Commerce Model Question Paper 5 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 2:30 Hours
Maximum Marks: 90

PART – I

Choose the correct answer. Answer all the questions. [20 × 1 = 20]

Question 1.
The document which authorises to deliver the goods either in part or full is called …………………..
(a) Warehouse warrant
(b) Dock receipt
(c) Dock warrant
(d) None of these
Answer:
(c) Dock warrant

Question 2.
Which of the following is not correctly matched?
(a) Franchisee – An agent who buys the accounts receivables
(b) Factor – Trade mark of the seller
(c) Logistics – Knowledge process outsourcing
(d) BPO – Extension of transportation
Answer:
(d) BPO – Extension of transportation

Question 3.
WTO was established on ……………………..
(a) 1-1-1996
(b) 1-1-1997
(c) 1-1-1995
(d) 1-1-1994
Answer:
(c) 1-1-1995

Question 4.
Charter Party is a document related to which of the following transport?
(a) Air Transport
(b) Ocean Transport
(c) Railway Transport
(d) Motor transport
Answer:
(b) Ocean Transport

Question 5.
Charter party may also be known as ………………………
(a) Bill of lading
(b) Voyage charter
(c) Airway note
(d) Way bill
Answer:
(b) Voyage charter

Question 6.
Occupation of a bank official is …………………………
(a) Employment
(b) Business
(c) Profession
(d) Sole trader
Answer:
(a) Employment

Question 7.
Who is not an intermediary in the export trade from the following?
(a) Indent house
(b) Forwarding agent
(c) Commission agent
(d) Export trading house
Answer:
(a) Indent house

Question 8.
What is IGST?
(a) Integrated Goods and Services Tax
(b) Indian Goods and Services Tax
(c) Initial Goods and Services Tax
(d) All the above
Answer:
(a) Integrated Goods and Services Tax

Question 9.
Dock Receipt is a document issued by ………………………….
(a) Dock authorities
(b) Warehouse keeper
(c) Owner of the goods
(d) Manufacturer
Answer:
(a) Dock authorities

Question 10.
………………………… is not a type of general insurance.
(a) Marine insurance
(b) Life insurance
(c) Fidelity insurance
(d) Fire insurance
Answer:
(b) Life insurance

Question 11.
Trade middleman who acts as a link between wholesaler and customers refers to a ………………………..
(a) Producer
(b) Broker
(c) Retailer
(d) Customer
Answer:
(c) Retailer

Question 12.
……………………… are mobile traders who deal in low priced articles with no fixed place of business.
(a) Shopping malls
(b) Super markets
(c) Street stalls
(d) Itinerant traders
Answer:
(d) Itinerant traders

Question 13.
Public deposits are the deposits which are raised directly from ………………………
(a) The public
(b) The director
(c) The auditors
(d) The owners
Answer:
(a) The public

Question 14.
Income Tax is ………………………..
(a) A business tax
(b) A direct tax
(c) An indirect tax
(d) None of these
Answer:
(a) A business tax

Question 15.
Which bank has the power to issue bank notes?
(a) Central bank
(b) Commercial bank
(c) Co – operative banks
(d) Foreign banks
Answer:
(a) Central bank

Question 16.
The compensation given for a breach of contract is …………………………..
(a) Damage
(b) Remuneration
(c) Money
(d) Cheque
Answer:
(a) Damage

Question 17.
Which one of the following is not correctly matched?
(a) Sony Corporation – MNC
(b) Post and Telegraph – Departmental undertaking
(c) IDBI – Agricultural bank
(d) Steel Authority of India Ltd – Government company
Answer:
(c) IDBI – Agricultural bank

Question 18.
Find out which is not the classification of manufacturing Industries?
(a) Micro industries
(b) Synthetic industry
(c) Processing industry
(d) Assembling industry
Answer:
(a) Micro industries

Question 19.
Match List – I with List – II and select the correct answer using the codes given below:

Answer:
Codes:

Question 20.
Socially responsible business provides goods at ……………………..
(a) High price
(b) Low price
(c) Reasonable price
(d) Moderate price
Answer:
(c) Reasonable price

PART – II

Answer any seven questions in which question No. 30 is compulsory. [7 × 2 = 14]

Question 21.
Give the meaning of crop insurance?
Answer:
This policy is to provide financial support to fanners in case of a crop failure due to drought or flood. It generally covers all risks of loss or damages relating to production of rice, wheat, millets, oil seeds and pulses etc.

Question 22.
Mention any four examples of public corporation?
Answer:
Examples of public corporation:

1. Life Insurance Corporation of India
2. The Indian Airlines
3. The Air India International
4. Food Corporation of India

Question 23.
What is meant by foreign bank?
Answer:
Banks which have registered office in a foreign country and branches in India are called foreign banks.

Question 24.
What is GATT?
Answer:
The General Agreement on Tariffs and Trade. (GATT) was signed at Geneva on 30th October 1947 by 23 countries. It came into effect on 1^st January 1948.

Question 25.
Describe any two advantages of water transport?
Answer:
Advantages of water transport:

1. It is the cheapest mode of transport.
2. It is most suitable for heavy loads.

Question 26.
A transport which is useful in hilly and remote areas. It is a means of transport in naval lifting device. What does it mean?
Answer:
It is the type of transport called pack animals. Animals like horse, mule, donkey, camel and elephant are known as pack animals. They are used for carrying small loads in backward areas, hilly tracks, forest regimes and deserts. They serve areas which are inaccessible to modem means of transport.

Question 27.
What is unlimited liability?
Answer:
The liability of the proprietor for the debts of the business is unlimited. The creditors have the right to recover their dues even from the personal property of the proprietor in case the business assets are not sufficient to pay their debts.

Question 28.
What are the services included in service business?
Answer:
Educational, medical, hospitality and banking are the services included in service businesses. Bank service is the nerve center of industry and commerce in a country.

Question 29.
What is meant by Marine Insurance?
Answer:
Marine insurance is a contract of insurance under which the insurer undertakes to indemnify the insured against marine losses. The insured pays the premium for the insurer’s guarantee to make good the looses arising from marine perils. Marine perils may be damage of ship, fire, etc.

Question 30.
What is credit co – operatives?
Answer:
Co – operative credit societies are societies formed for providing short-term financial help to their members. Agriculturists, artisans, industrial workers, salaried employees, etc., form these credit societies.

PART – III

Answer any seven questions in which question No. 40 is compulsory. [7 × 3 = 21]

Question 31.
The functions of commercial banks are:
(a) Primary functions
(b) Secondary functions. Secondary functions may be of agency and general utility functions? Describe any three utility services?
Answer:
General utility functions:

1. Accepting bills on behalf of customers: Banks accept bills on behalf of customers and make payments to the foreign exporter.
2. Issue of demand drafts and Banker’s cheques: Demand drafts and banker’s cheques are issued to the public and customers.
3. Safety lockers: Valuable documents, jewels can be kept in a vault provided by the bank for rent.

Question 32.
Goods are manufactured in one place and it may be demanded throughout the world. Goods may reach the consumers by a number of middlemen. Who is the first middleman in the trade? Explain any three features of that middleman?
Answer:
The first middleman in the trade or distribution is called wholesaler. A wholesaler buys goods directly from manufacturers and sells them to the retailers.

Features:

1. Wholesalers buy goods directly from producers.
2. Wholesalers buy goods in large quantities and sell in small quantities.
3. Wholesalers sell different varieties of a particular kind of product.

Question 33.
The importer places the order either directly or through an indent house. It is known as indent. Indent may be of three types. What are the three types of indents? Explain?
Answer:
There are three types of indent:

1. Open Indent: It gives complete freedom to exporter to choose type of goods, price, quality, method of packing, etc.
2. Closed Indent: It does not give any freedom to exporter. Importer specifies the type of goods, price, quality, etc.
3. Confirmatory Indent: An indent is to be confirmed by importer/his agent and the final indent is sent by importer thereafter.

Question 34.
Explain the differences between Direct tax and Indirect tax?
Answer:

Question 35.
Mention the importance of banking service?
Answer:
Banking service is the nerve center of industry and commerce in a country. It plays a vital role by providing the money required for their regular functioning and development. There are many types of banks rendering different types of services.

Question 36.
This organisation is useful to the farmers in a village. It helps in the purpose of cultivation. Identify the form of organisation and briefly explain about it?
Answer:
This form of organisation is ‘co-operative farming societies’. The societies in a village collect their land together for the purpose of cultivation, purchase the inputs for cultivation and market the crops for the sales.

Question 37.
State the meaning of retail trade?
Answer:
Retail trade deals with the distribution of goods in small quantities to the end consumers. It represents the final stage in the distribution where goods are transferred from the hands of manufacturers or wholesalers to the users. If the sales are made directly to the end consumers it will be considered as retailing.

Question 38.
What is the classification of foreign trade?
Answer:
Types of Foreign Trade:

1. Import Trade: Import trade means buying goods from a foreign country for domestic use.
2. Export Trade: Export trade means the sale of domestic goods to foreign countries.
3. Entrepot Trade: Entrepot trade means importing of goods from one country and exporting the same to foreign countries.

Question 39.
What are the various rules regarding damages?
Answer:
Generally in the following cases, the court grants specific performance:

1. When the act agreed to be done is such that compensation in money for its non-performance is not sufficient.
2. When it is probable that compensation in money cannot be received for the non-performance of the act agreed to be done.
3. When there is no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done.

Question 40.
The scheme was introduced by the RBI in August 1996. These are small private sector banks established in rural and semi urban areas. What is the name of the bank? Explain?
Answer:
Local Area Bank (LAB) scheme was introduced by the RBI in August 1996. LABs are small private sector banks established in rural and semi-urban areas. Each bank serves two or three adjoining districts only. Their main objective is to mobilise rural savings (accept deposits) and invest them in the same areas.

Examples:

1. Coastal Local Area Bank, Vijayawada, Andhra Pradesh.
2. Subhadra Local Area Bank Limited, Kolhapur, Maharashtra

PART – IV

Answer all the questions. [7 × 5 = 35]

Question 41.
(a) Discuss the advantages of transport?
Answer:
Advantages of railway transport:

1. Railways are well suited for carrying heavy and bulky goods over long distances.
2. It can provide long distance travel throughout the day and night with unbroken services.

Advantages of inland waterways:

1. It is considered as the cheapest mode of transport among the other modes of transport.
2. It is most suitable for heavy loads.

Advantages of air transport:

1. It provides a regular, convenient, efficient and quick service.
2. Perishable goods like fruits, vegetables, egg, meat, etc., can be transported quickly.

[OR]

(b) Discuss the causes of risk?
Answer:
Business risk arises due to a variety of causes which are classified as follows:
1. Natural Causes:
Human beings have little control over natural calamities like flood, earthquake, lightning, heavy rains, famine, etc. These result in heavy loss of life, property, and income in business.

2. Human Causes:
Human causes include such unexpected events like dishonesty, carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots, management inefficiency, etc.

3. Economic Causes:
These include uncertainties relating to demand for goods, competition, price, collection of dues from customers, change of technology or method of production, etc. Financial problems like rise in interest rate for borrowing, levy of higher taxes,, etc., also come under this type of causes as they result in higher unexpected cost of operation of business.

4. Other Causes:
These are unforeseen events like political disturbances, mechanical failures such as the bursting of boiler, fluctuations in exchange rates, etc. which lead to the possibility of business risks.

Question 42 (a).
Sole proprietorship is a form of business organisation in which an individual introduces his own capital, uses his own skill and intelligence in the management of the business? Explain the characteristics of a sole trader?
Answer:
Business owned and controlled by a single person is known as sole trading business.

The following are the characteristics of a sole trader:

1. Ownership by one man: This is owned by single person. The sole trader contributes the required capital.
2. Freedom of work and Quick decisions: The sole trader is the owner, so he need not consult with others. Hence he can take quick decision.
3. Unlimited liability: When his business assets are not sufficient to pay off the business debts he has to pay from his personal property.
4. Enjoying Entire Profit: All the benefits earned by the sole trader is enjoyed by him alone.
5. Absence of Government Regulation: A sole trading concern is free from Government regulations. No legal formalities are to be observed in its formation and management.
6. Maintenance of Secrecy: Since the trader manages all the affairs of the business, the secrecy can be maintained easily.

[OR]

(b) Partnership is the relation between persons who have agreed to share the profits of a business carried on by all. It is the result of an agreement. Closing of business is also by an agreement. It is called Dissolution of Partnership. Explain the dissolution of partnership firm without the order of the court?
Answer:
Dissolution of a partnership firm takes place in two ways:

1. Without the order of the court and
2. By the order of the court

1. Without the order of the court:

1. By agreement or mutual consent: A firm may be dissolved when all the partners agree to close the affairs of the firm.
2. By insolvency of all the partners but one: If any one of the partners is adjudged as insolvent, it is necessary to dissolve the firm.
3. When the objective becomes illegal: When the business carried on by the partnership becomes illegal, the partnership firm is automatically dissolved.
4. By notice of dissolution: In the case of partnership at will, if any partner gives in writing to close the firm, the firm will be dissolved.
5. On certain contingencies:
   • On the expiry of the period of the firm.
   • On the completion of a business.
   • On the death of a partner.
   • On the retirement of a partner.
   • On the insolvency of a partner.

Question 43 (a).
What are the features of public corporation?
Answer:
1. Special Statute:
A public corporation is created by a special Act of the Parliament or the State Legislature. The Act defines its powers, objectives, functions and relations with the ministry and the Parliament (or State Legislature).

2. Separate Legal Entity:
A public corporation is a separate legal entity with perpetual succession and common seal It has an existence, independent of the Government. It can own property; can make contracts and file suits, in its own name.

3. Capital Provided by the Government:
The capital of a public corporation is provided by the Government or by agencies controlled by the government. However, many public corporations have also begun to raise money from the capital market.

4. Financial Autonomy:
A public corporation enjoys financial autonomy. It prepares its own budget; and has authority to retain and utilize its earnings for its business.

5. Management by Board of Directors:
Its management is vested in a Board of Directors, appointed or nominated by the Government. But there is no Governmental interference in the day-to-day working of the corporation.

[OR]

(b) Partnership is formed according to Partnership Act. There are various kinds of partners based on capital and administration. Explain any five kinds of partners?
Answer:
Partnership is formed by agreement. In this partnership, the member in a firm is called as partner. There are various kinds of partners. They are as follows:

1. Active partner:
A partner who takes an active part in the conduct of the partnership business is known as an active partner.

2. Sleeping or Dormant partner:
A partner contributes capital and shares in the profits or losses of the firm, but does not take part in the management of the business is known as sleeping partner.

3. Nominal partner:
Such a partner neither contributes any capital nor is he entitled to manage the affairs of the business. He lends only his name to strengthen the firm.

4. Partner in profits only:
When a person joins a firm as a partner on the condition that he is entitled to share profits in the firm, he is called as a partner in profits only.

5. Secret partner:
A secret partner is one whose association is not known to the general public.

Question 44 (a).
Explain various types of insurance?
Answer:
Insurance covers various types of risks. All contract of insurance can be broadly classified as follows:

1. Life Insurance (or) Life Assurance
2. Non – life Insurance (or) General Insurance

It can be further classified into:

1. Fire Insurance
2. Marine Insurance
3. Health Insurance and
4. Miscellaneous Insurance

1. Life Insurance:
Life Insurance may be defined as a contract in which the insurance company called insurer undertakes to insure the life of a person called assured in exchange of a sum of money called premium which may be paid in one lump sum or monthly, quarterly, half yearly or yearly and promises to pay a certain sum of money either on the death of the assured or on expiry of certain period.

2. Non – Life Insurance or General insurance:
It refers as the insurance not related to human but related to properties.

3. Fire Insurance:
Fire insurance is a contract whereby the insurer, in consideration of the premium paid, undertakes to make good any loss or damage caused by a fire during a specified period upto the amount specified in the policy.

4. Marine Insurance:
Marine insurance is a contract of insurance under which the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses. The insured pays the premium in consideration of the insurer’s (underwriter’s) guarantee to make good the losses arising from marine perils or perils of the sea.

5. Health Insurance:
In mid 80’s, most of the hospitals in India were government owned and treatment was free of cost. With the advent of Private Medical Care, the need for Health Insurance was felt and various Insurance Companies introduced Health Insurance as a Product. Presently the health insurance exists primarily in the form of ‘Mediclaim policy’.

[OR]

(b) Explain the functions of retailers?
Answer:

1. Buying: A retailer buys a wide variety of goods from different wholesalers after estimating customer’s demand.
2. Storage: A retailer maintains a ready stock of goods and displays them in the shop.
3. Selling: The retailer sells the goods in small quantities according to the demand taste and preference of consumers.
4. Grading and Packing: The retailer grades the goods which are not graded by manufacturers and wholesalers.
5. Risk – bearing: A retailer always keeps stock of goods in anticipation of demand and bears the risk of loss due to fire, theft, spoilage, price fluctuations, etc.
6. Transportation: Retailers often carry goods from manufacturers to their retail outlets.
7. Financing: Some retailers grant credit facilities to his customers and provide the facility of return or exchange of goods.

Question 45 (a).
Explain any four personal investment avenues?
Answer:
1. Public Provident Fund (PPF):
It is the safest long – term investment option for the investors in India. It is totally tax – free. PPF account can be opened in bank or post office. The money deposited cannot be withdrawn before 15 years and an investor can earn compound interest from this account.

However the investor can extend the time frame for the next five years if the investor does not opt to withdraw the amount matured for payment at maturity date. PPF investor can take loan against PPF account when he/she experiences financial difficulties.

2. Mutual Funds:
An individual investor who wants to invest in equities and bond with a balance of risk and return generally can invest in mutual funds. Nowadays people invest in stock markets through a mutual fund. Systematic investment plan is one of the best investment options in India.

3. Direct Equity or Share Purchase:
An individual can opt for investment in shares. But he has to analyse the market price of various shares traded in stock exchange, reputation of the company, consistency in the payment of dividend, the nature of the project undertaken by the company, growth prospects of industry in which a company is operating, before investing in shares. If the investment is made for a long time, it may yield good return.

4. Real Estate Investment:
Real estate is one of the fastest growing sectors in India. Buying a flat or plot is supposed to be the best decision amongst the investment options. The value of the real asset may increase substantially depending upon the area of location and other support facilities available therein.

[OR]

(b) Explain any four warehousing documents?
Answer:
Warehouses means a place where goods are stored for future use. For keeping the goods, the various documents are needed; they are as follows:

1. Warehousing Warrants: It is a document issued in favour of goods by the warehouse keeper. It is also used as a document of title to goods.
2. Warehouse Keeper’s receipt: It is a document issued by the warehouse keeper, which acknowledges there receipt of goods from the owner of the goods.
3. Dock Warrant: Dock warrant is a document of title of goods issued by the dock authorities. This document certifies that the dock authorities hold the goods.
4. Dock Receipt: Dock receipt is an acknowledgement of receipt of goods issued by the dock authorities to the owner of the goods. It is not a document of title to goods.
5. Delivery Order: This is a document through which the depositor directs the warehouse keepers to deliver the goods to the party mentioned in the document.

Question 46 (a).
Industry means, which is connected with conversion of raw materials into finished goods. It may be of various types. Explain: (a) Analytical industry (b) Genetic industry and (c) Construction industry?
Answer:

1. Analytical Industry: It analyses and separates different elements from the same materials, as in the case of oil refinery.
2. Genetic Industries: These industries remain engaged in breeding plants and animals for their use in further reproduction. The seeds, nursery companies, poultry, diary, piggery, hatcheries, nursery, fisheries, apiary etc are classic examples of genetic industries.
3. Construction Industries: These industries are involved in the ,construction of building, dams, bridges, roads, as well as tunnels and canals.

[OR]

(b) Explain the procedure for the registration of partnership firm?
Answer:

1. Name of the firm.
2. The principal place of business.
3. Name of other places where the firm carried on business.
4. Names and addresses of all the partners.
5. The date on which each partner joined the firm.
6. The duration of the firm.

This statement signed by all the partners should be produced to the Registrar of Firms along with the necessary registration fee of Rs.3. Any change in the above particulars must be communicated to the Registrar within 14 days of such alteration.

Question 47 (a).
Partnership is formed by agreement. It is desirable to have a written agreement. What is the name of the agreement? Explain the contents of it?
Answer:

1. Name: Name of the Firm.
2. Nature of Business: Nature of the proposed business to be carried on by the partners.
3. Duration of Partnership: Duration of the partnership business whether it is to be run for a fixed period of time or whether it is to be dissolved after completing a particular venture,
4. Capital Contribution: The capital is to be contributed by the partners. It must be remembered that capital contribution is not necessary to become a partner for, one contribute his organizing power, business acumen, managerial skill etc., instead of capital.
5. Withdrawal from the Firm: The amount that can be withdrawn from the firm by each partner.
6. Profit/Loss Sharing: The ratio in which the profits or losses are to be shared. If the profit sharing ratio is not specified in the deed, all the partners must share the profits and bear the losses equally.
7. Interest on Capital: Whether any interest is to be allowed on capital and if so, the rate of interest.
8. Rate of Interest on Drawing: Rate of interest on drawings, if any.
9. Loan from Partners: Whether loans can be accepted from the partners and if so the rate of interest payable thereon.
10. Account Keeping: Maintenance of accounts and audit.
11. Salary and Commission to Partners: Amount of salary or commission payable to partners for their services. (Unless this is specifically provided, no partner is entitled to any salary).
12. Retirement: Matters relating to retirement of a partner. The arrangement to be made for paying out the amount due to a retired or deceased partner must also be stated.
13. Goodwill Valuation: Method of valuing goodwill on the admission, death or retirement of a partner.
14. Distribution of Responsibility: Distribution of managerial responsibilities. The work that is entrusted to each partner is better stated in the deed itself.
15. Dissolution Procedure: Procedure for dissolution of the firm and the mode of settlement of accounts thereafter.
16. Arbitration of Dispute: Arbitration in case of disputes among partners. The deed should provide the method for settling disputes or difference of opinion. This clause will avoid costly litigations.

[OR]

(b) Explain any five principles of co – operatives?
Answer:
1. Voluntary and Open Membership:
Co – operatives are voluntary organisations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2. Democratic Member Control:
Co – operatives are democratic organisations controlled by their members those who buy the goods or use the services of the co – operative who actively participate in setting policies and making decisions.

3. Member’s Economic Participation:
Members contribute equally to, and democratically control, the capital of the co – operative. This benefits members in proportion to the business they conduct with the co-operative rather than on the capital invested.

4. Autonomy and Independence:
Co – operatives are autonomous, self – help organisations controlled by their members. If the co – operative enters into agreements with other organisations or raises capital from external sources, it is done so based on terms that ensure democratic control by the members and maintains the co – operative’s autonomy.

5. Education, Training, and Information:
Co – operatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Members also inform the general public about the nature and benefits of cooperatives.

Students can Download Tamil Nadu 11th Commerce Model Question Paper 4 English Medium Pdf, Tamil Nadu 11th Commerce Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Commerce Model Question Paper 4 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 2:30 Hours
Maximum Marks: 90

PART – I

Choose the correct answer. Answer all the questions. [20 × 1 = 20]

Question 1.
……………………….. is a special type of bond issued in the currency other than the home currency.
(a) Government bond
(b) Foreign currency convertible bond
(c) Corporate bond
(d) Investment bond
Answer:
(b) Foreign currency convertible bond

Question 2.
……………………. acts as connective link between the producer and the consumer.
(a) Trade
(b) Industry
(c) Commerce
(d) Business
Answer:
(a) Trade

Question 3.
From the following which is not a recent trend in transportation?
(a) Metro rail
(b) Pipeline transport
(c) Bullock carts
(d) Ropeway transport
Answer:
(c) Bullock carts

Question 4.
Minimum how much amount can be transferred through RTGS?
(a) Any amount
(b) Rs 50,000
(c) Rs 2 lakhs
(d) Rs 5 Lakhs
Answer:
(c) Rs 2 lakhs

Question 5.
Goods are imported for the purpose of exporting to another country is termed as ……………………….
(a) Import trade
(b) Export trade
(c) Entrepot trade
(d) Internal trade
Answer:
(c) Entrepot trade

Question 6.
Agriculture income earned in india is ………………………..
(a) Fully taxable
(b) Fully exempted
(c) Not considered for income
(d) None of the above
Answer:
(b) Fully exempted

Question 7.
An …………………………. is a document prepared by the importer and sent to the exporter to buy the goods.
(a) Invoice
(b) Indent
(c) Enquiry
(d) Charter party
Answer:
(b) Indent

Question 8.
Which of the parties cannot demand performance of promise?
(a) Promisee
(b) Any of the joint promisees
(c) Death of a promisee, his legal representative
(d) Stranger to the contract
Answer:
(d) Stranger to the contract

Question 9.
The income paid to the (mercantile agent), broker is ………………………..
(a) Profit
(b) Brokerage
(c) Commission
(d) Salary
Answer:
(b) Brokerage

Question 10.
Ethics is important for ……………………….
(a) Top management
(b) Middle – level management
(c) Non – managerial employees
(d) All of them
Answer:
(d) All of them

Question 11.
……………………. is the oldest form of transport found in hilly areas, forest areas in remote places.
(a) Bullock carts
(b) Road transport
(c) Motor lorries
(d) Pathways transport
Answer:
(d) Pathways transport

Question 12.
The document which invites the public to buy the shares and debentures is known as …………………………
(a) Memorandum of Association
(b) Articles of Association
(c) Prospectus
(d) Partnership articles
Answer:
(c) Prospectus

Question 13.
Which one of the following is not correctly matched?
(a) Minimum two members – Partnership firm
(b) Minimum paid up capital Rs 100000 – Private company
(c) Voluntary Membership – Co – operatives
(d) 51% of paid up capital – Foreign company
Answer:
(d) 51% of paid up capital – Foreign company

Question 14.
ABC jointly promised to pay Rs. 50000 to D. Before performance of the contract, ‘C’ dies. Here the contract ………………………
(a) Becomes void on C’s death.
(b) Should be performed by A and B along with C’s legal representative.
(c) Should be performed by A and B alone.
(d) Should be renewed between A, B and D.
Answer:
(b) Should be performed by A and B along with C’s legal representative.

Question 15.
Airport Authority of India, is a public enterprise. Identify the form of organisation.
(a) Statutory corporations
(b) Departmental undertakings
(c) Multi – national corporations
(d) State – owned company
Answer:
(b) Departmental undertakings

Question 16.
Debenture holders are entitled to a fixed rate of ………………………
(a) Dividend
(b) Profits
(c) Interest
(d) Ratio
Answer:
(c) Interest

Question 17.
The State Bank of India came into being in ………………………
(a) 1995
(b) 1945
(c) 1955
(d) 1965
Answer:
(c) 1955

Question 18.
Match List – I with List – II and select the correct answer using the codes given below:

Answer:
Codes:

Question 19.
An ……………………… is a document prepared by the importer and sent to the exporter to buy the goods.
(a) Invoice
(b) Indent
(c) Enquiry
(d) Charter party
Answer:
(b) Indent

Question 20.
Point out the wrong statement from the following.
(a) Extractive industries extract products from natural resources.
(b) Genetic industries are engaged in breeding plants and animals for their use in further reproduction
(c) Manufacturing industries are engaged in producing goods through processing of raw material.
(d) Construction industries are involved in the successive stages for manufacturing sugar and paper, etc.
Answer:
(d) Construction industries are involved in the successive stages for manufacturing sugar and paper, etc.

PART – II

Answer any seven questions in which question No. 30 is compulsory. [7 × 2 = 14]

Question 21.
It is the oldest form of organisation in public enterprises. It is run by the particular department. What is the name of the organisation? How is it controlled?
Answer:
Departmental form of organisation of managing state enterprises is the oldest form of organisation. Under departmental form of organisation, a public enterprise is run as a separate full – fledged ministry or as a major sub-division of a department of the Government.

Question 22.
Banks which do not provide regular service, and are controlled by stock exchange, What is the name of the bank? Write a short note about the bank?
Answer:
The name of the bank is Merchant bank. A commercial bank or its subsidiary may offer services like project counselling, underwriting etc for starting a company. It is called merchant banking.

Question 23.
What is meant by chartered company?
Answer:
Chartered companies are established by the King or Queen of a country. Powers and privilege of chartered company are specified in the charter. Power to cancel the charter is vested with King/Queen.

Question 24.
Some co – operative societies are formed for providing short term finance to the members. It is useful to the farmers especially. What is the name of the society?
Answer:
Cooperative credit societies are societies formed for providing short-term financial help to their members. Agriculturists, artisans, industrial workers, salaried employees, etc., form these credit societies.

Question 25.
Give any two functions of warehouses?
Answer:

1. Storage
2. Price stabilization
3. Equalization of demand and supply

Question 26.
Define the term‘factoring’?
Answer:
The term ‘factoring’ is derived from a Latin term ‘facere’ which means ‘to make or do’. Factoring is an arrangement wherein the trade debts of a company are sold to a financial institution at a discount.

Question 27.
State the meaning of Mail order business?
Answer:
Mail order business means that the buying and selling is through mail. There is no personal contact between the buyers and sellers in this type of trading.

Question 28.
Explain the term – Credit card?
Answer:
Banks issue credit cards to customers and other eligible persons. With this card, the holder can purchase goods and services on credit at any shop in India.

Question 29.
What is meant by consumer co-operatives?
Answer:
Consumer co – operatives are organised by consumers. The aim of the consumers co-operative is to supply the quality goods at fair prices. They also supply essential commodities through Public Distribution System (PDS).

Question 30.
What is mutual funds?
Answer:
An individual investor who wants to invest in equities and bond with a balance of risk and return generally can invest in mutual funds. Nowadays people invest in stock markets through a mutual fund.

PART – III

Answer any seven questions in which question No. 40 is compulsory. [7 × 3 = 21]

Question 31.
What are the advantages of company? Explain any three?
Answer:
1. Large Capital:
A company can secure large capital compared to a sole trader or partnership. Large amount of capital is necessary for conducting business on a large scale.

2. Limited Liability:
The liability of a shareholder is limited. The risk of loss is limited to the unpaid amount on the face value of shares held. In the case of a company limited by shares, the liability of a shareholder is restricted to the unpaid amount on the shares held by him.

3. Transferability of Shares:
Transaction of Shares between two individuals is easy. So there is liquidity of investment. Any shareholder can easily convert his shares into money by selling his shares.

Question 32.
What is the necessity for Entrepot trade?
Answer:
Entrepot is necessary because of the following reasons:

1. The country may not have any accessible trade routes connecting the importing country.
2. The goods imported may require further processing or finishing before exporting, and these facilities may be lacking in the exporting or importing country.
3. There may not have any bilateral trade agreement between both the countries.

Question 33.
This is a loan taken by depositing document of title to the property with the banker. What is the name of the loan? Also how the banker grants the loan to the customers?
Answer:
The name of the loan is ‘hypothecation’. In this type of loan, the customer has to deposit the document of title to the property with the banker. But the physical possession of the property is with the borrower. If the loan is not paid, the lender will sell the property and can receive the loan amount.

Question 34.
What are the objectives of GST?
Answer:

1. To create a common market with uniform tax rate in India. (One Nation, One Tax, One Market)
2. To eliminate the cascading effect of taxes, GST allows set – off of prior taxes for the same transactions as input tax credit.
3. To boost Indian exports, the GST already collected on the inputs will be refunded and thus there will be no tax on all exports.
4. To increase the tax base by bringing more number of tax payers and increase tax revenue.
5. To simplify tax return procedures through common forms and avoidance of visiting tax departments.
6. To provide online facilities for payment of taxes and submission of forms.

Question 35.
Cargo vessels which do not follow set routes and timetable?
What is the kind and name of the transport?
Answer:
The name of the transport is Tramps. They are a kind of ocean going ships. They are essentially cargo vessels. They have no set routes. They do not follow any timetable. They sail only when they get sufficient load.

Question 36.
What is Gross Total Income?
Answer:
Income from the five heads, namely – Salaries, House Property, Profits and Gains of Business or Profession, Capital Gains, and Other Sources – is computed separately according to the provisions given in the Act. Income computed under these heads shall be aggregated after adjusting past and present losses and the total so arrived at is known as ‘Gross Total Income’.

Question 37.
The retailers having permanent establishment and deal in large scale are called fixed shop large scale retailers. There are various types of large scale retailers. What is telemarketing? Explain the types?
Answer:
Purchasing and selling of goods through telephones are called Telemarketing. It is divided into two types.

1. Telephonic marketing:
Potential customers are contacted through mobile to provide information about the products. Willing customers visit the office and place orders.

2. Television marketing:
In this method, customers are attracted by providing all information of product or service through TV demonstrations. Customers can contact through phone or website to place order.

Question 38.
Distinguish between hire purchase system and installment system of selling?
Answer:

Question 39.
Explain any three features of Self Help Groups?
Answer:
Self Help Group is a small informal voluntary association created for the purpose of enabling members to reap economic benefit out of mutual help, solidarity, and joint responsibility. Features of Self Help Groups:

1. The motto of every group members should be “saving first – credit latter”.
2. Self Help Group is homogeneous in terms of economic status.
3. The groups need not be registered.

Question 40.
What are the objectives of GST?
Answer:

1. To create a common market with uniform tax rate in India. (One Nation, One Tax, One Market)
2. To eliminate the cascading effect of taxes, GST allows set-off of prior taxes for the same transactions as input tax credit.
3. To boost Indian exports, the GST already collected on the inputs will be refunded and thus there will be no tax on all exports.
4. To increase the tax base by bringing more number of tax payers and increase tax revenue.
5. To simplify tax return procedures through common forms and avoidance of visiting tax departments.
6. To provide online facilities for payment of taxes and submission of forms.

PART – IV

Answer all the questions. [7 × 5 = 35]

Question 41 (a).
Write short notes on:

1. Owner’s funds
2. Borrowed funds

Answer:
1. Owner’s Funds:
Owner’s funds mean funds which are provided by the owner of the enterprises who may be an individual, or partners or shareholders of a company.

The profits reinvested in the business (ploughing back of profit or retained earnings) come under owner’s funds. These funds are not required to be refunded during the life time of business enterprise. It provides the owner the right to control the management of the enterprise.

2. Borrowed Funds:
The term ‘borrowed funds’ denotes the funds raised through loans or borrowings. For example debentures, loans from banks and financial institutions, public deposits, trade credit, lease financing, commercial papers, factoring, etc., represent borrowed funds.

1. These borrowed sources of funds provide specific period before which the fund is to be returned.
2. Borrower is under legal obligation to pay interest at given rate at regular intervals to the lender.
3. Generally borrowed funds are obtained on the security of certain assets like bonds, land, building, stock, vehicles, machinery, documents of title to the goods, and the like.

[OR]

(b) What are the advantages of sole trading?
Answer:

1. Easy Formation: No legal formalities are required to initiate a sole trading concern. Any person capable of entering into a contract can start it, provided he has the necessary resources for it.
2. Incentive to Work hard: There is a direct relationship between effort and reward. The fact that the entire profit can be taken by himself without sharing with anybody else induces him to work ceaselessly.
3. Small Capital: Small capital is an important as well as specific advantage of sole proprietorship. Sole proprietor can start business with small capital.
4. Credit Standing: Since his private properties are held liable for satisfying business debts, he can get more financial assistance from others.
5. Personal Contact with the Customers: Since sole proprietor knows each and every customer individually he can supply goods according to their taste and preferences. Thus he can cultivate personal relationship with the customers.
6. Flexibility: The sole trader can easily adjust himself to the changing requirements of his business.

Question 42 (a).
Explain the contents of Articles of Association?
Answer:
Contents of Articles of Association (AOA):

1. Amount of shares, capital, value and type of shares.
2. Rights of each class of shareholders regarding voting, dividend, return of capital
3. Rules regarding issue of shares and debentures
4. Procedures as well as regulations in respect of making calls on shares
5. Manner of transfer of shares
6. Declaration of dividends
7. Borrowing powers of the company
8. Rules regarding the appointment, remuneration, removal of directors
9. Procedure for conducting proxy, quorum, meetings, etc.
10. Procedures concerning keeping of books and audits
11. Seal of the company
12. Procedures regarding the winding up of the company.

[OR]

(b) What are the primary functions of commercial banks?
Answer:
The primary functions of a commercial bank are of three types. They are:

1. Accepting Deposits:
The basic deposit accounts offered by commercial banks are listed below:

A. Demand Deposits:
These deposits are repayable on demand on any day. These consist of –

• Savings Deposits: General public deposit their savings into this account. This account can be opened in one individual’s name or more than one name.
• Current Deposits: This account is suitable for business institutions. Individuals too can open this account. A higher minimum balance should be kept in this account.

B. Time Deposits:
These are repayable after a period. These include –

• Fixed Deposits (FD): Certain amount is deposited for a fixed period for a fixed rate of interest.
• Recurring Deposits (RD): Certain sum is deposited into the account every month for one year or five years or the agreed period. Interest rate is more than savings deposits and almost equal to fixed deposits.

2. Granting Loans and Advances:
Commercial banks lend money in order to earn interest.

A. Advances:

• Overdraft: It is a credit facility extended mostly to current account holding business community customers.
• Cash Credit: It is a secured credit facility given mostly to business institutions. Stock in hand, raw materials, other tangible assets, etc. are provided as collateral.
• Discounting of Bills: Business customers approach banks to discount the commercial bills of exchanges and provide money

B. Loans- Short term and medium term loans are provided by commercial banks against eligible collaterals to business concerns. Examples- housing loan, consumer loan, vehicle loan, educational Loan, jewel loan, etc.

3. Creation of Credit- Apart from the currency money issued by the RBI, the credit money in circulation created by commercial banks influence economic activities of a country to a large extent. Credit money of commercial banks is far greater in volume than the currency money.

Question 43 (a).
What are the disadvantages of MNC?
Answer:

1. Danger for Domestic Industries: MNCs, because of their vast economic power, pose a danger to domestic industries; which are still in the process of development. Domestic industries cannot face challenges posed by MNCs.
2. Transfer of Outdated Technology: Where MNCs transfer outdated technology to host nation, it serves no purpose.
3. No Benefit to Poor People: MNCs produce only those things, which are used by the rich. Therefore, poor people of host countries do not get, generally, any benefit, out of MNCs.
4. Danger to Independence: Initially MNCs help the Government of the host country, in a number of ways; and then gradually start interfering in the political affairs of the host country.
5. Deprivation of Job Opportunity of Local People: MNCs may not generate job opportunities to the people of home country.

[OR]

(b) Explain the organisational structure of RBI?
Answer:
The head office of the RBI is situated in Mumbai. This central office has 33 departments in 2017. It has four zonal offices in Mumbai, Delhi, Calcutta and Chennai functioning under local boards with deputy governors as their heads. It also has 19 regional offices and 11 sub-offices (2017).

The RBI is governed by a central board of directors. The 21 member board is appointed by the Government of India. It consists of:

1. One Governor and four deputy governors appointed for a period of four years,
2. Ten Directors from various fields
3. Two Government officials
4. Four Directors – one each from local boards.

Question 44 (a).
Distinguish between internal and international trade?
Answer:

[OR]

(b) State the features of departmental stores?
Answer:

1. Large Size: A department is a large scale retail showroom requiring a large capital investment by forming a joint stock company managed by a board of directors.
2. Wide Choice: It acts as a universal provider of a wide range of products from low priced to very expensive goods (Pin to Car) to satisfy all the expected human needs under one roof.
3. Departmentally organized: Goods offered for sale are classified into various departments.
4. Facilities provided: It provides a number of facilities and services to the customers such as restaurant, rest rooms, recreation, packing, free home delivery, parking, etc.
5. Centralised purchasing: All the purchases are made centrally and directly from the manufacturers and operate separate warehouses whereas sales are decentralised in different departments.

Question 45 (a).
What are the different types of transportation? Explain?
Answer:
Types of transportation:

(A) Land Transport:
Transport of people and goods by land vehicles is known as Land transport. It is also called as‘Surface Transport’.

• Pack Animals: Animals like horse, mule, donkey, camel, elephant etc., are used for carrying small loads in backward areas, hilly tracks, forest regions and deserts.
• Bullock Carts: It constitutes the predominant form of rural road transport in India for goods traffic and to some extent for passengers’ traffic.
• Road Transport: It is one of the most promising and potent means suitable for short and medium distances.
• Motor lorries and Buses: From the dawn of civilization, people have been endeavoring to form roads and use wheeled vehicles to facilitate transport of men and materials.
• Tramways: Tramways were initially horse drawn, later stearmpowered and now they are electrically operated.
• Railway Transport: The invention of steam engine by James Watt, revolutionized the mode of transport all over the world.
• Recent Trends in Transport: Metro Rail, Monorail, Bullet train, Pipeline Transport, Conveyor Transport, Ropeway transport and Hyper loop transport.

(B) Water Transport:

1. Inland Waterways: Inland Waterways comprise of rivers, canals and lakes. It is also known as internal water transport.
2. Ocean or Sea Transport: Ocean transport has been playing a significant role in development of economic, social and cultural relations among countries of the world.

• Coastal shipping
• Overseas shipping:
• Liner
• Tramps

(C) Air Transport:
Air transport is the fastest and the costliest mode of transport. Commercial air transport is now one of the most prominent modes of overseas transport. Domestic and International flights are the air travels.

[OR]

(b) Explain the principles of insurance?
Answer:
1. Utmost Good Faith:
According to this principle, both insurer and insured should enter into contract in good faith. Insured should provide all the information that impacts the subject matter. Insurer should provide all the details regarding insurance contract.

2. Insurable Interest:
The insured must have an insurable interest in the subject matter of insurance. Insurable interest means some pecuniary interest in the subject matter of the insurance contract.

3. Indemnity:
Indemnity means security or compensation against loss or damages. In insurance, the insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss.

This principle ensures that the insured does not make any profit out of the insurance. This principle of indemnity is applicable to property insurance alone.

4. Causa Proxima:
The word ‘Causa proxima’ means ‘nearest cause’. According to this principle, when the loss is the result of two or more cause, the proximate cause, i.e. the direct. The direct, the most dominant and most effective cause of loss should be taken into consideration. The insurance company is not liable for the remote cause.

5. Contribution:
The same subject matter may be insured with more than one insurer then it is known as ‘Double Insurance’. In such a case, the insurance claim to be paid to the insured must be shared on contributed by all insurers in proportion to the sum assured by each one of them.

6. Subrogation:
Subrogation means ‘stepping the shoes on others’. According to this principle, once the claim of the insured has been settled, the ownership right of the subject matter of insurance passes on to the insurer.

7. Mitigation: In case of a mishap, the insured must take off all possible steps to reduce or mitigate the loss or damage to the subject matter of insurance.

Question 46 (a).
Elucidate any five features of Income Tax?
Answer:
Features of Income Tax in India:
1. Levied as Per the Constitution Income tax is levied in India by virtue of entry No. 82 of list I (Union List) of Seventh Schedule to the Article 246 of the Constitution of India.

2. Levied by Central Government Income tax is charged by the Central Government on all incomes other than agricultural income. However, the power to charge income tax on agricultural income has been vested with the State Government as per entry 46 of list II, i.e., State List.

3. Direct Tax Income tax is direct tax. It is because the liability to deposit and ultimate burden are on same person. The person earning income is liable to pay income tax out of his own pocket and cannot pass on the burden of tax to another person.

4. Annual Tax Income tax is an annual tax because it is the income of a particular year which is chargeable to tax.

5. Tax on Person It is a tax on income earned by a person. The term ‘person’ has been defined under the Income tax Act. It includes individual, Hindu Undivided Family, Firm, Company, local authority, Association of person or body of Individual or any other artificial juridical persons. The persons who are covered under Income tax Act are called ‘assessees’.

[OR]

(b) Write down the functions of IMF?
Answer:

1. It acts as short term credit institution at the international level.
2. It provides machinery for ordinary adjustments of exchange rates.
3. It has a reservoir of currencies of the member countries from which a borrower can borrow currencies of other nations.
4. It promotes economic stability and global growth by encouraging countries adopt sound economic and financial policies.
5. It offers technical assistance and training to help member countries strengthen and implement effective policies. Technical assistance is offered in formulating banking, fiscal, monetary and exchange policies.
6. It helps member countries correct their imbalance in balance of payment.

Question 47 (a).
Describe the importance of international finance?
Answer:

1. International finance helps in calculating exchange rates of various currencies of nations and the relative worth of each and every nation in terms thereof.
2. It helps in comparing the inflation rates and getting an idea about investing in international debt securities.
3. It helps in ascertaining the economic status of the various countries and in judging the foreign market.
4. International Financial Reporting System (IFRS) facilitates comparison of financial statements made by various countries.
5. It helps in understanding the basics of international organisations and maintaining the balance among them.

[OR]

(b) What are the advantages of Railway transport?
Answer:

1. Railways are well suited for carrying heavy and bulky goods over long distances.
2. It provides long distance travel throughout the day and night service.
3. It can provide better production and safety to the goods than motor transport.
4. Though initial investment is large, in the long run the operating expenses will be very low in railways and it will prove a cheaper mode of transport.
5. It has regular schedule of timing and is available throughout the year.
6. It provides unaffected services whether rainy or sunny weather conditions.

Students can Download Tamil Nadu 11th Commerce Model Question Paper 3 English Medium Pdf, Tamil Nadu 11th Commerce Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Commerce Model Question Paper 3 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 2:30 Hours
Maximum Marks: 90

PART – I

Choose the correct answer. Answer all the questions. [20 × 1 = 20]

Question 1.
Which bank has the power to issue bank notes?
(a) Central bank
(b) Commercial bank
(c) Co – operative banks
(d) Foreign banks
Answer:
(a) Central bank

Question 2.
Which one is not land transport?
(a) Pack animals
(b) Bullock cart
(c) Tramways
(d) Liner
Answer:
(d) Liner

Question 3.
Occupation of a Doctor is called …………………..
(a) Employment
(b) Business
(c) Profession
(d) Sole proprietor
Answer:
(c) Profession

Question 4.
Match List – I with List – II and select the correct answer using the codes given below:

Answer:
Codes:

Question 5.
Primary industries may be divided as follows:
(I) Extractive industries
(II) Manufacturing industries
(III) Genetic industries
(IV) Construction industries
(a) (I) and (II)
(b) (II) and (III)
(c) (I) and (III)
(d) (I) and (IV)
Answer:
(c) (I) and (III)

Question 6.
Centralised control in MNCs implies control exercised by ………………………
(a) Branches
(b) Subsidiaries
(c) Headquarters
(d) Parliament
Answer:
(c) Headquarters

Question 7.
Large scale fixed retailers include ………………………..
(a) Super markets
(b) Speciality stores
(c) General stores
(d) Second shops
Answer:
(a) Super markets

Question 8.
Exim Bank was set up in the year ……………………..
(a) 1949
(b) 1972
(c) 1935
(d) 1982
Answer:
(d) 1982

Question 9.
Social responsibility towards employees represents the following except ………………………
(a) Reasonable remuneration
(b) Proper facilities
(c) Social security
(d) Exploitation
Answer:
(d) Exploitation

Question 10.
Which one of the following is not correctly matched?
(a) Imperial bank – Mumbai
(b) RBI – 2013
(c) RTGS – Commercial bank
(d) Development banks – SBI
Answer:
(d) Development banks – SBI

Question 11.
Enterprises operating in several countries but managed from one country is termed as ………………………
(a) Government company
(b) Multinational company
(c) Private company
(d) Joint venture
Answer:
(b) Multinational company

Question 12.
The money can be withdrawn from the PPF, after …………………….. years.
(a) 14
(b) 13
(c) 15
(d) 12
Answer:
(c) 15

Question 13.
The exporters appoint a ……………………. to fulfill the customs formalities.
(a) Clearing agent
(b) Forwarding agent
(c) Commission agent
(d) Factor
Answer:
(b) Forwarding agent

Question 14.
The compensation given for breach of contract is ………………………..
(a) Damage
(b) Remuneration
(c) Money
(d) Cheque
Answer:
(a) Damage

Question 15.
Ethics is important for ………………………
(a) Top management
(b) Middle level managers
(c) Non – managerial employees
(d) All of them
Answer:
(d) All of them

Question 16.
World Bank is located at ……………………..
(a) Washington DC
(b) Newyork
(c) Tokyo
(d) Hongkong
Answer:
(a) Washington DC

Question 17.
Which of the following is not a function of a central bank?
(a) Guiding and regulating the banking system of country
(b) Deal with the general public
(c) Acts as government banker
(d) Maintains deposit accounts of all other bank
Answer:
(b) Deal with the general public

Question 18.
Dispersal of decision making power to branches/affiliates/subsidiaries is by the head officer represents ………………………..
(a) Centralisation
(b) Decentralisation
(c) Power
(d) Integration
Answer:
(b) Decentralisation

Question 19.
The document which authorises to deliver the goods either in part or full is called ………………………….
(a) Warehouse warrant
(b) Dock receipt
(c) Dock warrant
(d) None of these
Answer:
(c) Dock warrant

Question 20.
Which of the following holder is given voting rights?
(a) Debentures
(b) Preference shares
(c) Equity shares
(d) Bonds
Answer:
(c) Equity shares

PART – II

Answer any seven questions in which question No. 30 is compulsory. [7 × 2 = 14]

Question 21.
Warehouses mean the places to store the goods for future purpose. It renders invaluable services to the society by performing the various functions. Give any three functions of warehouses?
Answer:

1. Storage
2. Price stabilization
3. Equalization of demand and supply

Question 22.
Murugan is the famous auditor in Madurai. Identify the type of economic activity highlighted in the case. Write the meaning of it?
Answer:
The economic activity highlighted in this case is profession. Profession means something which is more than a job. For the profession a special qualification is necessary. The income from the profession is professional fee. It may be different from one profession to another profession.

Question 23.
Define commerce?
Answer:
According to Evelyn Thomas, “Commercial operations deal with the buying and selling of goods, the exchange of commodities and the contribution of finished products”.

Question 24.
Insurance covers different types of risks. It can be broadly classified into

1. Life insurance
2. Non – life insurance. What is the other name for Non – life insurance? How it is classified?

Answer:
The other name for Non – life insurance is called as General insurance. It can be further classified into:

1. Fire insurance
2. Marine insurance
3. Health insurance
4. Miscellaneous insurance

Question 25.
Write any two differences between warehouse warrant and warehouse receipt?
Answer:

Question 26.
Briefly explain the need for Debit card?
Answer:
ATM card is also called debit card. This card is more useful in purchase of goods and services anywhere in India if the shop maintains a swiping machine facility.

Question 27.
What is a Statutory Company?
Answer:
Companies are established by a Special Act passed in Parliament or State Assembly. Rules relating to day – to – day management of statutory companies are specified in the Articles of Association (AOA). Examples: LIC, RBI, Railways, etc.

Question 28.
Write any two advantages of MNC?
Answer:
1. Low Cost Labour:
MNC set up their facilities in low cost countries and produce goods/services at lower cost.

2. Quality Products:
The resource, experience and expertise of MNCs in the sphere of research and development enables the host country to establish its research and development system which helps it in producing quality goods and services at least possible cost.

Question 29.
How the RBI is acting as banker to the government?
Answer:
RBI is acting as a banker to the government. It is one of the traditional functions of RBI. It accepts money into central and state government’s accounts and make payments on their behalf. It manages the governments debts. It advises the government and the terms of new loans.

Question 30.
Write short note on debentures?
Answer:
Debentures are an important instrument for raising long term debt capital. A company can raise funds through issue of debentures which bear a fixed rate of interest.

PART – III

Answer any seven questions in which question No. 40 is compulsory. [7 × 3 = 21]

Question 31.
At first the co – operative movement was started by Robert Owen in the year 1844. Who are Rochdale pioneers?
Answer:
At first, the cooperative movement was started by Robert Owen, in the year 1844. He formed a consumer’s cooperative society in England with 28 workers as members, called “Rochdale Society of Equitable Pioneers”.

Question 32.
List the steps in factoring process?
Answer:
Factoring is derived from a Latin term “facere” which means ‘to make or do’. Factoring is an arrangement wherein the trade debts of a company are sold to a financial institution at a discount.

Factoring Process:

1. The firm enters into a factoring arrangement with a factor, which is generally a financial institution.
2. Whenever goods are sold on credit basis, an invoice is prepared and a copy of the same is sent to the factor.
3. The debt amount due to the firm is transferred to the factor through assignment.
4. On the due date, the amount is collected by the factor from the customer.
5. After retaining the service fees, the remaining amount is sent to the firm by the factor.

Question 33.
List out the products produced by MSME in Tamil Nadu?
Answer:
In Tamil Nadu, MSMEs sector produces a wide variety of products in almost all fields. The prominent among them are the textile, electronic products, engineering products, auto ancillaries, leather products, chemicals, plastics, garments, jewellery etc.

Question 34.
What do you understand by Burglary Insurance?
Answer:
Burglary Insurance: This policy comes under the category of insurance of property. Any loss of damage due to theft, larceny, burglary, house breaking and acts of nature are covered by this policy. Compensation of actual loss is done.

Question 35.
It is the oldest form of organisation. It is administrated by a separate department. What is the form of organisation? Describe any three features of this organisation?
Answer:
1. Formation:
A departmental undertaking is established either as a separate full-fledged ministry or as a sub-division of a ministry (i.e. department) of the Government.

2. No Separate Entity:
A departmental undertaking does not have an independent entity distinct from the Government.

3. Accounting and Audit:
The departmental undertaking is subject to the normal budgeting, accounting and audit procedures, which are applicable to all Government departments.

Question 36.
Mention any three rights of partners?
Answer:
Rights of Partners;

1. Right to take part in business: Every partner has a right to take part in the management of the business.
2. Right to consult: Every partner has the right to consult in all the matters concerning the firm.
3. Right to share profit: Every partner is entitled to share the profits in the agreed ratio. If no ratio is specified in the deed, the profit must be shared equally.

Question 37.
Explain the features of general stores?
Answer:
General Stores sell a wide variety of products under one roof, most commonly found in a local market and residential areas to satisfy the day – to – day needs of the customers residing in nearby localities. They remain open for long hours at convenient timings and often provide credit facilities to their regular customers.

Question 38.
It is a policy taken as a safeguard against the medical costs. It is a contract between an insurer and an individual or a group. What is the name of the policy? Mention a few points about this?
Answer:
In mid 80’s, most of the hospitals in India were government owned and treatment was free of cost. With the advent of Private Medical Care, the need for Health Insurance was felt and various Insurance Companies introduced Health Insurance as a Product. Presently the health insurance exists primarily in the form of ‘Mediclaim policy’.

Question 39.
Without money customers can purchase costly articles with this method. It is useful to Middle – class people. There are two methods- hire purchase and installment system. Mention any three differences between hire purchase and installment system?
Answer:

Question 40.
What is meant by government company?
Answer:
A “Government company” is defined under Section 2(45) of the Companies Act, 2013 as “any company in which not less than 51% of the paid – up share capital, is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company”.

PART – IV

Answer all the questions. [7 × 5 = 35]

Question 41 (a).
Compare business with profession and employment?
Answer:

[OR]

(b) Explain the different types of warehouses on the basis of ownership?
Answer:

• Private Warehouses: Private warehouses are built and owned by private business enterprises in order to store the products produced by them.
• Government Warehouses: They are created and operated by the Government to implement the programmes of the Government.
• Public Warehouse: It is open for public at large. Most of the business organisations, especially small and medium scale units cannot afford to have their own warehouses.
• Co-operative Warehouses: There are warehouses owned and managed by the marketing co-operative societies or agricultural co-operative societies. They are setup to provide warehousing facilities to their members.
• Bonded Warehouses: Bonded warehouses are those warehouses, which are licensed
  by the government to accept storage of imported goods which are not cleared due to non-payment of customs duty by the importer.

Question 42 (a).
Discuss the advantages of transport?
Answer:
(A) Advantages of railway transport:

1. Railways are well suited for carrying heavy and bulky goods over long distances.
2. It can provide long distance travel throughout the day and night with unbroken services.

(B) Advantages of inland waterways:

1. It is considered as the cheapest mode of transport among the other modes of transport.
2. It is most suitable for heavy loads.

(C) Advantages of air transport:

1. It provides a regular, convenient, efficient and quick service.
2. Perishable goods like fruits, vegetables, egg, meat, etc., can be transported quickly.

[OR]

(b) Explain the principles of insurance?
Answer:
1. Utmost Good Faith:
According to this principle, both insurer and insured should enter into contract in good faith. Insured should provide all the information that impacts the subject matter. Insurer should provide all the details’regarding insurance contract.

2. Insurable Interest:
The insured must have an insurable interest in the subject matter of insurance. Insurable interest means some pecuniary interest in the subject matter of the insurance contract.

3. Indemnity:
Indemnity means security or compensation against loss or damages. In insurance, the insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss. This principle ensures that the insured does not make any profit out of the insurance. This principle of indemnity is applicable to property insurance alone.

4. Causa Proxima:
The word ‘Causa proxima’ means ‘nearest qause’. According to this principle, when the loss is the result of two or more cause, the proximate cause, i.e. the direct. The direct, the most dominant and most effective cause of loss should be taken into consideration. The insurance company is not liable for the remote cause.

5. Contribution:
The same subject matter may be insured with more than one insurer then it is known as ‘Double Insurance’. In such a case, the insurance claim to be paid to the insured must be shared on contributed by all insurers in proportion to the sum assured by each one of them.

6. Subrogation:
Subrogation means ‘stepping the shoes on others’. According to this principle, once the claim of the insured has been settled, the ownership right of the subject matter of insurance passes on to the insurer.

7. Mitigation:
In case of a mishap, the insured must take off all possible steps to reduce or mitigate the loss or damage to the subject matter of insurance.

Question 43 (a).
Business owned by a single person is known as sole trading business. He contributes the required capital. Explain the characteristics of sole trading business?
Answer:

1. Ownership by one man: This is owned by single person. The sole trader contributes the required capital. He is not only the owner of the business but also manages the entire affairs.
2. Freedom of work and Quick Decisions: Since an individual is himself as a owner, he need not consult anybody else. Hence he can take quick decisions.
3. Unlimited Liability: When his business assets are not sufficient to pay off the business debts he has to pay from his personal property.
4. Enjoying Entire Profit: He strives tirelessly for the improvement and expansion of his business and enjoys all the benefits of his hard work.
5. Absence of Government Regulation: A sole proprietor concern is free from Government regulations. No legal formalities are to be observed in its formation, management or in its closure.
6. No Separate Entity: The sole trading concern comes to an end with death, disability, insanity and insolvency of the individual.
7. Maintenance of Secrecy: Since he/she manages all the affairs of the business, the secrecy can be maintained easily.

[OR]

(b) What are the rights of a partner?
Answer:

1. Right to take part in business: Every partner has a right to take part in the management of the business.
2. Right to be consultant: Every partner has the right to be consulted in all the matters concerning the firm. The decision of the majority will prevail in all the routine matters.
3. Right of access to books, record and document: Every partner has the right of access to all records and books of accounts, and to examine and copy them.
4. Right to share profit: Every partner is entitled to share the profits in the agreed ratio. If no profit – sharing ratio is specified in the deed, they must be shared equally.
5. Right to receive interest: A partner has the right to receive interest on loans advanced by him to the firm at the agreed rate, and where no rate is stipulated, interest @ 6% p.a. allowed.

Question 44 (a).
Briefly explain the auxiliaries to trade?
Answer:
1. Commerce includes not only trade but also services such as transport, warehousing, packaging, insurance, banking and sales promotion which are incidental or auxiliaries to trade.

2. Trade: The term trade is used to denote buying and selling. Therefore who buys and sells is a trader. A trader is a middleman between the producer and the consumer.

3. Transportation: Goods produced are to be sent to different places where they are demanded. It is done by transporting.

4. Banking: To start the business or to run it smoothly, we need money. Banks supply money in the form of loan. Business activities cannot be undertaken unless funds are available. The funds can be obtained from the bank.

5. Insurance: Business involves many types of risks. Factory building, machinery, furniture must be protected against fire, theft and other risks. Employees are also protected against the risk of accident. Insurance provides protection in all such cases.

6. Warehousing: Usually goods are not sold or consumed immediately after the production. They are to be kept in stock to make them available as and when required. Warehousing helps the firms to overcome the problem of storage and stores the goods for future usage.

[OR]

(b) A Joint stock company is a distinct form of business organisation. It is useful to overcome the limitations of sole trader and partnership. There are so many features of company. What are the characteristics of Joint stock company?
Answer:
Characteristics of a Joint stock Company:
1. Separate legal entity:
Under Incorporation a company becomes a separate legal entity as compared to its members. The company is distinct and different from its members.

2. Limited Liability:
The liability of the members of the company is limited to contribution to the assets of the company upto the face value of shares held by him. A member is liable, to pay only the uncalled money due on shares held by him.

3. Transferability of shares:
Shares in a company can be freely transferable. When a member transfers his shares to another person, the transferee becomes the shareholder of the company.

4. Common Seal:
A company is an artificial person and does not have a physical presence. So the common seal is necessary because the company cannot sign the documents. It is the official signature of the company.

5. One Share – One Vote:
The principle of voting in a company is one share – one vote. If a person has 10 shares, he has 10 votes in the company. So in a company, money is given more importance than a man.

Question 45 (a).
List out the advantages of international trade?
Answer:

1. Geographical Specialization: Countries across the world differ significantly in terms of natural resources, capital equipment, manpower, technology and land and so on.
2. Optimum use of Natural Resources: International business operates on a simple principle that a country which can produce more efficiently and trade the surplus production with other countries has to procure what it cannot produce more efficiently.
3. Economic Development: International business helps the developing countries greatly in achieving rapid economic development by importing machinery, equipment, technology, talent, and so on.
4. Generation of Employment: International business generates employment opportunities by assisting the expansion and growth of agricultural and industrial activities.
5. Higher Standard of Living: On account of international business, the citizens of the country can buy more varieties of goods and services which cannot be produced cost effectively within the home country.
6. Price Equilisation: International business helps to stabilize the prices of various commodities which are fluctuating on a daily basis in the world market.
7. Prospects for Higher Profit: International business helps the firms which produce goods in excess to sell them at relatively higher price to various countries in the international market.
8. Capacity Utilisation: International business enables the firms across the country to sell their goods and services on a large scale in the international market.
9. International Peace: International business makes countries across the world become inter-dependent while these countries are independent in their functioning.

[OR]

(b) Write down the structure of capital account?
Answer:
Capital account consists of three components:

1. Private Capital
2. Banking Capital
3. Official Capital

1. Private Capital:
Private capital consists of foreign investments, long term loan and foreign currency deposits.

2. Banking Capital:
Banking capital includes movement into external financial asset and liabilities commercial and co-operative banks authorized to dealing in foreign exchange.

3. Official Capital:
It includes RBI’s holdings of foreign currency and special drawing rights (SDR) held by the Government.

Question 46 (a).
What are the advantages of sole trading business?
Answer:
1. Easy Formation:
No legal formalities are required to initiate a sole trading concern. Any person capable of entering into a contract can start it, provided he has the necessary resources for it.

2. Incentive to Work hard:
There is a direct relationship between effort and reward. The fact that the entire profit can be taken by himself without sharing with anybody else induces him to work ceaselessly.

3. Small Capital:
Small capital is an important as well as specific advantage of sole proprietorship. Sole proprietor can start business with small capital.

4. Credit Standing:
Since his private properties are held liable for satisfying business debts, he can get more financial assistance from others.

5. Personal Contact with the Customers:
Since sole proprietor knows each and every customer individually he can supply goods according to their taste and preferences. Thus he can cultivate personal relationship with the customers.

6. Flexibility:
The sole trader can easily adjust himself to the changing requirements of his business.

[OR]

(b) What are the factors influencing a channel of distribution? Explain any five?
Answer:
The factors affecting a channel of distribution are as follows:

1. Product Characteristics:
Seasonal products are distributed through less layer of middlemen. Non standardized products that are made according to customer specifications may be delivered directly.

2. Market Characteristics:
The size of the market for the goods is a major factor while selecting the route for distribution of products.

3. Number of Consumers:
Large purchases made by few consumers require centralised distribution.

4. Middlemen factor:
Middlemen who are experienced and have produced more sales are wanted by all producers. Long channel naturally increases the cost and price of the product.

5. Capacity of the Manufacturer:
A financially strong producer may select a high technology oriented channel which will reduce cost in the long run.

Question 47 (a).
Explain the features of a government company?
Answer:
The features of a government company:

1. Registration Under the Companies Act:
A Government company is formed through registration under the Companies Act, 1956; and is subject to the provisions of this Act, like any other company.

However, the Central Government may direct that any of the provisions of the Companies Act shall not apply to a Government company or shall apply with certain modifications. .

2. Executive Decision of Government:
A Government company is created by an executive decision of the Government, without seeking the approval of the Parliament or the State Legislature.

3. Separate Legal Entity:
A Government company is a legal entity separate from the Government. It can acquire property; can make contracts and can file suits, in its own name.

4. Whole or Majority Capital Provided by Government:
The whole or majority (at least 51%) of the capital of a Government company is provided by the Government; but the revenues of the company are not deposited into the treasury.

5. Majority of Government Directors:
Being in possession of a majority of share capital, the Government has authority to appoint majority of directors, on the Board of Directors of a government company.

[OR]

(b) What are the advantages of co-operatives? Explain any five?
Answer:
Advantages of co – operatives:

1. Voluntary organisation:
The membership of a cooperative society is open to all. Any person with common interest can become a member. The membership fee is kept low so that everyone would be able to join and benefit from cooperative societies.

2. Easy formation:
Cooperatives can be formed much easily when compared to a company. Any 10 members who have attained majority can join together for forming a cooperative society by observing simple legal formalities.

3. Democracy:
A co – operative society is run on the principle of ‘one man one vote’. It implies that all members have equal rights in managing the affairs of the enterprises.

4. Equal distribution of surplus:
The surplus generated by the cooperative societies is distributed in an equitable manner among members. Therefore all the members of the cooperative society are benefited.

5. Limited liability:
The liability of the members in a cooperative society is limited to the extent of their capital contribution. They cannot be personally held liable for the debts of the society.

Students can Download Tamil Nadu 11th Commerce Model Question Paper 2 English Medium Pdf, Tamil Nadu 11th Commerce Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Commerce Model Question Paper 2 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 2:30 Hours
Maximum Marks: 90

PART – 1

Choose the correct answer. Answer all the questions. [20 × 1 = 20]

Question 1.
Wholesalers buy in ………………………… quantity of goods.
(a) Small
(b) Large
(c) Medium
(d) Limited
Answer:
(b) Large

Question 2.
Small scale fixed retailers include ……………………..
(a) General stores
(b) Pedlars
(c) Cheap jacks
(d) Hawkers
Answer:
(a) General stores

Question 3.
In India, GST became effective from ………………………
(a) 1^st April 2017
(b) 1^st January 2017
(c) 1^st July 2017
(d) 1^st March 2017
Answer:
(a) 1^st April 2017

Question 4.
‘One share – one vote’ principle is followed in kind of organization.
(a) Co – operatives
(b) Partnership
(c) Company
(d) None of these
Answer:
(c) Company

Question 5.
……………………. is not a type of general insurance.
(a) Marine insurance
(b) Life insurance
(c) Fidelity insurance
(d) Fire insurance
Answer:
(b) Life insurance

Question 6.
Self – help groups convert the sayings into a common find known as ……………………..
(a) Common fund
(b) Group corpus fund
(c) Group fund
(d) None of the above
Answer:
(b) Group corpus fund

Question 7.
A major disadvantage of sole proprietorship is ……………………….
(a) Limited liability
(b) Unlimited liability
(c) Easy formation
(d) Quick decision
Answer:
(b) Unlimited liability

Question 8.
Which one of the following is not correctly matched?
(a) Mercantile agents – Functional middleman
(b) Merchant middleman – Wholesalers
(c) Retailer – Small quantities
(d) Wholesaler – Last middleman in the distribution
Answer:
(d) Wholesaler – Last middleman in the distribution

Question 9.
From which of the following deposit holders can get overdraft facilities?
(a) Savings deposits
(b) Current deposits
(c) Recurring deposits
(d) Fixed deposits
Answer:
(b) Current deposits

Question 10.
The role of government in logistics management is through ……………………….
(a) Legislations
(b) Governance
(c) Transport
(d) Distribution
Answer:
(d) Distribution

Question 11.
The local area banks are promoting ………………………
(a) Rural savings
(b) Business savings
(c) Industrial development
(d) Agricultural development
Answer:
(a) Rural savings

Question 12.
Way bill is a document issued by ………………………
(a) Railway transport
(b) Air transport
(c) Road transport
(d) Water transport
Answer:
(c) Road transport

Question 13.
The types of development banks are ……………………….
(I) IFCI
(II) State Bank of India
(III) MUDRA Bank
(IV) Karur Vysya Bank
(a) (I) and (II)
(b) (II) and (IV)
(c) (I) and (III)
(d) (II) and (IV)
Answer:
(c) (I) and (III)

Question 14.
Auxiliaries to trade is also called as ……………………..
(a) Trade
(b) Advertisement
(c) Warehousing
(d) Aids to trade
Answer:
(d) Aids to trade

Question 15.
Consumers co-operation was first successful in …………………………
(a) England
(b) USA
(c) Swiss
(d) India
Answer:
(a) England

Question 16.
Match List – I with List – II and select the correct answer using the codes given below:

Answer:
Codes:

Question 17.
Who is the first middleman in the channel of distribution?
(a) Wholesaler
(b) Producer
(c) Retailer
(d) Customer
Answer:
(a) Wholesaler

Question 18.
Find out which is not advantage of partnership from the following:
(a) Easy formation
(b) Division of work
(c) Limited liability
(d) Easy dissolution
Answer:
(c) Limited liability

Question 19.
Presently IRDAI headquarters is in ……………………….
(a) Hyderabad
(b) Chennai
(c) Mumbai
(d) Delhi
Answer:
(a) Hyderabad

Question 20.
The aggregate income under fine heads is termed as ……………………….
(a) Gross total income
(b) Total income
(c) Salary income
(d) None of the above
Answer:
(b) Total income

PART – II

Answer any seven questions in which question No. 30 is compulsory: [7 × 2 = 14]

Question 21.
Who are middlemen?
Answer:
The term ‘middlemen’ refers to all those who are in the link between the primary producer and the ultimate consumer in the exchange of goods or service.

Question 22.
Mention any four examples of MNC?
Answer:
A multinational company is one which is incorporated in one country, but it may be operated in many countries. Examples: Coca – Cola, International Business Machine (IBM), Sony Corporation and Microsoft Corporation.

Question 23.
There are various hindrances in business. The manufacturers and consumers do not know each other. But the goods are purchased and sold by these two persons. What kind of hindrance is this? How is it removed?
Answer:
This is ‘hindrance of a person’. Manufacturers do not know the consumer, who is using the products, produced by him. This difficulty or hindrance is removed by the traders.

Question 24.
Give any three functions of warehouses?
Answer:

1. Storage
2. Price stabilization
3. Equalization of demand and supply

Question 25.
What is meant by private company?
Answer:
Private limited company is a type of company which is formed with minimum two shareholders and two directors, the minimum requirement with respect to authorised or paid up capital of Rs. 1,00,000 has been omitted by the Companies (Amendment) Act, 2015 w.e.f. 29^th of May, 2015.

Another crucial condition of a private limited company is that it by its articles of association restricts the right to transfer its shares and also prohibits any invitation to the public to subscribe for any securities of the company.

Question 26.
Is low taxes possible in co – operative society?
Answer:
Yes, Low taxes are possible in co – operative society because it is a non-profit enterprise, and government provides various exemptions and tax concessions.

Question 27.
Write any two advantages of water transport?
Answer:

1. It is considered as the cheapest mode of transport among the other modes of transport.
2. It is most suitable for heavy loads.

Question 28.
What are the non-corporate enterprises?
Answer:

1. Sole trading concern
2. Partnership firm
3. Joint Hindu family business

Question 29.
Mention any three differences between warehouse warrant and warehouse receipt?
Answer:

Question 30.
Mention any four kinds of partners?
Answer:

1. Active partner
2. Sleeping partner
3. Nominal partner
4. Partner in profits only

PART – III

Answer any seven questions in which question No. 40 is compulsory: [7 × 3 = 21]

Question 31.
List the five heads of income?
Answer:
The five heads of income are:

1. Income from‘Salaries’ [Sections 15 – 17];
2. Income from ‘House Property’ [Sections 22 – 27];
3. Income from ‘Profits and Gains of Business or Profession’ [Sections 28 – 44];
4. Income from ‘Capital Gains’ [Sections 45 – 55]; and
5. Income from ‘Other Sources’ [Sections 56 – 59].

Question 32.
Explain the concept of business?
Answer:
Business refers to any human activity undertaken on a regular basis with the object to earn profit through production, distribution, sale or purchase of goods and services.

Business activities are connected with raising, producing or processing of goods. Industry creates form utility to goods by bringing materials into the form which is useful for intermediate consumption or final consumption by consumers.

Question 33.
Explain any three features of Self – Help Group?
Answer:

1. The motto of every group members should be “saving first – credit latter”.
2. Self Help Group is homogeneous in terms of economic status.
3. The ideal size of a Self Help Group ranges between 10 and 20 members.

Question 34.
Explain the features of general stores?
Answer:
General Stores sell a wide variety of products under one roof, most commonly found in a local market and residential areas to satisfy the day – to – day needs of the customers residing in nearby localities. They remain open for long hours at convenient timings and often provide credit facilities to their regular customers.

Question 35.
How is it possible to maintain secrecy in sole proprietorship?
Answer:
In sole proprietorship, the trader is the sole owner of the business. Since he/she manages all the affairs of the business, the secrecy can be maintained easily.

Question 36.
What is the importance of bonded warehouses?
Answer:
Bonded warehouses are those warehouses which are licensed by government. It is used to accept the storage of imported goods which are cleared for non – payment of customs duty by the importer. Strict supervision and control is imposed by customs authorities on their functioning.

Question 37.
Describe any three advantages of international trade?
Answer:
Advantages of international trade:

1. Optimum use of natural resources: International trade operates on a simple principle that a country can produce more efficiently and trade the surplus production.
2. Economic development: International trade helps the developing countries in achieving rapid economic development by importing machinery, technology and talent.
3. Generation of employment: International business generates employment opportunities by assisting the expansion and growth of agricultural and industrial activities.

Question 38.
What are the advantages of MNC?
Answer:
1. Low Cost Labour:
MNC set up their facilities in low cost countries and produce goods/services at lower cost.

2. Quality Products:
The resource, experience and expertise of MNCs in the sphere of research and development enables the host country to establish its research and development system which helps it in producing quality goods and services at least possible cost.

Question 39.
India is an agricultural country. It has so many villages. Agriculture is inevitable to our country. What kind of insurance is needed to safeguard agriculture?
Answer:
Crop insurance is taken for safeguarding the agriculture. This policy is to provide financial support to farmers in case of a crop failure due to drought or flood. It generally covers all risks of loss or damages relating to production of rice, wheat, millets, oil seeds and pulses.

Question 40.
Why is balance of payment prepared?
Answer:
Balance of payments help in framing monetary, fiscal and trade policies of country. Government keenly observes balance of payment position of its important trade partners in making policy decisions. It reveals whether a country produces enough economic output to pay for its growth.

PART – IV

Answer all the questions: [7 × 5 = 35]

Question 41 (a).
Memorandum of Association is a legal document prepared to form and register a joint stock company. It reveals the powers and activities, the company is permitted to undertake. What are the contents of memorandum of Association? Explain?
Answer:
1. Name Clause:
The name clause requires you to state the legal and recognized name of the company. You are allowed to register a company name only if it does not bear any similarities with the name of an existing company.

2. Situation Clause:
The registered office clause requires you to show the physical location of the registered office of the company. You are required to keep all the company registers in this office in addition to using the office in handling all the outgoing and incoming communication correspondence.

3. Objective Clause:
The objective clause requires you to summarize the main objectives for establishing the company with reference to the requirements for shareholding and use of financial resources.

You also need to state ancillary objectives; that is, those objectives that are required to facilitate the achievement of the main objectives.

4. Liability Clause:
The liability clause requires you to state the extent to which shareholders of the company are liable to the debt obligations of the company in the event of the company dissolving.

You should show that shareholders are liable only their shareholding and/or to their commitment to contribute to the dissolution costs upon liquidation of a company limited by guarantee.

5. Capital Clause:
The capital clause requires you to state the company’s authorized share capital, the ’ different categories of shares and the nominal value (the minimum value per share) of the shares. You are also required to list the company’s assets under this clause.

6. Association Clause:
The association clause confirms that shareholders bound by the MOA are willingly associating and forming a company. You require seven members to sign an MOA for a public company and not less than two people for a MOA of a private company. You must conduct the signing in the presence of witness who must also append his signature.

[OR]

(b) Explain any five rights of partners?
Answer:

1. Right to take part in business: Every partner has a right to take part in the management of the business.
2. Right to be consultant: Every partner has the right to be consulted in all the matters concerning the firm. The decision of the majority will prevail in all the routine matters.
3. Right of access to books, record and document: Every partner has the right of access to all records and books of accounts, and to examine and copy them.
4. Right to share profit: Every partner is entitled to share the profits in the agreed ratio. If no profit-sharing ratio is specified in the deed, they must be shared equally.
5. Right to receive interest: A partner’ has the right to receive interest on loans advanced by him to the firm at the agreed rate, and where no rate is stipulated, interest @ 6% p.a. allowed.

Question 42 (a).
Explain the contents of prospectus?
Answer:
Prospectus means a document inviting the public to buy its shares or debentures. It also applies to advertisements inviting deposits from the public.

Contents:

1. The prospectus contains the main objectives of the company.
2. The name and address of the signatories of the Memorandum of Association.
3. The name, address and occupation of directors and managing directors.
4. The number and classes of shares and debentures.
5. The qualification share of directors.
6. The name and address of the vendors of any property acquired by the company.
7. Particulars about the directors, secretaries and the treasures and their remuneration.
8. The amount for the minimum subscription.
9. The estimated amount of preliminary expenses.
10. Name and address of the auditors, bankers and solicitors of the company,
11. Time and place where copies of balance sheets, profits and loss account and the auditor’s report may be inspected.

[OR]

(b) Write a note on Consumer Co – operative Society?
Answer:
A Consumer Co – operative Society is organized by consumers. It sells quality goods at better prices to the consumers.

Features:

1. It can sell the goods at a lesser price rather than the traditional retail stores.
2. They also supply essential goods through Public Distribution System (PDS).
3. Nationally, the most widely used co – operative form is the credit union.
4. Credit unions are essentially co – operatives of people that use banking services.
5. It purchases goods directly from the manufacturers, which helps to fix the lower price. – Example – Students Co – operative Stores, Supermarkets, etc.

Question 43 (a).
Goods were exchanged for goods prior to invention of money. Each party must have surplus goods for exchange. What does it mean? What are the constraints of that system?
Answer:
The system in which the goods were exchanged for goods was called ‘barter system’. The barter system has many constraints. They are:

1. Lack of double coincidence of Wants: Unless two persons who have surplus have the demand for the goods possessed by each other, barter could not materialize. If this “coincidence of wants” does not exist, Barter cannot take place.
2. Non – existence of common measure of value: Barter system could not determine the value of commodities to be exchanged as they lacked commonly acceptable measures to evaluate each and every commodity.
3. Lack of direct contact between producer and consumers: It was not possible for buyers and sellers to meet face to face in many contexts for exchanging the commodities for commodities.
4. Lack of surplus stock: Absence of surplus stock was one of the impediments in barter system. If the buyers and sellers do not have surplus then no barter was possible.

[OR]

(b) Describe any five objectives of business?
Answer:
1. Economic Objectives:
Economic objectives of business refer to the objective of earning profit and also other objectives that are necessary to be pursued to achieve the profit objective, which includes creation of customers, regular innovations and best possible use of available resources.

2. Social Objectives:
Social objective are those objectives of business, which are desired to be achieved for the benefit of the society. Since business operates in a society by utilizing its scarce resources, the society expects something in return for its welfare.

3. Organizational Objectives:
The organizational objectives denote those objectives an organization intends to accomplish during the course of its existence in the economy like expansion and modernization, supply of quality goods to consumers, customers’ satisfaction, etc.

4. Human Objectives:
Human objectives refer to the objectives aimed at the well – being as well as fulfillment of expectations of employees as also of people who are disabled, handicapped and deprived of proper education and training.

The human objectives of business may thus include economic well – being of the employees, social and psychological satisfaction of employees and development of human resources.

5. National Objectives:
Being an important part of the country, every business must have the objective of fulfilling national goals and aspirations.

Question 44 (a).
Banks can be classified as follows:

1. Based on the functions of banks
2. Based on the status given by RBI
3. Based on the ownership pattern

What are the banks based on functions or organization? Explain any five kinds of banks.
Answer:
1. Commercial banks:
Banks which accept deposits from the public and grant loans to traders, individuals, agriculture, industries, transport, etc. in order to earn profit. Their lending is in comparatively small amounts and mostly for short and medium period. e.g., State Bank of India.

2. Development Banks:
Huge finance required for investment, expansion and modernisation of big industries and others are granted by a separate type of banks called development Banks. They are also called industrial banks, e.g., IFCI, SIDBI.

3. Co – operative Banks:
All Co – operative banks in India are owned by its customers or members who are farmers, small traders and others. Co – operative banks in India are either urban based or rural based. e.g.,NAFED, Tamil Nadu State Apex Co-operative Bank – Head Office, Chennai.

4. Foreign Banks:
Banks which have registered office in a foreign country and branches in Ipdia are called foreign banks, e.g., Bank of America – USA.

5. Regional Rural Banks (RRBs):
The RRBs were formed under the Regional Rural Bank Act 1976, jointly by the Central Government, State Government, and a sponsor bank. e.g., Pandian Grama Bank.

[OR]

(b) In India Joint Hindu Family Business is a distinct form of organisation. A person can become member by his birth. What are the features of Joint Hindu Family Business? Explain any five features?
Answer:
Features of Joint Hindu Family Business are:

1. Governed by Hindu Law
2. Management
3. Membership by birth
4. Liability
5. Permanent existence
6. Implied authority of Karta
7. Minor as a co – parcener
8. Dissolution

Explanation:

1. Governed by Hindu law: The business of the Joint Hindu Family is controlled and managed by the hindu law.
2. Membership by birth: The membership of the family can be acquired only by birth. As soon as a male child is bom in the family, the child becomes a member.
3. Liability: Except the Kartha, the liability of all other members is limited to their shares in the business.
4. Minor also as a co-parcener: In a Joint Hindu Family firm even a new bom baby can be a co-parcener.
5. Dissolution: It can be dissolved only at the will of the members of the family.

Question 45 (a).
Explain any five types of Cooperative societies?
Answer:
Types of Co – operative societies:

1. Consumers Co – operative:
Consumer Co – operatives are organized by consumers that want to achieve better prices or quality in the goods or services they purchase. In contrast to traditional retail stores or service providers, a consumer co – operative exists to deliver goods or services rather than to maximize profit from selling those goods or services.

2. Producers Co – operative:
Producer co – operatives are created by producers and owned and operated by producers. Producers can decide to work together or as separate entities to help increase marketing possibilities and production efficiency.

3. Marketing Co – operative:
Co – operative marketing societies are associations of small producers formed for the purpose of marketing their produce. The marketing co-operatives perform certain marketing functions such as grading, warehousing, advertising etc.

4. Credit Co – operative:
Cooperative credit societies are societies formed for providing short-term financial help to their members. Agriculturists, artisans, industrial workers, salaried employees, etc., form these credit societies.

5. Housing Co – operative:
These co – operative housing societies are meant to provide residential accommodation to their members on ownership basis or on rent.

People who intend to build houses of their own join together and form housing societies. These societies advance loans to members, repayable over a period of 15 to 20 years.

[OR]

(b) Partnership is formed by an agreement. It may be oral or written. The agreement is called partnership deed. Explain the contents of partnership deed.
Answer:
The contents of partnership deed include:

1. Name: Name of the Firm.
2. Nature of Business: Nature of the proposed business to be carried on by the partners.
3. Duration of Partnership: Duration of the partnership business whether it is to be run for a fixed period of time or whether it is to be dissolved after completing a particular venture.
4. Capital Contribution: The capital is to be contributed by the partners. It must be remembered that capital contribution is not necessary to become a partner for, one can contribute his organising power, business acumen, managerial skill, etc., instead of capital.
5. Withdrawal from the Firm: The amount that can be withdrawn from the firm by each partner.
6. Profit/Loss Sharing: The ratio in which the profits or losses are to be shared. If the profit sharing ratio is not specified in the deed, all the partners must share the profits and bear the losses equally.
7. Interest on Capital: Whether any interest is to be allowed on capital and if so, the rate of interest.
8. Rate of Interest on Drawing: Rate of interest on drawings, if any.
9. Loan from Partners: Whether loans can be accepted from the partners and if so the rate of interest payable thereon.
10. Account Keeping: Maintenance of accounts and audit.
11. Salary and Commission to Partners: Amount of salary or commission payable to partners for their services. (Unless this is specifically provided, no partner is entitled to any salary).
12. Retirement: Matters relating to retirement of a partner. The arrangement to be made for paying out the amount due to a retired or deceased partner must also be stated.
13. Goodwill Valuation: Method of valuing goodwill on the admission, death or retirement of a partner.
14. Distribution of Responsibility: Distribution of managerial responsibilities. The work that is entrusted to each partner is better stated in the deed itself.
15. Dissolution Procedure: Procedure for dissolution of the firm and the mode of settlement of accounts thereafter.
16. Arbitration of Dispute: Arbitration in case of disputes among partners. The deed should provide the method for settling disputes or difference of opinion. This clause will avoid costly litigations.

Question 46 (a).
Explain the various primary functions of commercial banks?
Answer:
The primary functions of a commercial bank are of three types. They are:

(I) Accepting Deposits – The basic deposit accounts offered by commercial banks are listed below:

1. Demand Deposits: These deposits are repayable on demand on any day. These consist of –

• Savings Deposits: General public deposit their savings into this account. This account can be opened in one individual’s name or more than one name.
• Current Deposits: This account is suitable for business institutions. Individuals too . can open this account. A higher minimum balance should be kept in this account.

2. Time Deposits: These are repayable after a period. These include –

• Fixed Deposits (FD): Certain amount is deposited for a fixed period for a fixed rate of interest.
• Recurring Deposits (RD): Certain sum is deposited into the account every month for one year or five years or the agreed period. Interest rate is more than savings deposits and almost equal to fixed deposits.

(II) Granting Loans and Advances: Commercial banks lend money in order to earn interest.

1. Advances

• Overdraft: It is a credit facility extended mostly to current account holding business community customers.
• Cash Credit: It is a secured credit facility given mostly to business institutions. Stock in hand, raw materials, other tangible assets, etc., are provided as collateral.
• Discounting of Bills: Business customers approach banks to discount the commercial bills of exchanges and provide money.

2. Loans – Short term and medium term loans are provided by commercial banks against eligible collaterals to business concerns. Examples – housing loan, consumer loan, vehicle loan, educational loan, jewel loan, etc.

3. Creation of Credit – Apart from the currency money issued by the RBI, the credit money in circulation created by commercial banks influence economic activities of a country to a large extent. Credit money of commercial banks is far greater in volume than the currency money.

[OR]

(b) What are the advantages of warehousing?
Answer:

1. It safeguards the stock for the merchants who do not have storage place.
2. Warehouses reduce the distribution cost of the traders by storing the goods in bulk and allow the trader to take the goods in small lots to his shop.
3. It helps in selection of channel of distribution. The producer will prefer whether to appoint a wholesaler or retailer.
4. It assists in maintaining the continuous sale and avoid the possibilities of “Out of Stock”.
5. It creates employment opportunities for both skilled and unskilled workers to improve their standard of living.

Question 47 (a).
Explain the features of a government company?
Answer:
The features of a government company are:
1. Registration Under the Companies Act:
A Government company is formed through registration under the Companies Act, 1956; and is subject to the provisions of this Act, like any other company.

However, the Central Government may direct that any of the provisions of the Companies Act shall not apply to a Government company or shall apply with certain modifications.

2. Executive Decision of Government:
A Government, company is created by an executive decision of the Government, without seeking the approval of the Parliament or the State Legislature.

3. Separate Legal Entity:
A Government company is a legal entity separate from the Government. It can acquire property; can make contracts and can file suits, in its own name.

4. Whole or Majority Capital Provided by Government:
The whole or majority (at least 51%) of the capital of a Government company is provided by the Government; but the revenues of the company are not deposited into the treasury.

5. Majority of Government Directors:
Being in possession of a majority of share capital, the Government has authority to appoint majority of directors, on the Board of Directors of a government company.

[OR]

(b) What are the advantages of co – operatives? Explain any five?
Answer:
Advantages of co – operatives:
1. Voluntary organisation:
The membership of a co – operative society is open to all. Any person with common interest can become a member. The membership fee is kept low so that everyone would be able to join and benefit from co – operative societies.

2. Easy formation:
Co – operatives can be formed much easily when compared to a company. Any 10 members who have attained majority can join together for forming a co – operative spciety by observing simple legal formalities.

3. Democracy:
A co – operative society is run on the principle of ‘one man one vote’. It implies that all members have equal rights in managing the affairs of the enterprises.

4. Equal distribution of surplus:
The surplus generated by the co – operative societies is distributed in an equitable manner among members. Therefore all the members of the co – operative society are benefitted.

5. Limited liability:
The liability of the members in a co – operative spciety is limited to the extent of their capital contribution. They cannot be personally held liable for the debts of the society.

Students can Download Tamil Nadu 11th Commerce Model Question Paper 1 English Medium Pdf, Tamil Nadu 11th Commerce Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Commerce Model Question Paper 1 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 2:30 Hours
Maximum Marks: 90

PART – I

Choose the correct answer. Answer all the questions. [20 × 1 = 20]

Question 1.
………………….. is considered as an artificial person.
(a) Sole trader
(b) Joint Hindu family business
(c) Joint Stock company
(d) Co – operative societies
Answer:
(c) Joint Stock company

Question 2.
A contract with or by a minor is a ……………………
(a) Valid contract
(b) Void contract
(c) Voidable contract
(d) Voidable at the option of either party
Answer:
(b) Void contract

Question 3.
The largest commercial bank of India is ……………………….
(a) ICICI
(b) SBI
(c) PNB
(d) RBI
Answer:
(b) SBI

Question 4.
Which one of the following is correctly matched?
(a) Overdraft – More than one person
(b) RBI – Lender of last resort
(c) Partnership – Motor transport
(d) Life Insurance – Current Account
Answer:
(b) RBI – Lender of last resort

Question 5.
Hindrance of risk is removed by ……………………..
(a) Transport
(b) Warehouse
(c) Insurance
(d) None of these
Answer:
(c) Insurance

Question 6.
A mador disadvantage of a sole proprietorship is ……………………..
(a) Limited liability
(b) Unlimited liability
(c) Easy formation
(d) Quick decision
Answer:
(b) Unlimited liability

Question 7.
Match the List – I with List – II and select the correct answer using the codes given below:

Answer:
Codes:

Question 8.
Trade and Commerce was common to ……………………. dynasty.
(a) Pallava
(b) Chola
(c) Pandiya
(d) Chera
Answer:
(c) Pandiya

Question 9.
The external source of funds are ……………………
(I) Shares and debentures
(II) Retained earnings
(III) Collection from receivables
(IV) Borrowings from banks
(a) (I) and (II)
(b) (II) and (III)
(c) (I) and (IV)
(d) (I) and (III)
Answer:
(c) (I) and (IV)

Question 10.
What kind of tax is the GST?
(a) Direct tax
(b) Indirect tax
(c) On the type of goods and services
(d) None of these
Answer:
(b) Indirect tax

Question 11.
In 1969, there were …………………….. private banks which were nationalised.
(a) 19
(b) 14
(c) 20
(d) 15
Answer:
(b) 14

Question 12.
Wholesalers deal in quantity of goods.
(a) Small
(b) Large
(c) Medium
(d) Limited
Answer:
(b) Large

Question 13.
The persons who enter into partnership are collectively called as …………………..
(a) Partners
(b) Shareholders
(c) Owners
(d) Firm
Answer:
(d) Firm

Question 14.
Producers co – operatives are established and operated by …………………….
(a) Producers
(b) Consumers
(c) Traders
(d) Wholesalers
Answer:
(a) Producers

Question 15.
ONGC is a public enterprise. Identify the form of organisation.
(a) Public corporations
(b) Departmental undertaking
(c) Multinational corporations
(d) Government company
Answer:
(a) Public corporations

Question 16.
…………………….. is a document acknowledging the receipt of goods by a carrier.
(a) Waybill
(b) Consignment note
(c) Charter party
(d) Bill of lading
Answer:
(a) Waybill

Question 17.
Which company has minimum paid up capital of Rs 5,00,000?
(a) Government company
(b) Public company
(c) Private company
(d) Foreign company
Answer:
(c) Private company

Question 18.
From the following which is not a direct tax?
(a) Income tax
(b) Wealth tax
(c) GST
(d) Capital gains tax
Answer:
(c) GST

Question 19.
Business units can reduce expenditure by outsourcing front office work like ………………………
(a) Paperwork
(b) File work
(c) Billing
(d) Manufacturing
Answer:
(b) File work

Question 20.
The year in which income earned is known as …………………………
(a) Assessment year
(b) Previous year
(c) Light year
(d) Calendar year
Answer:
(b) Previous year

PART – II

Answer any seven questions in which question No. 30 is compulsory: [7 × 2 = 14]

Question 21.
Define commerce?
Answer:
According to Evelyn Thomas, “Commercial operations deal with the buying and selling of goods, the exchange of commodities and the contribution of finished products”.

Question 22.
What is unlimited liability?
Answer:
Unlimited liability is a feature of sole trading business. When the sole trader’s business assets are not sufficient to pay off the business debts, he has to pay from his personal property.

Question 23.
Franchising is the practice of the right to use a firm’s business model and brand for a prescribed period of time. Who are the parties involved in franchising?
Answer:
There are two parties to a franchising agreement. They are:

1. Franchisor – The owner of a business who provides the franchise.
2. Franchisee – The individual who gets the right to operate the business or use the trademark.

Question 24.
Give any three functions of warehouses?
Answer:

1. Storage
2. Price stabilization
3. Equalization of demand and supply

Question 25.
A company is a large scale organization. Compared to sole trader and partnership organization, more profit can be received from the company. Mention any two advantages of a company?
Answer:
1. Large Capital:
A company can secure large capital compared to a sole trader or partnership. Large amount of capital is necessary for conducting business on a large scale.

2. Limited Liability:
The liability of a shareholder is limited. The risk of loss is limited to the unpaid amount on the face value of shares held. In the case of a company limited by shares, the liability of a shareholder is restricted to the unpaid amount on the shares held by him.

Question 26.
Give any two advantages of MNC?
Answer:
1. Low Cost Labour:
MNC set up their facilities in low cost countries and produce goods/services at lower cost.

2. Quality Products:
The resource, experience and expertise of MNCs in the sphere of research and development enables the host country to establish its research and development . system which helps it in producing quality goods and services at least possible cost.

Question 27.
List out any four types of indirect taxes levied in India?
Answer:

1. CGST
2. SGST
3. UGST
4. IGST

Question 28.
It was launched by the RBI in 2013. The transactions are settled on real time basis. What does it mean? Write a short note about this?
Answer:
Real Time Gross Settlement Systems (RTGS) was launched by the RBI in 2013. The transactions are settled on real time basis. Gross settlement means the transaction is settled between one bank and another bank without adding any other transactions.

Question 29.
State the different types of Public Sector Enterprises?
Answer:

1. Coal India Ltd
2. Gas Authority of India Ltd
3. Tamil Nadu State Transport Corporation
4. Steel Authority of India Ltd

Question 30.
Who is a sleeping partner?
Answer:
A sleeping partner is the one who contributes capital and shares in the profits or losses of the firm but does not take part in the management of the business.

PART – III

Answer any seven questions in which question No. 40 is compulsory: [7 × 3 = 21]

Question 31.
Explain the features of general stores?
Answer:
General Stores sell a wide variety of products under one roof, most commonly found in a local market and residential areas to satisfy the day – to – day needs of the customers residing in nearby localities.

They remain open for long hours at convenient timings and often provide credit facilities to their regular customers.

Question 32.
Explain the characteristics of business?
Answer:
The essential characteristics of business are as follows:

1. Production or Procurement of Goods: Goods must be produced or procured in order to satisfy human wants.
2. Sale, Transfer or Exchange: There must be sale or exchange of goods or services.
3. Profit Motive: An important feature of business is profit motive. Business is an economic activity by which human beings make their living.
4. Dealing in Goods and Services: Goods produced or procured may be consumer goods like cloth, pen, brush, bag, etc., or producer-goods like plant and machinery.

Question 33.
All the affairs of a Joint Hindu Family are controlled by the manager. The other members are co-parceners. What is the other name of the manager in Joint Hindu Family? How does he control the business?
Answer:
The other name of the manager in the Joint Hindu family is ‘Karta’. The Karta is the senior most male member of the family. He controls and manages the business of the Joint Hindu family.

Question 34.
Income tax provides the method to compare the total income of an assessee. It is divided into five heads. What are the five heads of incomp under total income?
Answer:
The five heads of income are:

1. Income from ‘Salaries’ [Sections 15 – 17];
2. Income from ‘House Property’ [Sections 22 – 27];
3. Income from ‘Profits and Gains of Business or Profession’ [Sections 28 – 44];
4. Income from ‘Capital Gains’ [Sections 45 – 55]; and
5. Income from ‘Other Sources’ [Sections 56 – 59]

Question 35.
Generally, the liability of the partners in a firm is unlimited. But in service sector, the liability is limited. What is the name of the partnership? Write a short note about this?
Answer:
The name of the partnership is Limited Liability Partnership. It is popular in service sector and in the small scale enterprises. Limited liability partnership means for paying the debts of the firm, only the assets of the business will be utilised. Example – cost accountants firm, lawyers, engineers, etc.

Question 36.
Mention any three features of government company?
Answer:
Features of government company: .

1. Registrations under the companies Act: A government company is formed under the Companies Act 1956.
2. Own staff: A government company has its own staff except government officials who are sent to it on deputation.
3. Majority of the capital provided by the government: The whole or majority (at least 51%) of the capital of a government company is provided by the government.

Question 37.
What is bill of lading?
Answer:
Bill of Lading is a document containing the terms and conditions of the contract of carriage. It is issued by the shipping company and signed by the captain of the ship.

It acknowledges the receipt of the goods described in it on board the ship. It also serves as an official receipt of goods. It is a document of title of goods.

Question 38.
What do you mean by the concept of business ethics?
Answer:
Business exists to supply goods and services to the people from social point of view but from individual point of view, the primary objective of any business unit is to make profit.

The individual objective should not be in conflict with societal objective. These two objectives normally contradict each other, as one business enterprise may be good in individual objective and bad at social objective and vice versa.

Question 39.
Define Retailer?
Answer:
According to S. Evelyn Thomas “the retailer is the last of the many links in the economic chain whereby the consumer’s wants are satisfied smoothly and efficiently by retailers”.

Question 40.
Write any three differences between Direct taxes and Indirect taxes?
Answer:

PART – IV

Answer all the questions: [7 × 5 = 35]

Question 41 (a).
What are the features of public corporation? Explain any five?
Answer:
1. Special Statute:
A public corporation is created by a special Act of the Parliament or the State Legislature. The Act defines its powers, objectives, functions and relations with the ministry and the Parliament (or State Legislature).

2. Separate Legal Entity:
A public corporation is a separate legal entity with perpetual succession and common seal. It has an existence, independent of the Government. It can own property; can make contracts and file suits, in its own name.

3. Capital Provided by the Government:
The capital of a public corporation is provided by – the Government or by agencies controlled by the government. However, many public corporations have also begun to raise money from the capital market.

4. Financial Autonomy:
A public corporation enjoys financial autonomy. It prepares its own budget; and has authority to retain and utilize its earnings for its business.

5. Management by Board of Directors:
Its management is vested in a Board of Directors, appointed or nominated by the Government. But there is no Governmental interference in the day – to – day working of the corporation.

[OR]

(b) Explain the organizational structure of RBI?
Answer:
The head office of the RBI is situated in Mumbai. This central office has 33 departments in 2017. It has four zonal offices in Mumbai, Delhi, Calcutta and Chennai functioning under local boards with deputy governors as their heads. It also has 19 regional offices and 11 sub – offices (2017).

The RBI is governed by a central board of directors. The 21 member board is appointed by the Qovemment of India. It consists of:

1. One Governor and four deputy governors appointed for a period of four years.
2. Ten Directors from various fields.
3. Two Government officials.
4. Four Directors – one each from local boards.

Question 42 (a).
Sole proprietorship is a form of business organization in which an individual introduces his own capital, uses his own skill and intelligence in the management of the business. Explain the characteristics of a sole trader?
Answer:
Business owned and controlled by a single person is known as sole trading business.
The following are the characteristics of a sole trader:

1. Ownership by one man: This is owned by single person. The sole trader contributes the required capital.
2. Freedom of work and Quick decisions: The sole trader is the owner, so he need not consult with others. Hence he can take quick decision.
3. Unlimited liability: When his business assets are not sufficient to pay off the business debts he has to pay from his personal property.
4. Enjoying Entire Profit: All the benefits earned by the sole trader is enjoyed by him alone.
5. Absence of Government Regulation: A sole trading concern is free from Government regulations. No legal formalities are to be observed in its formation and management,
6. Maintenance of Secrecy: Since the trader manages all the affairs of the business, the secrecy can be maintained easily.

[OR]

(b) Partnership is the relation between persons who have agreed to share the profits of a business carried on by all. It is the result of an agreement. Closing of business is also by an agreement. It is called Dissolution of Partnership. Explain the dissolution of partnership firm without the order of the court?
Answer:
Dissolution of a partnership firm takes place in two ways:

1. Without the order of the court and
2. By the order of the court A.

Without the order of the court:

1. By agreement or mutual consent:
A firm may be dissolved when all the partners agree to close the affairs of the firm.

2. By insolvency of all the partners but one:
If any one of the partners is adjudged as insolvent, it is necessary to dissolve the firm.

3. When the objective becomes illegal:
When the business carried on by the partnership becomes illegal, the partnership firm is automatically dissolved.

4. By notice of dissolution:
In the case of partnership at will, if any partner gives in writing to close the firm, the firm will be dissolved.

5. On certain contingencies:

• On the expiry of the period of the firm.
• On the completion of a business.
• On the death of a partner.
• On the retirement of a partner.
• On the insolvency of a partner.

Question 43 (a).
Explain the various types of warehouses?
Answer:
1. Private Warehouses:
Private warehouses are built and owned by private business enterprises in order to store the products produced by them.

2. Government Warehouses:
They are created and operated by the Government to implement the programmes of the Government.

3. Public Warehouse:
It is open for public at large. Most of the business organisations, especially small and medium scale units cannot afford to have their own warehouses.

4. Co – operative Warehouses:
There are warehouses owned and managed by the marketing co – operative societies or agricultural co-operative societies. They are setup to provide warehousing facilities to their members.

5. Bonded Warehouses:
Bonded warehouses are those warehouses, which are licensed by the government to accept storage of imported goods which are not cleared due to non¬payment of customs duty by the importer.

[OR]

(b) Insurance is a contract between the insurer and the insured under which the insurer undertakes to compensate-the insured for the loss arising from the risk insured. Explain the principles of insurance?
Answer:
1. Utmost Good Faith:
According to this principle, both insurer and insured should enter into contract in good faith. Insured should provide all the information that impacts the subject matter. Insurer should provide all the details regarding insurance contract.

2. Insurable Interest:
The insured must have an insurable interest in the subject matter of insurance. Insurable interest means some pecuniary interest in the subject matter of the insurance contract.

3. Indemnity:
Indemnity means security or compensation against loss or damages. In insurance, the insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss. This principle ensures that the insured does not make any profit out of the insurance. This principle of indemnity is applicable to property insurance alone.

4. Causa Proxima:
The word ‘Causa proxima’ means ‘nearest cause’. According to this principle, when the loss is the result of two or more cause, the proximate cause, i.e. the direct. The direct, the most dominant and most effective cause of loss should be taken into consideration. The insurance company is not liable for the remote cause.

5. Contribution:
The same subject matter may be insured with more than one insurer then it is known as ‘Double Insurance’. In such a case, the insurance claim to be paid to the insured must be shared on contributed by all insurers in proportion to the sum assured by each one of them.

6. Subrogation:
Subrogation means ‘stepping the shoes on others’. According to this principle, once the claim of the insured has been settled, the ownership right of the subject matter of insurance passes on to the insurer.

7. Mitigation:
In case of a mishap, the insured must take off all possible steps to reduce or mitigate the loss or damage to the subject matter of insurance.

Question 44 (a).
Write short notes on:

1. Owner’s funds
2. Borrowed funds

Answer:
1. Owner’s Funds:
Owner’s funds mean funds which are provided by the owner of the enteiprises who may be an individual, or partners or shareholders of a company.

The profits reinvested in the business (ploughing back of profit or retained earnings) come under owner’s funds. These funds are not required to be refunded during the life time of business enterprise. It provides the owner the right to control the management of the enterprise.

2. Borrowed Funds:
The term ‘borrowed funds’ denotes the funds raised through loans or borrowings. For example, debentures, loans from banks and financial institutions, public deposits, trade credit, lease financing, commercial papers, factoring, etc., represent borrowed funds.

• These borrowed sources of funds provide specific period before which the fund is to be returned.
• Borrower is under legal obligation to pay interest at given rate at regular intervals to the lender.
• Generally borrowed funds are obtained on the security of certain assets like bonds, land, building, stock, vehicles, machinery, documents of title to the goods, and the like.

[OR]

(b) What is meant by consumers co-operative store? Explain its merits in brief?
Answer:
A consumers co-operative store is a retail organisation owned, managed and controlled by the
consumers themselves to obtain products of daily use at reasonable low prices. Its objective is to eliminate profits to middlemen by establishing a direct contact with the manufacturers.

People belonging to middle and low income groups, at least 25 persons have to come together to form a voluntary association and get it registered under the Cooperative Societies Act.

The capital of a co-operative store is raised by issuing shares to members. The management of the store is democratic and entrusted to an elected managing committee, where “one man one vote” is the rule.

The co – operative stores are very famous in Tamil Nadu. For example, Kamadhenu and Chinthamani co-operative supermarkets in Chennai, Karpagam in Vellore, etc. .

Question 45 (a).
Describe the agency functions of commercial banks?
Answer:
Banks act as agents of customers and provide certain services:

1. Transfer of Funds:
Banks issue demand drafts, bankers’ cheques, travelers’ cheques, etc. and help in transfer of funds from one place to another.

2. Periodic Payment of Premiums, Rent, etc:
After instruction from the customers, banks undertake the monthly payment of insurance premium, rent, telephone bills, etc., from the accounts of customers.

3. Collection and Payment of Cheques:
On behalf of customers, bank collect the cheques deposited into the accounts of customers from other banks and deposit cash in the customers’ accounts.

4. Acting as Executors, Trustees and Attorneys:
Banks act as executors of will of the customers and implement their will after their death.

5. Conduct Share Market transactions:
A Demat account should be opened with Depository Participant and that demat account should be linked with savings bank account by the customer.

6. Preparation of Income Tax Return:
Banks prepare the annual income tax return on behalf of the customers and provide income tax related advice to them.

7. Dealing in Foreign Exchange:
Banks buy and sell foreign currencies on behalf of customers.

8. Acting as Correspondent:
Banks act as correspondent of customers and receive travel, ticket, passport, etc.

[OR]

(b) Explain the services rendered by retailers to consumers?
Answer:
1. Regular Supply of Goods:
Retailers maintain a ready stock of various products of different manufacturers for sale to consumers.

2. New Products Information:
The retailers provide important information about the new arrival of products through their personal.

3. Credit Facilities:
Sometimes retailers provide credit facilities to their customers and enable them to increase their level of consumption.

4. Wide Selection:
Retailers generally keep stock of a variety of products of different manufacturers.

5. Miscellaneous Services:

• Retailers provide free door delivery services to the customers.
• They provide after sale service to customers.
• They allow cash discounts on their sales.

Question 46 (a).
Write a note on e-commerce models?
Answer:
1. Business to customers (B2C):
This is fastest growing segment in e-commerce space. Under this model, business concern sells directly to consumers.

2. Business to Business (B2B):
Under the model, business concerns transact with one another through internet. For instance, Snapdeal, Flipkart, Alibaba, Indiamart, Trade India.com etc.

3. Consumer to consumer (C2C):
Under this model, customers sell directly to other customers through online classified advertisement or through auction or through mobile or through market places.

Example, Indian ventures in C2C are Kraftly App (buying and selling anythings) which deals in handmade products of a wide range. Onceagainstore. com is a website that buys pre-owned women’s fashion products. Other players are Quikr, OLX, ebay, etc.

4. Customer to Business (C2B):
This model is reverse to auction model. Products like • automobile, electronic items, furniture and similar product are traded by customer through websites. Naukri.com and Monster.com are examples of Indian companies operating in this domain.

5. Business to Government (B2G):
This model envisages selling products and services by business consumer to Government organization. For instance TCS operates the passport application process for the Government of India as part off-line process.

[OR]

(b) Explain any four personal investment avenues?
Answer:
1. Public Provident Fund (PPF):
It is the safest long – term investment option for the investors in India. It is totally tax- free. PPF account can be opened in bank or post office. The money deposited cannot be withdrawn before 15 years and an investor can earn compound interest from this account.

However the investor can extend the time frame for the next five years if the investor does not opt to withdraw the amount matured for payment at maturity date. PPF investor can take loan against PPF account when he/she experiences financial difficulties.

2. Mutual Funds:
An individual investor who wants to invest in equities and bond With a balance of risk and return generally can invest in mutual funds. Nowadays people invest in stock markets through a mutual fund. Systematic investment plan is one of the best investment options in India.

3. Direct Equity or Share Purchase:
An individual can opt for investment in shares. But he has to analyse the market price of various shares traded in stock exchange, reputation of the company, consistency in the payment of dividend, the nature of the project undertaken by the company, growth prospects of industry in which a company is operating, before investing in shares. If the investment is made for a long time, it may yield good return.

4. Real Estate Investment:
Real estate is one of the fastest growing sectors in India. Buying a flat or plot is supposed to be the best decision amongst the investment options. The value of the real asset may increase substantially depending upon the area of location and other support facilities available therein.

Question 47 (a).
What are the functions of wholesalers?
Answer:
Following are the functions of wholesalers:

1. Collection of Goods: Wholesaler collects the goods from manufacturers or producers in bulk.
2. Storage of Goods: Wholesaler collects and stores them safely in warehouses, till they are sold out.
3. Distribution: Wholesaler sells goods to different retailers. Thus he performs the function of distribution.
4. Financing: Wholesalers provide financial support to producers and manufacturers by providing money in advance to them.
5. Risk Taking: Wholesaler buys finished goods from the producer and keeps them in the warehouses till the time they are sold and assumes the risk arising from price, spoilage of goods, and changes in demand.
6. Grading, Packing and Packaging: Wholesaler classifies the goods into different categories.
7. Providing Information: Wholesalers provide valuable information to retailers and producers.
8. Transportation: A wholesaler arranges for the transport of goods from producers to his warehouse and from the warehouse to retailer.

[OR]

(b) Explain the characteristics of a supermarket?
Answer:

1. Supermarkets are generally situated at the main shopping centres.
2. The goods kept on racks with clearly labelled price and quality tags in such stores.
3. The customers move into the store to pickup goods of their requirements, bring them to the cash counter, make payment and take home delivery.
4. The goods are sold on cash basis only. No credit facilities are made available.
5. Supermarkets are organized on departmerftal basis.
6. It requires huge investment.

Students can Download Tamil Nadu 11th Economics Model Question Paper 5 English Medium Pdf, Tamil Nadu 11th Economics Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Economics Model Question Paper 5 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 3:00 Hours
Maximum Marks: 90

PART – I

Choose the correct answer. Answer all the questions: [20 × 1 = 20]

Question 1.
Marginal revenue is the addition made to the …………………….
(a) Total sales
(b) Total revenue
(c) Total production
(d) Total cost
Answer:
(b) Total revenue

Question 2.
Function with single independent variable is known as ………………………
(a) Multivariate Function
(b) Bivariate Function
(c) Univariate Function
(d) Polynomial Function
Answer:
(c) Univariate Function

Question 3.
There is no opportunity cost in ……………………..
(a) Floating cost
(b) Prime cost
(c) Sunk cost
(d) social cost
Answer:
(c) Sunk cost

Question 4.
Density of population is rural areas are ……………………..
(a) Very high
(b) Very low
(c) Moderate
(d) Constant
Answer:
(b) Very low

Question 5.
Amartya Kumara Sen received the Nobel prize in Economics in the year ……………………..
(a) 1998
(b) 2000
(c) 2008
(d) 2010
Answer:
(a) 1998

Question 6.
The transfer of ownership from public sector to private sector is known as ……………………..
(a) Globalization
(b) Liberalization
(c) Privatization
(d) Nationalization
Answer:
(c) Privatization

Question 7.
The gateway of privatization ………………………..
(a) Denationalization
(b) Disinvestment
(c) Both (a) and (b)
(d) None of these
Answer:
(c) Both (a) and (b)

Question 8.
Equilibrium condition of a firm is …………………….
(a) MC = MR
(b) MC > MR
(c) MC < MR
(d) MR = price
Answer:
(a) MC = MR

Question 9.
The reward given for the use of capital ………………………..
(a) Rent
(b) Wage
(c) Interest
(d) Profit
Answer:
(c) Interest

Question 10.
SPIC is located in ……………………
(a) Chennai
(b) Madurai
(c) Tuticorin
(d) Pudukkottai
Answer:
(c) Tuticorin

Question 11.
The advocate of democratic socialism was ……………………..
(a) Jawaharlal Nehru
(b) P.C. Mahalanobis
(c) Dr. Rajendra prasad
(d) Indira Gandhi
Answer:
(a) Jawaharlal Nehru

Question 12.
Which is considered as the basic unit for rural areas?
(a) Panchayat
(b) Village
(c) Town
(d) Municipality
Answer:
(b) Village

Question 13.
The objective of the Industrial policy 1956 was ……………………
(a) Develop heavy Industries
(b) Develop agricultural sector only
(c) Develop private sector only
(d) Develop cottage Industries only
Answer:
(a) Develop heavy Industries

Question 14.
The long – run production function is explained by ………………………
(a) Law of demand
(b) Law of supply
(c) Return to scale
(d) Law of variable proportions
Answer:
(c) Return to scale

Question 15.
How many commercial banks were nationalised in 1969?
(a) 10
(b) 12
(c) 14
(d) 16
Answer:
(c) 14

Question 16.
Expansion of FDI ……………………
(a) Foreign Private Investment
(b) Foreign Portfolio
(c) Foreign Direct Investment
(d) Forex Private Investment
Answer:
(c) Foreign Direct Investment

Question 17.
Thiruvalluvar Economic ideas mainly dealt with ………………………..
(a) Wealth
(b) Poverty is the curse in the society
(c) Agriculture
(d) All the above
Answer:
(d) All the above

Question 18.
State of rest is a point termed as ………………………….
(a) Equilibrium
(b) Non – Equilibrium
(c) Minimum Point
(d) Maximum Point
Answer:
(a) Equilibrium

Question 19.
An incremental change independent variable with respect to change independent variable is known as ………………………….
(a) Slope
(b) Intercept
(c) Variant
(d) Constant
Answer:
(a) Slope

Question 20.
In sex ratio, Tamil Nadu ranks ……………………..
(a) First
(b) Second
(c) Third
(d) Fourth
Answer:
(c) Third

PART – II

Answer any seven question in which Question No. 30 is compulsory. [7 × 2 = 14]

Question 21.
Define Micro industry?
Answer:

1. Micro, small and medium Enterprises are MSMEs produce a wide variety of products in almost all sectors.
2. The prominent among them are the engineering, electrical, chemicals, plastics, steel, paper, matches, textiles, hosiery and garments sector.

Question 22.
Find the average cost function where TC = 60 + 10x + 15x²
Answer:

1. Formula = \(\frac{TC}{x}\)
2. Average cost function = \(\frac{60}{x}\) + \(\frac{10x}{x}\) + \(\frac { 15x^{ 2 } }{ x } \)
3. Average cost = \(\frac{60}{x}\) + 10 + 15x

Question 23.
What is the formula for elasticity of supply if you know the supply function?
Answer:
Elasticity of supply = \(\frac{dq}{dp}\)

Question 24.
Define Marginal product of a factor?
Answer:
It is the addition or the increment made to the total product when one more unit of the variable input is employed . In other words, it is the ratio of the change in the total product to the change in the units of the input. It is expressed as
Where, MP = ∆TP/∆N
Where, MP = Marginal Product
∆TP = Change in total product
∆N = Change in units of input
It is also expressed as
MP = TP[n] – TP [n – 1]
MP = Marginal product
TP [n] = Total product of employing nth unit of a factor.
TP [n – 1] = Total product of employing the previous unit of a factor, that is, [n – 1]^th unit of a factor.

Question 25.
Define Rural economy?
Answer:

1. Rural Economics deals with the application of economic principles in understanding and developing rural areas.
2. Rural areas are geographical areas located outside towns and cities.
3. Rural Economy refers to villages and rural community refers to people living in villages.

Question 26.
What are goods?
Answer:
Goods are also called:

1. Products
2. Commodities
3. Things
4. In Economics, the term ‘goods’ implies the term ‘services’.

Question 27.
Mention the types of distribution?
Answer:
Personal Distribution:
Personal Distribution is the distribution of national income among the individuals.

Functional Distribution:
Functional Distribution means the distribution of income among the four factors of production namely land, labour, capital and organization for their services in production process.

Question 28.
State the features that distinguish a land tenure system from other system?
Answer:
(I) Land Tenure refers to the system of land ownership and management.

(II) The features that distinguish a land tenure system from the others relate to the following:

• Who owns the land;
• Who cultivate the land;
• Who is responsible for paying the land revenue to the government.

(III) Based on these questions, three different types of land tenure existed in India before Independence.

Question 29.
What is meant by Sunk cost?
Answer:
A cost incurred in the past and cannot be recovered in future is called as Sunk Cost. This is historical but irrelevant for future business decisions. It is called as sunk because; they are unalterable, unrecoverable and if once invested it should be treated as drowned or disappeared.

Question 30.
Point out the essential features of pure competition?
Answer:

1. Large number of Buyers and sellers.
2. Homogeneous Product and Uniform price.
3. Free Entry and exit.
4. Absence of Transport cost.
5. Perfect mobility of factors of production.
6. Perfect knowledge of the market.
7. No Government Intervention.

PART – III

Answer any seven question in which Question No. 40 is compulsory. [7 × 3 = 21]

Question 31.
Compare productivity of any two food crops between Tamil Nadu and India?
Answer:
Productivity position of Tamil Nadu and India:

1. The Government of Tamil Nadu lays emphasis on agricultural production and productivity.
2. Tamil Nadu tops in productivity, in food crops as well as non – food crops among the states in India.

Productivity position of Tamil Nadu in India

1. Tamil Nadu ranks first in maize, cumbu, groundnut, oil seeds and cotton.
2. Tamil Nadu ranks second in rice and coconut.
3. Tamil Nadu ranks third in sugarcane, sunflower and Jowar.

Question 32.
How do you justify the merits of privatization?
Answer:

1. Privatisation is transfer of ownership and management of enterprises from public sector to private sector.
2. Denationalization, disinvestment and opening exclusive public sector enterprises to private sector are the gateways to privatization.

Question 33.
State and explain the elasticity of supply?
Answer:

1. Elasticity of supply may be defined as the degree of responsiveness of change in supply to change in price on the part of sellers.
2. It is Mathematically expressed as,

Elasticity of supply = Proportionate change in supply/Proportionate change in price
e_s = \(\frac { \Delta Q_{ S } }{ Q_{ S } } \)/\(\frac { \Delta P }{ P } \)
e_s = \(\frac { \Delta Q_{ S } }{ \Delta P } \) × \(\frac{P}{Qs}\)
Where Q_s represents the supply, P presents price, ∆ denotes a change.

Question 34.
What are the functions of Entrepreneur?
Answer:
Functions of an Entrepreneur:
1. Initiation:
An organizer is the initiator of the business, by considering the situation and availability of resources and planning the entire process of business of production.

2. Innovation:
A successful entrepreneur is always an innovator. He introduces new methods in the production process.

3. Co – ordination:
An organizer applies a particular combination of the factor of production, to start and run the business or production.

4. Control, Direction and Supervision:
An organiser controls so that nothing prevents the organisation from achieving its goal. He directs the factors to get better results and supeiVises for the efficient functioning of all the factors involved in the process of production.

5. Risk – taking and uncertainty – bearing:
There are risk – taking and uncertainty-bearing obstacles. Risks may be insured but uncertainties cannot be insured. They reduce the profit.

Question 35.
List out the kinds of wages?
Answer:
Wages are divided into four types.

1. Nominal Wages or Money Wages:
Nominal wages are referred to the wages paid in terms of money.

2. Real Wages:
Real wages are the wages paid in terms of goods and services. Hence, real wages are the purchasing power of money wages.

3. Piece Wages:
Wages that are paid on the basis of quantum of work done.

4. Time Wages:
Wages that are paid on the basis of the amount of time that the worker works.

Question 36.
Give short note on Cold Storage?

1. India is the largest producer of fruits and second largest producer of vegetables in the world.
2. Inspite of that per capita availability of fruits and vegetables is quite low because of post – harvest losses which account for about 25% to 30% of production.
3. Besides, quality of a sizable quantity of produce also deteriorates by the time it reaches the consumer.
4. Most of the problems relating to the marketing of fruits and vegetables can be traced to their perishability.
5. Perishability is responsible for high marketing costs, market gluts, price fluctuations and other similar problems.
6. In order to overcome this constraint, the Government of India and the Ministry of Agriculture promulgated an order known as “cold storage order, 1964” under section 3 of the Essential Commodities Act., 1955.

Question 37.
Compare positive economics and normative economics?
Answer:

Question 38.
Describe the development of textile Industry in Tamil Nadu?
Answer:

1. Tamil Nadu is the largest textile hub of India.
2. Tamil Nadu is known as the “Yam Bowl” of the country accounting for 41% of India’s cotton yam production.
3. The textile industry plays a significant role in the Indian economy by providing direct employment to an estimated 35 million people, and thereby contributing 4% of GDP and 35% of gross export earnings.
4. The textile sector contributes to 14% of the manufacturing sector.
5. From spinning to garment manufacturing, entire textile production chain facilities are in Tamil Nadu.
6. About half of India’s total spinning mill capacity is in Tamil Nadu.
7. The western part of Tamil Nadu comprising Coimbatore, Tirupur, Erode, Dindigul and Karur has the majority of spinning mills manufacturing cotton, polyester, blended yam and silk yam used by garment units in Tamil Nadu, Maharastra etc.,
8. Yam is also exported to China, Bangladesh, etc.,
9. Tirupur known as “knitting city” is the exporter of garments worth USD (United States Dollar) 3 billion.
10. Karur is the major home for textile manufacturing (curtain cloth, bed linens, kitchen linens, toilet linens, table linens, wall hangings etc.,) and export hub in India.
11. Erode is the main cloth market in South India for both retail and wholesale ready – mades.

Question 39.
What are the important features of utility?
Answer:
The important features of utility are:

1. Utility is psychological. It depends on the consumer’s mental attitude. For example, a vegetarian derives no utility from mutton.
2. Utility is not equivalent to usefulness. For example, a smoker derives utility from a cigarette; but, his health gets affected.
3. Utility is not the same a pleasure. A sick person derives utility from taking a medicine, but definitely it is not providing pleasure.
4. Utility is personal and relative. An individual obtains varied utility from one and the same good in different situations and places.
5. Utility is the function of the intensity of human want. An individual consumer faces a tendency of diminishing utility.
6. Utility cannot be measured objectively. It is a subjective concept and it cannot be measured numerically.
7. Utility has no ethical or moral significance. For example, a cook derives utility from a knife using which he cuts some vegetables, and a killer wants to stab his enemy by that knife. In economics, a commodity has utility if it satisfies a human want.

Question 40.
Mention the features of SHGs?
Answer:
Major features of SHGs [Self Help Groups]

1. SHG is generally an economically homogeneous group formed through a process of self – selection based upon the affinity of its members.
2. Most SHGs are women’s groups with membership ranging between 10 and 20.
3. SHGs have well – defined rules and by – laws, hold regular meetings and maintain records and savings and credit discipline.
4. SHGs are self managed institutions characterized by participatory and collective decision making.

PART- IV

Answer all the questions. [7 × 5 = 35]

Question 41 (a).
A firm has the revenue function R = 600q – 0.03q² and the cost function is
C = 150q + 60,000, where q is the number of units produced. Find AR, AC, MR and MC?
Answer:
(I) Average Revenue = \(\frac{R}{q}\)
\(\frac { 600q-0.03q^{ 2 } }{ q } \) = \(\frac{600q}{q}\) – \(\frac { 0.03q^{ 2 } }{ q } \)
AR = 600 – 0.03q

(II) Average Cost = \(\frac{C}{q}\)
= \(\frac{150q+60000}{q}\)
= \(\frac{150q}{q}\) + \(\frac{60000}{q}\)
AC = 150 + \(\frac{60000}{q}\)

(III) Marginal Revenue = \(\frac{dR}{dq}\)
R = 600q – 0.03q²
\(\frac{dR}{dq}\) = 600 – (0.03)q²
\(\frac{dR}{dq}\) = 600 – (0.03)(2q)
MR = 600 – 0.06q

(IV) Marginal Cost = \(\frac{dC}{dq}\)
C = 150q + 60000
MC = 50

[OR]

(b) What are the steps involved in executing a MS Excel sheet?
Answer:

1. MS – excel is used in data analysis bý using formula.
2. A spread sheet is a large sheet of paper which contains rows and columns.
3. The intersection of rows and columns is termed as cell.
4. MS – Excel 2007 version supports upto I million rows and 16 thousand columns per work sheet.

MS Excel Start From Various Options:

1. Click Start → Program → Micro Soft Excel
2. Double click the MS Excel Icon from thè Desktop

Worksheet:
MS – Excel work sheet is a table like document containing rows and columns with data and formula.

There are four kinds of calculation operators. They are:

1. Arithmetic
2. Comparison
3. Text Concatenation [link together]
4. Reference

MS – Excel helps to do data analysis and data presentation in the form of graphs, diagrams, area chart, line chart etc.

Question 42 (a).
Illustrate the concept of producer’s equilibrium?
Answer:
Producer equilibrium implies the situation where producer maximizes his output. It is also known as optimum combination of the factors of production. In short, the producer manufactures a given amount of output with ‘least cost combination of factors’, with his given budget.

Optimum Combination of Factors implies either:
There is output maximisation for given inputs or there is cost minimisation for the given output.

Conditions for Producer Equilibrium:
The two conditions that are to be fulfilled for the attainment of producer equilibrium are:
The iso – cost line must be tangent to iso – quant curve. At point of tangency, the iso-quant curve must be convex to the origin or MRTSLk must be declining.

[OR]

(b) State the relationship between AC and MC?
Answer:
There is a unique relationship between the AC and MC curves as shown in diagram.

1. When AC is falling, MC lies below AC.
2. When AC becomes constant, MC also becomes equal to it.
3. When AC starts increasing, MC lies above the AC.
4. MC curve always cuts AC at its minimum point from below.

Question 43 (a).
Explain various divisions of Economics?
Answer:
Economics sub divisions are:

(I) Consumption:

• Human wants coming under consumption is the starting point of economic activity.
• In this section the characteristics of human wants based on the behaviour of the consumer, the diminishing marginal utility and consumer’s surplus are dealt with.

(II) Production:

• Production is the process of transformation of inputs into output.
• This division covers the characteristics and role of the factors of production namely land, labour, capital and organization.

(III) Exchange:

• Exchange is concerned with price determination in different market forms.
• This division covers trade and commerce.
• Consumption is possible only if the produced commodity is placed in the hands of the consumer.

(IV) Distribution:

• Production is the result of the coordination of factors of production.
• Since a commodity is produced with the efforts of land, labour, capital and organization, the produced wealth has to be distributed among the cooperating factors.
• The reward for factors of production is studied in this division under rent, wages, interest and profit.
• Distribution studies about the pricing of factors of production.

[OR]

(b) Explain the law of demand and its exceptions?
Answer:
Definitions:
The Law of Demand says as “the quantity demanded increases with a fall in price and diminishes with a rise in price”. – Marshall
“The Law of Demand states that people will buy more at lower price and buy less at ‘ higher prices, other things remaining the same”. – Samuelson

Assumptions of Law of Demand:

1. The income of the consumer remains constant.
2. The taste, habit and preference of the consumer remain the same.
3. The prices of other related goods should not change.
4. There should be no substitutes for the commodity in study.
5. The demand for the commodity must be continuous.
6. There should not be any change in the quality of the commodity.

Given these assumptions, the law of demand operates. If there is change even in one of these assumptions, the law will not operate.

Explanation:
The law of demand explains the relationship between the price of a commodity and the quantity demanded of it. This law states that quantity demanded of a commodity expands with a fall in price and contracts with a rise in price.

In other words, a rise in price of a commodity is followed by a contraction demand and a fall in price is followed by extension in demand. Therefore, the law of demand states that there is an inverse relationship between the price and the quantity demanded of a commodity.

Exceptions to the law of demand:
Normally, the demand curve slopes downwards from left to right. But there are some unusual demand curves which do not obey the law and the reverse occurs. A fall in price brings about a contraction of demand and a rise in price results in an extension of demand. Therefore the demand curve slopes upwards from left to right.

It is known as exceptional demand curve. In the above diagram, DD is the demand curve which slopes upwards from left to right. It shows that when price is OP₁, OQ₁, is the demand and when the price rises to OP₂, demand also extends to OQ₂.

Question 44 (a).
How price and output are determined under the perfect competition?
Answer:
Perfect Competition: Firm’s Equilibrium in the Short Run

In the short run, at least a few factors of production are fixed. The firms under Perfect Competition take the price (10) from the industry and start adjusting their quantities produced. For example Q_d = 100 – 5P and Q_s = 5P.

At equilibrium Q_d = Q_s
Therefore 100 – 5P = 5P
100 = 10P; 100/10 = P; Qd = demand
P = 10; P = Price
Qd = 100 – 5(10); Q_s = Supply
100 – 50 = 50
Q_s = 5 (10) = 50
Therefore 50 = 50

This diagram consists of three panels. The equilibrium of an industry is explained in the first panel. The demand and supply forces of all the firms interact and the price is fixed as 10. The equilibrium of an industry is obtained at 50 units of output.

In the second part of the diagram, AC curve is lower than the price line. The equilibrium condition is achieved where MC = MR. Its equilibrium quantity sold is 50. With the prevailing price, ₹ 10 it experiences super normal profit. AC = ₹ 8, AR = ₹ 10.

Its total revenue is 50 × 10 = 500. Its total cost is 50 × 8 = 400. Therefore, its total profit is 500 – 400 = 100.

In the third part of the diagram, firm’s cost curve is above the price line. The equilibrium condition is achieved at point where MR = MC. Its quantity sold is 50. With the prevailing price, it experiences loss. (AC > AR). Its total revenue is 50 × 10 = 500. Its total cost is 50 × 12 = 600. Therefore, its total loss is 600 – 500 = 100.

As profit prevails in the market, new firms will enter the industry, thus increasing the supply of the product. This means a decline in the price of the product and increase the cost of production. Thus, the abnormal profit will be wiped out; loss will be incurved. When loss prevails in the market, the existing loss making firms will exit the industry, thus decreasing the supply of the product.

This means a rise in the price of the product and reduction in the cost of production. So the loss will vanish; Profit will emerge. Consequent upon the entry and exit of new firms into the industry, firms always earn ‘normal profit’ in the long run as shown in diagram.

[OR]

(b) Elucidate the Loanable funds Theory of Interest?
Answer:

1. The Loanable Funds Theory, also known as the “Neo – Classical Theory,” was developed by Swedish economists like Wicksell, Bertil, Ohlin, Viner, Gunnar Myrdal and others.
2. According to this theory, interest is the price paid for the use of loanable funds.
3. The rate of interest is determined by the equilibrium between demand for and supply of ‘ loanable funds in the credit market.

Demand for loanable funds
The demand for loanable funds depends upon the following:

(I) Demand for Investment [I]

• The most important factor responsible for the loanable funds is the demand for investment.
• Bulk of the demand for loanable funds comes from business firms which borrow money for purchasing capital goods.

(II) Demand for consumption [C]
The demand for loanable funds comes from individuals who borrow money for consumption purposes also.

(III) Demand for Hoarding [H]

• The next demand for loanable funds comes from hoarders. Demand for hoarding money arises because of people’s preference for liquidity, idle cash balances and so on.
• The demand for C, I and H varies inversely with interest rate.

Supply of Loanable funds:
The supply of loanable funds depends upon the following four sources:

1. Savings [S]:
Loanable funds comes from savings. According to this theory, savings may be of two types, namely,

• Savings planned by individuals are called “ex-ante-savings ”.
• The unplanned savings are called ‘ex-post savings”.

2. Bank Credit [BC]:
The bank credit is another source of loanable funds. Commercial banks create credit and supply loanable funds to the investors.

3. Dishoarding [DH]:
Dishoarding means bringing out the hoarded money into use and thus it constitutes a source of supply of loanable funds.

4. Disinvestment: [DI]:
Disinvestment is the opposite of investment. Disinvestment means not providing sufficient funds for depreciation of equipment.

It gives rise to the supply of loanable funds. All the four sources of supply of loanable funds vary directly with the interest rate.

Question 45 (a).
The features of Rural Economy are peculiar’Argue?
Answer:
Features of Rural Economy:

(I) Village is an Institution:
The village is a Primary Institution and it satisfies almost all the needs of the rural community. The rural people have a feeling of belongingness and a sense of unity towards each other.

Dependence on Agriculture:
The rural economy depends much on nature and agricultural activities. Agriculture and allied activities are the main occupation in rural areas.

Life of Rural people:
Lifestyles in villages are very simple. Public services like education, housing, health and sanitation, transport and communication, banking, roads and markets are limited and unavailable.

The standards of living of majority of rural people are poor and pitiable. In terms of methods of production, social organization and political mobilization, rural sector is extremely backward and weak.

Population Density:
Population density, measured by number of persons living per sq.km is very low and houses are scattered in the entire villages.

Employment:
There exists unemployment, seasonal unemployment and under employment in rural areas.

Poverty:
Poverty is a condition where the basic needs of the people like food, clothing and shelter are not being met.

Indebtedness:
People in rural areas are highly indebted owing to poverty and underemployment, lack of farm and non – farm employment opportunities, low wage employment, seasonality in production, poor marketing network etc.

Rural Income:
The Income of the rural people is constrained as the rural economy is not sufficiently vibrant to provide them.

Dependency:
Rural households are largely dependent on social grants and remittances from family members working in urban areas and cities.

Dualism:
Dualism means the co-existence of two extremely different features like developed and under developed. These characteristics are very common in rural areas. Inequality: The distributions of income, wealth and assets are highly skewed among rural people. Land, livestock and other assets are owned by a few people.

Migration:
Rural people are forced to migrate from villages to urban areas in order to seek gainful employment for their livelihood.

[OR]

(b) Explain the various sources of energy in Tamil Nadu?
Answer:
Tamil Nadu tops in power generation among the Southern States as seen in the table. Tamil Nadu 26,865 MW in 1st Rank in the energy level. Tamil Nadu is in the forefront of all other Indian States in installed capacity.

Muppandal wind farm is a renewable energy source, supplying the villagers with electricity for work. Wind farms were built in Nagercoil and Tuticorin apart from already existing ones around Coimbatore, Pollachi, Dharapuram and Udumalaipettai. These areas generate about half of India’s 2,000 megawatts of wind energy or two percent of the total power output of India.

Nuclear Energy:
The Kalpakkam Nuclear Power Plant and the Koodankulam Nuclear Power Plant are the major nuclear energy plants for the energy grid.

Thermal power:

1. In Tamil Nadu the share of thermal power in total energy sources is very high and the thermal power plants are at Athippattu (North Chennai) Ennore, Mettur, Neyveli and Thoothukudi.
2. The generation of power under various sources is given here.

Hydel Energy:

1. There are about 20 hydro-electric units in Tamil Nadu.
2. The prominent units are Hundah, Mettur, Periyar, Maravakandy, Parson Valley etc.,

Solar Energy:

1. Tamil Nadu tops in solar power generation in India as seen in the table here:
2. Southern Tamil Nadu is considered as pne of the most suitable regions in the country for developing solar power projects.

Wind Energy:

1. Tamil Nadu has the highest installed wind energy capacity in India.
2. The State has very high quality of offshore wind energy potential off the Tirunelveli coast and southern Thoothukudi and Rameswaram coast.

Question 46 (a).
What are the methods of measuring Elasticity of demand?
Answer:
There are three methods of measuring price elasticity of demand.

1. The Percentage method:
e_p = \(\frac { \Delta Q }{ \Delta P } \), \(\frac{P}{Q}\)
It is also known as ratio method, when we measure the ratio as:
e_p = \(\frac { %\Delta Q }{ %\Delta P } \) where,
% ∆Q = Percentage change in demand
% ∆P = Percentage change in price

2. Total Outlay Method:
Marshall suggested that the simplest way to decide whether demand is elastic or inelastic is to examine the change in total outlay of the consumer or total revenue of the firm Total Revenue = (Price × Quantity Sold)
TR = ( P × Q)

Where there is inverse relation between Price and Total Outlay, demand is elastic. Direct relation means inelastic. Elasticity is unity when Total Outlay is constant.

3. Point or Geometrical Elasticity:
When the demand curve is a straight line, it is said to be linear. Graphically, the point elasticity of a linear demand curve is shown by the ratio of the segments of the line to the right and to the left of the particular point.
Lower segment of the demand curve
Point Elasticity =

e_p = \(\frac{L}{U}\)
Where ‘e_p’ stands for point elasticity, ‘L’ stands for the lower segment and ‘U’ for the upper segment.

[OR]

(b) Explain the VKRV Rao’s National Income Methodology and Industrialization?
Answer:
(a) Rao’s National Income Methodology:

1. Rao’s name is remembered for his pioneering work on the enumeration of national income of India.
2. He attempted
   • To develop the national income concepts suited to India and developing countries.
   • To analyze the concepts of investment, saving and the multipliers is an underdeveloped economy.
   • To study the compatibility of the national incomes of Industrialized and underdeveloped countries.
3. Rao’s paper on “Full Employment and Economic Development” was one of the earliest contributions in the field of development towards employment.

(b) Rao’s views on Industrialization:
Rao gave the following reasons for low per capita income and low levels of per capita nutrition in India.

1. Uneconomic holdings with sub-divisions and fragmentation.
2. Low levels of water availability for crops.
3. Excess population pressure on agriculture due to the absence of a large industrial sector.
4. Absence of capital.
5. Absence of autonomy in currency policy, and in general in monetary matters encouraging holding of gold.

Question 47 (a).
Compare and contrast various definitions of economics?
Answer:
1. Adam Smith’s wealth definition:

• Adam Smith [1723 – 1790] in his book “An Inquiry into Nature and Cause of Wealth of Nations” [1776] defines “Economics as the science of wealth”
• He explains how a nation’s wealth is created and increased.
• He considers that the individual in the society wants to promote his own gain and in this process, he is guided and led by an “invisible hand”
• Adam Smith favours the introduction of “division of labour” to increase the quantum of output.
• Severe competition in factories and society helps in bettering the product.
• Supply force is very active and a commodity is made available to the consumers at the lowest price.

2. Alfred Marshall welfare definition: .

• Alfred Marshall [1842-1924] in his book “Principles of Economics” [1890] defines economics thus “Political Economy” or Economics is a study of mankind in the ordinary business of life.
• It examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well being.
• Thus , it is on one side a study of wealth and on the other and more important side, a part of the study of man”.

The important features of Marshall’s definition are:

• Economics does not treat wealth as’the be-all and end-all of economic activities.
• Man promotes primarily welfare and not wealth.
• The science of economics contains the concerns of ordinary people who are moved by love and not merely guided or directed by the desire to get maximum monetary benefit.
• Economics is a social science. It studies people in the society who influence one another.

3. Lionel Robbins – Scarcity definition:

• Lionel Robbins published a book “An Essay on the Nature and Significance of Economic Science” in 1932.
• According to him, “Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses”.

The major features of Robbins’ definition:

• Ends refer to human wants, human beings have unlimited number of wants.
• On the other hand, resources or means that go to satisfy the unlimited human wants are limited or scarce in supply.
• The scarce means are capable of having alternative uses.
• An individual grades his wants and satisfies first his most urgent want.
• Economics, according to Robbins, is a science of choice. •

4. Samuelson’s – growth definition:

• Paul Samuelson defines economics as “the study of how men and society choose, with or without the use of money, to employ scarce productive resources which could have alternative uses to produce various. commodities over time, and distribute them for consumption, now and in the future among various people and groups of society”.
  The major implications of this definition are as follows:
• Samuelson’s makes his definition dynamic by including the element of time in it.
• Samuelson’s definition is applicable also in a barter economy.
• His definition covers various aspects like production, distribution and consumption.
• Samuelson treats economics as a social science.
• Samuelson appears to be the most satisfactory.

[OR]

(b) Explain the law of Equi – marginal utility?
Answer:
The law of the Equi-marginal utility:

1. The law of diminishing marginal utility is applicable only to the want of a single commodity.
2. The law of equi – marginal utility explains the behavior of a consumer when he consumer more than one commodity.
3. Wants are unlimited but the income which is available are limited.
4. This law explains how the consumer spends his limited income on various commodities to get maximum satisfaction.
5. Law of Equi-Marginal Utility is also known as the law of substitution.
6. “The law of consumer’s equilibrium ”
7. “Gossen’s second law ” and “ The law of maximum satisfaction”.

Definition:
Marshall states the law as, “If a person has a thing which he can put to several uses, he will distribute it among these uses in such a way that it has the same marginal utility in all. For, if it had a greater marginal utility in one use than another he would gain by taking away some of it from the second use and applying it to first”.

Assumption:

1. The consumer is rational in the sense that he wants to get maximum satisfaction.
2. The utility of each commodity is measurable in cardinal numbers.
3. The marginal utility of money remains constant.
4. The income of the consumer is given. ‘
5. There is perfect competition in the market.
6. The prices of the commodities are given.
7. The law of diminishing marginal utility operates.

Illustration:
This law can be illustrated with the help of table. Let us assume that the consumer has a given income of ₹ 11. He wants to spend this entire income [i.e. ₹ 11] on Apple and Orange. The price of an Apple and the price of an orange is ₹ 1 each.

If the consumer wants to attain maximum utility, he should buy 6 units of apples and 5 units of oranges, so that she can get [92 + 58] = 150 units. No other combination of Apple and Orange can give higher than 150 utilities.

Diagrammatic Illustration:
In the diagram, X – axis represents the amount of money spent and Y axis represents the marginal utilities of Apple and Orange respectively.

If the consumer spends ₹ 6 on Apple and ₹ 5 on Orange, the marginal utilities of both are equal, i.e. AA₁ = BB₁ [4 = 4], Hence, he gets maximum utility.

Criticisms:

1. In practice, utility cannot be measured, only be felt.
2. This law cannot be applied to durable goods.

Students can Download Tamil Nadu 11th Economics Model Question Paper 4 English Medium Pdf, Tamil Nadu 11th Economics Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Economics Model Question Paper 4 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 3:00 Hours
Maximum Marks: 90

PART – I

Choose the correct answer. Answer all the questions: [20 × 1 = 20]

Question 1.
The cost incurred by producing one more unit of output is ……………………. cost.
(a) Variable
(b) Fixed
(c) Marginal
(d) Total
Answer:
(c) Marginal

Question 2.
Ordinal utility can be measured by ……………………
(a) Ranking
(b) Numbering
(c) Wording
(d) None of these
Answer:
(a) Ranking

Question 3.
A production function measures the relation between ……………………..
(a) Input prices and output prices
(b) Input prices and the quantity of output
(c) The quantity of inputs and the quantity of output
(d) The quantity of inputs and input prices
Answer:
(c) The quantity of inputs and the quantity of output

Question 4.
If average product is decreasing, then marginal product ……………………
(a) Must be greater than average product
(b) Must be less than average product
(c) Must be increasing
(d) Both (a) & (c)
Answer:
(b) Must be less than average product

Question 5.
Price discrimination will always lead to ………………………
(a) Increase in output
(b) Increase in profit
(c) Different prices
(d) (b) and (c)
Answer:
(d) (b) and (c)

Question 6.
Which of the following is a micro – economics statement?
(a) The real domestic output increased by 2.5 percent last year.
(b) Unemployment was 9.8 percent of the labour force last year.
(c) The price of wheat determines its demand
(d) The general price level increased by 4 percent last year.
Answer:
(c) The price of wheat determines its demand

Question 7.
The marginal productivity theory was developed by ……………………
(a) Clark
(b) Wickseed
(c) Walras
(d) All
Answer:
(c) Walras

Question 8.
The chief exponent of the cardinal utility approach was …………………..
(a) J.R. Hicks
(b) R.G. D. Allen
(c) Marshall
(d) Stigler
Answer:
(c) Marshall

Question 9.
Keynesian Theory of interest is popularly known as ……………………
(a) Abstinence theory
(b) Liquidity preference theory
(c) Loanable funds theory
(d) Agio theory
Answer:
(b) Liquidity preference theory

Question 10.
Total revenue is equal to total output sold multiplied by ………………….
(a) Price
(b) Total cost
(c) Marginal revenue
(d) Marginal cost
Answer:
(a) Price

Question 11.
In which of the following is not a type of market structure price will be very high?
(a) Perfect competition
(b) Monopoly
(c) Duopoly
(d) Oligopoly
Answer:
(b) Monopoly

Question 12.
The Father of Green Revolution in India was ……………………..
(a) M.S. Swaminathan
(b) Gandhi
(c) Visweswaraiah
(d) N.R. Viswanathan
Answer:
(a) M.S. Swaminathan

Question 13.
A Statement of equality between two quantities is called ……………………
(a) Inequality
(b) Equality
(c) Equations
(d) Functions
Answer:
(c) Equations

Question 14.
Product obtained from additional factors of production is terms as ………………….
(a) Marginal product
(b) Total product
(c) Average product
(d) Annual product
Answer:
(a) Marginal product

Question 15.
Rent is the reward for the use of ……………………..
(a) Capital
(b) Labour
(c) Land
(d) Organization
Answer:
(c) Land

Question 16.
Revenue received from the sale of additional unit is termed as …………………….. revenue.
(a) Profit
(b) Average
(c) Marginal
(d) Total
Answer:
(c) Marginal

Question 17.
Tamil Nadu is rich in ……………………
(a) Forest resource
(b) Human resource
(c) Mineral resource
(d) All the above
Answer:
(d) All the above

Question 18.
The New foreign trade policy was announced in the year ……………………….
(a) 2000
(b) 2002
(c) 2010
(d) 2015
Answer:
(a) 2000

Question 19.
The PQLI was developed by ……………………..
(a) Planning Commission
(b) Nehru
(c) Morris
(d) Morrisd.Biswajeet
Answer:
(c) Morris

Question 20.
In India’s total cement production, Tamil Nadu ranks ……………………….
(a) Third
(b) Fourth
(c) First
(d) Second
Answer:
(a) Third

PART – II

Answer any seven question in which Question No. 30 is compulsory. [7 × 2 = 14]

Question 21.
State the meaning of privatization?
Answer:
Privatization means transfer of ownership and management of enterprises from public sector to private sector.

Question 22.
What are the reasons for upward sloping supply curve?
Answer:

1. A supply curve represents the data given in the supply schedule. As the price of the commodity increases, the quantum supplied of the commodity also increases. Thus the supply curve has a positive slope from left to right.
2. The quantum supplied of commodity x is represented on X axis. And the price of the commodity is represented on the Y axis. The points such as e, d, c, b and a on the supply curve SS’, represent various quantities at different prices.

Question 23.
Give a short note on Sen’s “choice of Technique”?
Answer:
Sen’s “Choice of Technique” was a research work where he argued that in a labour surplus economy; generation of employment cannot be increased at the initial stage by the adaptation of capital – intensive technique.

Question 24.
What are major ports in Tamil Nadu?
Answer:

1. Tamil Nadu has three major ports; one each at Chennai, Ennore, and Thoothukudi as well as one intermediate port in Nagpattinam, and 23 minor ports.
2. All the minor ports are managed by the Tamil Nadu Maritime Board, Chennai Port.
3. Ennore port was recently converted from an intermediate port to a major port and handles all the coal and ore traffic in Tamil Nadu.

Question 25.
Define cost function?
Answer:
The function relationship between cost and output is expressed as ‘Cost Function’.
A Cost Function may be written as
C = f(Q)
Eg. TC = Q³ – 18Q² + 91Q + 12
Where, C = Cost and Q = Quantity of output. Cost functions are derived functions because they are derived from Production Functions.

Question 26.
What are the main menus of MS word?
Answer:

Where, C = Cost and Q = Quantity of output. Cost functions are derived functions because they are derived from Production Functions.

Question 27.
If 62 = 34 + 4 x what is x?
Answer:
62 – 34 = 4x ⇒ 28 = 4x
28 ÷ 5 – 4 = 1x
∴ x = 7

Question 28.
Define‘Rent’?
Answer:
Rent is the price or reward given for the use of land or house or a machine to the owner. But, in Economics, “Rent” or “Economic Rent” refers to that part of payment made by a tenant to his land lords for the use of land only.

Question 29.
What are conditions for producer’s equilibrium?
Answer:

1. Producer equilibrium implies the situation where producer maximizes his output.
2. It is also known as optimum combination of the factors of production.
3. In short, the producer manufactures a given amount of output with ‘least cost combination of factors’, with his given budget.

Question 30.
Write three policy initiative introduced in 1991 – 92 to correct the fiscal imbalance?
Answer:
The important policy initiatives introduced in the budget for the year 1991 – 92 for correcting the fiscal imbalance were:

1. Reduction in fertilizer subsidy.
2. Abolition of subsidy on sugar.
3. Disinvestment of a part of the government’s equity holdings in select public sector undertakings.

PART – III

Answer any seven question in which Question No. 40 is compulsory. [7 × 3 = 21]

Question 31.
Describe the performance of Tamil Nadu economy in health?
Answer:

1. Tamil Nadu has a three – tier health infrastructure comprising hospitals, primary health centres, health units, community health centres and sub – centres.
2. As of March 2015, the State had 34 district hospitals, 229 sub – divisional hospitals, 1,254 primary health centres, 7,555 sub – centres and 313 community health centres.

Question 32.
Explain the difference between internal and external economies?
Answer:

Question 33.
State and explain the elasticity of supply?
Answer:

1. Elasticity of supply may be defined as the degree of responsiveness of change in supply to change in price on the part of sellers.
2. It is Mathematically expressed as,

Elasticity of supply = Proportionate change in supply / Proportionate change in price
e_s = \(\frac { \Delta Q_{ S } }{ Qs } \)/\(\frac { \Delta P }{ P } \)
e_s = \(\frac { \Delta Q_{ S } }{ \Delta P } \) × \(\frac { P }{ Q_{ S } } \)
Where Q_s represents the supply, P represents price, ∆ denotes a change.

Question 34.
Write a note on mineral resources in TamilNadu?
Answer:
Mineral Resources in Tamil Nadu:

1. Tamil Nadu has a few mining projects based on Titanium, Lignite, Magnesite, Graphite, Limestone, Granite and Bauxite.
2. The first one is the Neyveli Lignite Corporation that has led development of large industrial complex around Neyveli in Cuddalore district with Thermal Power Plants, Fertilizer and Carbonisation plants.
3. Magnesite mining is at Salem from which mining of Bauxite ores are carried out at Yercaud, and this region is also rich in iron ore at Kanjamalai.
4. Molybdenum is found in Dharmapuri, and is the only source in the country.

Question 35.
What are the motives of demand for money?
Answer:
Motives of Demand for Money:
According to Keynes, there are three motives for liquidity preference. They are:

1. The Transaction Motive :

• The transaction motive relates to the desire of the people to hold cash for the current transactions.
• The amount saved under this motive depends on the level of income. M_t = f(y)

2. The Precautionary Motive:

• The precautionary motive relates to the desire of the people to hold cash to meet unexpected or unforeseen expenditures such as sickness, accidents, fire and theft.
• The amount saved for this motive also depends on the level of income. M_p – f(r)

3. The Speculative Motive:
The speculative motive relates to the desire of the people to hold cash in order to take advantage of market movements regarding the future changes in the price of bonds and securities in the capital market. The amount saved for this motive depends on the rate of interest.

M_S = f(i). There is inverse relation between liquidity preference and rate of interest.

Question 36.
State Ambedkar’s Economic Ideas on agricultural economics?
Answer:
In the 1918, Ambedkar published a paper “Small Holding in India and their Remedies”. Citing Adam Smith’s “Wealth of Nations”, he made a fine distinction between “Consolidation of Holdings” and Enlargement of Holdings”.

Question 37.
What are the functions of Entrepreneur?
Answer:
Functions of an Entrepreneur:

1. Initiation: An organizer is the initiator of the business, by considering the situation and availability of resources and planning the entire process of business of production.
2. Innovation: A successful entrepreneur is always an innovator. He introduces new methods in the production process.
3. Co – ordination: An organizer applies a particular combination of the factor of production to start and run the business or production.
4. Control, Direction and Supervision: An organiser controls so that nothing prevents the organisation from achieving its goal. He directs the factors to get better results and supervises for the efficient functioning of all the factors involved in the process of production.
5. Risk – taking and uncertainty – bearing: There are risk – taking and uncertainty-bearing obstacles. Risks may be insured but uncertainties cannot be insured. They reduce the profit.

Question 38.
Explain GSDP in Tamil Nadu?
Answer:

1. The Gross State Domestic Product (GSDP) refers to the total money value of all the goods and services produced annually in the state.
2. Tamil nadu is the second largest economy in India with a GSDP of $ 207.8 billion in 2016 – 2017 according to the Directorate of Economics and Statistics, Tamil Nadu.
3. The GSDP of Tamil Nadu is equal to the GDP of Kuwait on nominal term and GDP of UAE on PPP terms. Per capita GSDP would be better for intercountry or interstate comparisons.
4. Tamil Nadu GSDP = $207.8 billion in 2016 – 17.

Question 39.
Briefly explain the concept of consumer’s equilibrium?
Answer:
The consumer reaches equilibrium at the point where the budget line is tangent on the indifference curve. T is the point of equilibrium as budget line AB is tangent on indifference curve IC3 the upper IC which implies maximum possible level of satisfaction.

At equilibrium point, the slope of IC refers to MRS_XY and the slope of BL (Budget Line) refers to ratio of price of X to price of Y i.e. P_x / P_y . Therefore MRS_x,y = P_x / P_y.

Question 40.
List out the kinds of wages:
Answer:
Wages are divided into four types.

1. Nominal Wages or Money Wages: Nominal wages are referred to the wages paid in terms of money.
2. Real Wages: Real wages are the wages paid in terms of goods and services. Hence, real wages are the purchasing power of money wages.
3. Piece Wages: Wages that are paid on the basis of quantum of work done.
4. Time Wages: Wages that are paid on the basis of the amount of time that the worker works.

PART – IV

Answer all the questions. [7 × 5 = 35]

Question 41 (a).
Write a brief note on the Gandhian economic ideas?
Answer:
Gandhian Economics is based on ethical foundations. Gandhi wrote “ Economics that hurts the moral well-being of an individual or a nation is immoral, and therefore , Sinful”. Gandhi repeated the same belief “ that economy is untrue which ignores or disregards moral values”.

Salient features of Gandhian Economic Thought:

(I) Village Republics:

• India lives in villages.
• He was interested in developing the villages as self – sufficient units.
• He opposed extensive use of machinery, urbanization and industrialization.

(II) On Machinery:

• Gandhi described machinery as ‘Great sin’. He said that “Books could be written to demonstrate its evils”.
• It is necessary to realize that machinery is bad.
• Instead of welcoming machinery as a boon, we should look upon it as an evil.
• It would ultimately cease.

(III) Industrialism:

• Gandhi considered industrialism as a curse on mankind.
• He thought industrialism depended entirely on a country’s capacity to exploit.

(IV) Decentralization:
Gandhi advocated a decentralized economy i. e., production at a large number of places on a small scale or production in the people’s homes.

(V) Village Sarvodaya:

• According to Gandhi, “ Real India was to be found in villages and not in towns or cities”.
• He suggested, self – dependent villages.

(VI) Bread Labour:

• Gandhi realized the dignity of human labour.
• He believed that God created man to eat his bread by the sweat of his brow.
• Bread labour or body labour was the expression that Gandhi used to mean manual labour.

(VII) The Doctrine of Trusteeship:
Trusteeship provides a means of transforming the present capitalist order of society into an egalitarian one.

(VIII) On the Food Problem:

• Gandhi was against any sort of food controls.
• Once India was begging for food grain, but now India tops the world with very large production of food grains, fruits, vegetables, milk, egg, meat etc.

(IX) On Population:

• Gandhi opposed the method of population control through contraceptives.
• He was, however, in favour of birth control through Brahmacharya or self – control.
• He considered self – control as a sovereign remedy to the problem of Over population.

(X) On Prohibition:

• Gandhi regarded the use of liquor as a disease rather than a vice.
• He felt that it was better for India to be poor than to have thousands of drunkards.
• Many states depend on revenue from liquor sales.

[OR]

(b) Analyse the causes for Rural Indebtedness?
Answer:
The Causes for Rural Indebtedness:

(I) Poverty of Farmers:

• The vicious circle of poverty forces the farmers to borrow for consumption and cultivation.
• Thus poverty, debt and high rates of interest hold the farmer in the grip of money lenders.

(II) Failure of Monsoon:

• Frequent failure of monsoon is a curse to the farmers and they have to suffer due to the failure of nature.
• Farmers find it difficult to identify good years to repay their debts.

(III) Litigation:

• Due to land disputes litigation in the court compels them to borrow heavily.
• Being uneducated and ignorant they are caught in the litigation process and dry away their savings and resources.

(IV) Money Lenders and High Rate of Interest:
The rate of interest charged by the local money lenders is very high and the compounding of interest leads to perpetuate indebtedness of the farmer.

Question 42 (a).
Explain various divisions of Economics?
Answer:
Economics sub divisions are:

(I) Consumption:

• Human wants coming under consumption is the starting point of economic activity.
• In this section the characteristics of human wants based on the behaviour of the consumer, the diminishing marginal utility and consumer’s surplus are dealt with.

(II) Production:

• Production is the process of transformation of inputs into output.
• This division covers the characteristics and role of the factors of production namely land, labour, capital and organization.

(III) Exchange:

• Exchange is concerned with price determination in different market forms.
• This division covers trade and commerce.
• Consumption is possible only if the produced commodity is placed in the hands of the consumer.

(IV) Distribution:

• Production is the result of the coordination of factors of production.
• Since a commodity is produced with the efforts of land, labour, capital and organization, the produced wealth has to be distributed among the cooperating factors.
• The reward for factors of production is studied in this division under rent, wages, interest and profit.
• Distribution studies about the pricing of factors of production.

[OR]

(b) Explain the law of demand and its exceptions?
Answer:
Definitions:
The Law of Demand says as “the quantity demanded increases with a fall in price and diminishes with a rise in price”. – Marshall
“The Law of Demand states that people will buy more at lower price and buy less at higher prices, other things remaining the same”. – Samuelson Assumptions of Law of Demand:

1. The income of the consumer remains constant.
2. The taste, habit and preference of the consumer remain the same.
3. The prices of other related goods should not change.
4. There should be no substitutes for the commodity in study.
5. The demand for the commodity must be continuous.
6. There should not be any change in the quality of the commodity.

Given these assumptions, the law of demand operates. If there is change even in one of these assumptions, the law will not operate.

Explanation:
The law of demand explains the relationship between the price of a commodity and the quantity demanded of it. This law states that quantity demanded of a commodity expands with a fall in price and contracts with a rise in price.

In other words, a rise in price of a commodity is followed by a contraction demand and a fall in price is followed by extension in demand. Therefore, the law of demand states that there is an inverse relationship between the price and the quantity demanded of a commodity.

Exceptions to the law of demand:
Normally, the demand curve slopes downwards from left to right. But there are some unusual demand curves which do not obey the law and the reverse occurs.

A fall in price brings about a contraction of demand and a rise in price results in an extension of demand. Therefore the demand curve slopes upwards from left to right. It is known as exceptional demand curve.

In the above diagram, DD is the demand curve which slopes upwards from left to right. It shows that when price is OP₁,, OQ₁, is the demand and when the price rises to OP₂, demand also extends to OQ₂.

Question 43 (a).
Describe the degree of price discrimination?
Answer:
Degrees of Price Discrimination:
Price discrimination has become widespread in almost all monopoly markets. According to A.C.Pigou, there are three degrees of price discrimination.

(I) First degree price discrimination:
A monopolist charges the maximum price that a buyer is willing to pay. This is called as perfect price discrimination. This price wipes out the entire consumer’s surplus. This is maximum exploitation of consumers. Joan Robinson named it as “Perfect Discriminating Monopoly”.

(II) Second degree price discrimination:
Under this degree, buyers are charged prices in such a way that a part of their consumer’s surplus is taken away by the sellers. This is called as imperfect price discrimination. Joan Robinson named it as “Imperfect Discriminating Monopoly”.

Under this degree, buyers are divided into different groups and a different price is charged for each group. For example, in cinema theatres, prices are charged for same film show from viewers of different classes. In a theatre the difference between the first row of first class and the last row in the second class is smaller as compared to the differences in charges.

(III) Third degree price discrimination:
The monopolist splits the entire market into a few sub – market and charges different price in each sub – market. The groups are divided on the basis of age, sex and location. For example, railways charge lower fares from senior citizens. Students get discounts in museums, and exhibitions.

[OR]

(b) Write a short note on Total Revenue?
Answer:
Total revenue is the amount of income received by the firm from the sale of its products. It is obtained by multiplying the price of the commodity by the number of units sold.

where, TR denotes Total Revenue, P denotes Price and Q denotes Quantity sold.
For example, a cell – phone company sold 100 cell – phones at the price of ₹500 each.
TR is ₹50,000. (TR = 500 × 100 = 50,000).

When price is constant, the behaviour of TR is shown in the above table and diagram, assuming P = 5. When P = 5; TR = PQ

When price is declining with increase in quantity sold. (Eg. Imperfect Competition on the goods market) the behaviour of TR is shown in the following table and diagram. TR can be obtained from Demand fuction: If Q = 11 – P,
When P = 1, Q = 10

TR = PQ = 1 × 10 = 10
When P = 3, Q = 8, TR = 24
When P = 0, Q = 1, TR = 10

Question 44 (a).
Discuss the problems of Rural Economy?
Answer:
Rural areas are facing number of problems relating to,

1. People
2. Agriculture
3. Infrastructure
4. Economy
5. Society and Culture
6. Leadership and
7. Administration.

(I) People Related Problems:
The problems related to individuals and their standard of living consist of illiteracy, lack of technical know how, low level of confidence, dependence on sentiments and beliefs etc.

(II) Agriculture Related Problems:
The problems related to agriculture include as follows,

• Lack of expected awareness, knowledge, skill and attitude.
• Unavailability of inputs.
• Poor marketing facility.

(III) Infrastructural Related problems:
Poor infrastructure facilities like, water, electricity, transport, educational institutions, communication, health, employment, storage facility, banking and insurance are found in rural areas.

(IV) Economics related problems:
The economic problems related to rural areas are,

• Inability to adopt high cost technology
• High cost of inputs
• Under privileged rural industries.
• Low income
• Indebtedness
• Existence of inequality in land holdings and assets

(V) Leadership Related Problems:
The Specific leadership related problems found in rural areas are:

• Leadership among the hands of inactive and incompetent people
• Self – interest of leaders
• Biased political will
• Less bargaining power
• Negation skills and dominance of political leaders

(VI) Administrative Problems:
The rural administrative problems are,

• Political interference
• Lack of motivation and interest
• Low wages in villages
• Improper utilization of budget
• Absence of monitoring
• Implementation of rural development programme.

[OR]

(b) Mention the causes for Rural poverty?
Answer:
Causes for Rural Poverty:
1. Unequal distribution of Land:
The distribution of land is highly skewed in rural areas. Therefore, majority of rural people work as hired labour to support their families.

2. Lack of Non – Farm Employment:
Non – farm employment opportunities do not match the increasing labour force. The excess supply of labour in rural areas reduces the wages and increases the incidence of poverty.

3. Lack of public sector Investment:
The root cause of rural poverty in our country is lack of public sector investment on human resource development.

4. Inflation:
Steady increase in prices affects the purchasing power of the rural poor leading to rural poverty.

5. Low productivity:
Low productivity of rural labour and farm activities is a cause as well as the effect of poverty.

6. Unequal Benefit of Growth:
Major gains of economic development are enjoyed by the urban rich people leading to concentration of wealth. Due to defective economic structure and policies, gains of growth are not reaching the poor and the contributions of poor people are not accounted properly.

7. Low Rate of Economic Growth:
The rate of growth of India is always below the target and it has benefited the rich. The poor are always denied of the benefits of the achieved growth and development of the country.

8. More Emphasis on Large Industries:
Huge investment in large industries catering to the needs of middle and upper classes in urban areas are made in India. Such industries are capital-intensive and do not generate more employment opportunities. Therefore, poor are not in a position to get employed and to come out from the poverty in villages.

9. Social evils:
Social evils prevalent in the society like custom, beliefs, etc., increase unproductive expenditure.

Question 45 (a).
Bring out the relationship between TR, AR, MR and Elasticity of demand?
Answer:
Relationship among TR, AR and MR Curves:
When marginal revenue is positive, total revenue rises, when MR is zero the total revenue becomes maximum. When marginal revenue becomes negative total revenue starts falling. When AR and MR both are falling, then MR falls at a faster rate than AR.

TR, AR, MR and Elasticity of demand:

1. The relationship among AR, MR and elasticity of demand (e) is stated as follows.
   MR = AR (e – 1/e)
2. The relationship between The AR curve and MR curve depends upon the elasticity of AR curve [AR = DD = Price]

• When price elasticity of demand is greater than one, MR is positive and TR is increasing.
• When price elasticity of demand is less than one, MR is negative and TR is decreasing.
• When price elasticity of demand is equal to one, MR is equal to Zero and TR is maximum and constant.

It is to be noted that, the output range of 1 to 5 units, the price elasticity of demand is greater than one according to total outlay method. Hence, TR is increasing and MR is positive.
TR, AR, MR & Elasticity

At the output range of 5 to 6 units, the price elasticity of demand is equal to one. Hence, TR is maximum and MR is equals to zero. At the output range of 6 units to 10 units, the price elasticity of demand is less than unity. Hence, TR is decreasing and MR is negative.

[OR]

(b) Explain the monetary and financial sector reforms?
Answer:
Monetary reforms aimed at doing away with interest rate distortions and rationalizing the structure of lending rates. The new policy tried in many ways to make the banking system more efficient. Some of the measures undertaken were:

(I) Reserve Requirements:

• Reduction in Statutory liquidity ratio [SLR] and the cash reserve ratio [CRR] were the recommendations by the Narasimham Committee Report, 1991.
• It was proposed to cut down the SLR from 38.5 percent to 25 percent within a time span of three years.

(II) Interest Rate Liberalisation:
RBI controlled:

• The interest rates payable on deposits. The interest rate which could be charged for bank loans.
• Greater competition among public sector, private sector and foreign banks and elimination of administrative constraints.
• Liberalisation of bank branch licensing policy in order to rationalize the existing branch network.
• Banks were given freedom to relocate branches and open specialized branches.
• Guidelines for opening new private sector banks.
• New accounting norms regarding classification of. assets and provisions of bad debt were introduced in tune with the Narasimham Committee Report.

Question 46 (a).
Examine the law of variable proportions with the help of a diagram?
Answer:
The law states that if all other factors are fixed and one input is varied in the short run, the total output will increase at an increasing rate at first instance^ be constant at a point and then eventually decrease. Marginal product will become negative at last.

According to G.Stigler, “As equal increments of one input are added, the inputs of other productive services being held constant, beyond a certain point, the resulting increments of product will decrease, i.e., the marginal product will diminish”.

Assumptions:
The Law of Variable Proportions is based on the following assumptions.

• Only one factor is variable while others are held constant.
• All units of the variable factor are homogeneous.
• The product is measured in physical units.
• There is no change in the state of technology.
• There is no change in the price of the product.

Total Product (TP)
Total product refers to the total amount of commodity produced by the combination of all inputs in a given period of time.

Summation of marginal products, i.e.
TP = ΣMP
where, TP = Total Product,
MP = Marginal Product

Average Product (AP)
Average Product is the result of the total product divided by the total units of the input employed. In other words, it refers to the output per unit of the input.
Mathematically, AP = TP/N
Where, AP = Average Product
TP = Total Product
N = Total units of inputs employed

Marginal Product (MP)
Marginal Product is the addition or the increment made to the total product when one more unit of the variable input is employed. In other words, it is the ratio of the change in the total product to the change in the units of the input. It is expressed as
MP = ∆TP/∆N

where,
MP = Marginal Product
∆TP = Change in total product
∆N = Change in units of input It is also expressed as
MP = TP(n) – TP (n – 1)
Where, MP = Marginal Product
TP(n) = Total product of employing n^th unit of a factor.
TP(n – 1) = Total product of employing the previous unit of a factor, that is, (n – 1)^th unit of a factor.
The Law of Variable Proportions is explained with the help of the following schedule and diagram:

In above table, units of variable factor (labour) are employed along with other fixed factors of production. The table illustrates that there are three stages of production. Though total product increases steadily at first instant, constant at the maximum point and then diminishes, it is always positive forever.

While total product increases, marginal product increases up to a point and then decreases. Total product increases up to the point where the marginal product is zero. When total product tends to diminish marginal product becomes negative.

In diagram, the number of workers is measured on X axis while TP_L, AP_L and MP_L are denoted on Y axis. The diagram explains the three stages of production as given in the above table.

Stage I:
In the first stage MP_L increases up to third labourer and it is higher than the average product, so that total product is increasing at an increasing rate. The tendency of total product to increase at an increasing rate stops at the point A and it begins to increase at a decreasing rate. This point is known as ‘Point of Inflexion’.

Stage II:
In the second stage, MP_L decreases up to sixth unit of labour where MP_L curve intersects the X – axis. At fourth unit of labor MP_L = AP_L. After this, MP_L curve is lower than the AP_L. TP_L increases at a decreasing rate.

Stage III:
Third stage of production shows that the sixth unit of labour is marked by negative MP_L, the AP_L continues to fall but remains positive. After the sixth unit, TP_L declines with the employment of more units of variable factor, labour.

[OR]

(b) What are the types of elasticity of supply?
Answer:
There are five types of elasticity of supply

1. Relatively Elastic Supply:
The co – efficient of elastic supply is greater than 1 [E_S > 1], One percent change in the price of a commodity causes more than one percent change in the quantity supplied of the commodity.

2. Unitary Elastic Supply:
The co – efficient of elastic supply is equal to 1 [E_g = 1]. One percent change in the price of a commodity causes an equal [one percent ] change in the quantity supplied of the commodity.

3. Relatively Inelastic Supply:
The co-efficient of elasticity is less than one [ES < 1]. One percent change in the price of a commodity causes and less than one percent change in the quantity supply supplied of the commodity.

4. Perfectly Inelastic Supply:
The co – efficient of elasticity is equal to zero [E_S = 0], One percent change in the price of a commodity causes no change in the quantity supplied of the commodity.

5. Perfectly Elastic Supply:
The co – efficient of elasticity of supply is infinity [E_S = 3]. One percent change in the price of a commodity causes an infinite change in the quantity supplied of the commodity.

Question 47 (a).
Analyse the causes for Rural Indebtedness?
Answer:
The Causes for Rural Indebtedness:
(I) Poverty of Farmers:

• The vicious circle of poverty forces the farmers to borrow for consumption and cultivation.
• Thus poverty, debt and high rates of interest hold the farmer in the grip of money lenders.

(II) Failure of Monsoon:

• Frequent failure of monsoon is a curse to the farmers and they have to suffer due to the failure of nature.
• Farmers find it difficult to identify good years to repay their debts.

(III) Litigation:

• Due to land disputes litigation in the court compels them to borrow heavily.
• Being uneducated and ignorant they are caught in the litigation process and dry away their savings and resources.

(IV) Money Lenders and High Rate of Interest:
The rate of interest charged by the local money lenders is very high and the compounding of interest leads to perpetuate indebtedness of the farmer.

[OR]

(b) Explain the public transport system in Tamil Nadu?
Answer:
Transport:
Tamil Nadu has a well established transportation system that connects all parts of the State. This is partly responsible for the investment in the State.

Tamil Nadu is served by an extensive road network in terms of its spread and quality, providing links between urban centres, agricultural market-places and rural habitations in the countryside. However, there is scope for improvement.

Road Transport:

1. There are 28 national highways in the State covering a total distance of 5,036 km.
2. The State has a total road length of 167,000 km, of which 60,628 km are maintained by Highways Department.

Rail Transport:

1. Tamil Nadu has a well-developed rail network as part of Southern Railway, Head quartered at Chennai.
2. Tamil Nadu has a total railway track length of 6,693 km and there are 690 railway stations in the State.
3. Main rail junctions in the State include Chennai, Coimbatore, Erode, Madurai, Salem, Tiruchirapalli and Tirunelveli.
4. Chennai has a well – established suburban Railway network, a Mass Rapid Transport system and is currently developing a Metro System, with its first underground stretch operational since May 2017.

Air Transport:

1. Tamil Nadu has four major international airports.
2. Chennai International Airport is currently the third largest airport in India.
3. Other international Airports in Tamil Nadu include Coimbatore International Airports, Madurai International Airport and Tiruchirapalli International Airport.
4. It also has domestic airports at Tuticorin, Salem, and Madurai.
5. Increased industrial activity has given rise to an increase in passenger traffic as well as freight movement which has been growing at over 18% per year.

Ports:

1. Tamil Nadu has three major ports; one each at Chennai, Ennore and Tuticorin, as well as one intermediate port in Nagapattinam, and 23 minor ports.
2. The ports are currently capable of handling over 73 million metric tonnes of cargo annually (24 % share of India).
3. All the minor ports are managed by the Tamil Nadu Maritime Board, Chennai Port.
4. This is an artificial harbour and the second principal port in the country for handling containers.
5. It is currently being upgraded to have a dedicated terminal for cars capable of handling 4,00,000 vehicles.
6. Ennore port was recently converted from an intermediate port to a major port and handles all the coal and ore traffic in Tamil Nadu.

Students can Download Tamil Nadu 11th Economics Model Question Paper 3 English Medium Pdf, Tamil Nadu 11th Economics Model Question Papers helps you to revise the complete Tamilnadu State Board New Syllabus, helps students complete homework assignments and to score high marks in board exams.

TN State Board 11th Economics Model Question Paper 3 English Medium

General Instructions:

1. The question paper comprises of four parts.
2. You are to attempt all the parts. An internal choice of questions is provided wherever applicable.
3. All questions of Part I, II, III and IV are to be attempted separately.
4. Question numbers 1 to 20 in Part I are Multiple Choice Questions of one mark each.
   These are to be answered by choosing the most suitable answer from the given four alternatives and writing the option code and the corresponding answer
5. Question numbers 21 to 30 in Part II are two-mark questions. These are to be answered in about one or two sentences.
6. Question numbers 31 to 40 in Part III are three-mark questions. These are to be answered in above three to five short sentences.
7. Question numbers 41 to 47 in Part IV are five-mark questions. These are to be answered in detail Draw diagrams wherever necessary.

Time: 3:00 Hours
Maximum Marks: 90

PART – I

Choose the correct answer. Answer all the questions: [20 × 1 = 20]

Question 1.
Knitted garment production is concentrated in …………………..
(a) Coimbatore
(b) Tiruppur
(c) Erode
(d) Karur
Answer:
(b) Tiruppur

Question 2.
The recommendation of Narashimham Committee Report was admitted in the year ………………….
(a) 1990
(b) 1991
(c) 1995
(d) 2000
Answer:
(b) 1991

Question 3.
In literacy rate, TN ranks …………………
(a) Second
(b) Fourth
(c) Sixth
(d) Eighth
Answer:
(d) Eighth

Question 4.
The average revenue curve under monopolistic competition will be ………………….
(a) Perfectly inelastic
(b) Perfectly elastic
(c) Relatively
(d) Unitary elastic
Answer:
(c) Relatively

Question 5.
The main theme of the Twelfth Five Year Plan …………………..
(a) Faster and more inclusive growth
(b) Growth with social Justice
(c) Socialistic pattern of society
(d) Faster, more inclusive and sustainable growth
Answer:
(d) Faster, more inclusive and sustainable growth

Question 6.
The Oldest large scale industry in India …………………
(a) Cotton
(b) Jute
(c) Steel
(d) Cement
Answer:
(a) Cotton

Question 7.
The main gold mine region in kamataka is ………………..
(a) Kolar
(b) Ramgiri
(c) Anantpur
(d) Cochin
Answer:
(a) Kolar

Question 8.
The command Ctrl + M is applied for …………………..
(a) Saving
(b) Copying
(c) Getting new slide
(d) Deleting a slide
Answer:
(c) Getting new slide

Question 9.
Theory of distribution is popularly known as ………………………
(a) Theory of product pricing
(b) Theory of factor pricing
(c) Theory of wages
(d) Theory of Interest
Answer:
(b) Theory of factor pricing

Question 10.
Identify the formuld of estimating average cost ………………………
(a) AVC/Q
(b) TC/Q
(c) TVC/Q
(d) AFC/Q
Answer:
(b) TC/Q

Question 11.
The cost per unit of output is denoted by …………………. cost.
(a) Average
(b) Marginal
(c) Variable
(d) Total
Answer:
(a) Average

Question 12.
Revenue received from the sale of additional unit is turned as …………………. revenue.
(a) Profit
(b) Average
(c) Marginal
(d) Total
Answer:
(c) Marginal

Question 13.
The Headquarters of Southern Railway is at ……………………
(a) Tiruchirappalli
(b) Chennai
(c) Madurai
(d) Coimbatore
Answer:
(b) Chennai

Question 14.
Financial sector reforms mainly related to …………………….
(a) Insurance sector
(b) Banking sector
(c) Both (a) & (b)
(d) Transport sector
Answer:
(c) Both (a) & (b)

Question 15.
Identify the cause for rural indebtedness in India.
(a) Poverty
(b) High population
(c) High productivity
(d) Full employment
Answer:
(a) Poverty

Question 16.
Differentiation of constant term gives …………………..
(a) One
(b) Zero
(c) Infinity
(d) Non – infinity
Answer:
(b) Zero

Question 17.
The recommended nutritional intake per person in rural areas …………………
(a) 2100 calories
(b) 2200 calories
(c) 2300 calories
(d) 2400 calories
Answer:
(d) 2400 calories

Question 18.
Perfect competition assumes …………………….
(a) Luxury goods
(b) Producer goods
(c) Differentiated goods
(d) Homogeneous goods
Answer:
(d) Homogeneous goods

Question 19.
The concept of ‘Quasi – Rent’ is associated with ……………………
(a) Ricardo
(b) J.M. Keynes
(c) Walker
(d) Marshall
Answer:
(d) Marshall

Question 20.
In Economics, distribution of income is among the ………………….
(a) Factors of production
(b) Individual
(c) Firms
(d) Traders
Answer:
(a) Factors of production

PART – II

Answer any seven question in which Question No. 30 is compulsory. [7 × 2 = 14]

Question 21.
State the meaning of liquidity preference?
Answer:

1. Liquidity preference means the preference of the people to hold wealth in the form of liquid cash rather than in other non – liquid assets like bonds, securities, bills of exchange, land, building, gold etc.
2. “Liquidity Preference is the preference to have an equal amount of cash rather than of claims against other”.

Question 22.
State the various components of central sector schemes under post – harvest measures?
Answer:

1. Mega food parks, Integrated cold chain, Value Addition Preservation, Infrastructure and modernization of slaughter house.
2. Scheme for quality Assurance, Codex Standards, Research and Development and other promotional activities.

Question 23.
What are the nuclear power plants in Tamil Nadu?
Answer:
The Kalpakkam Nuclear Power Plant and the Koodankulam Nuclear Power plant are the major nuclear energy plants for the energy grid.

Question 24.
Give the meaning of deductive method?
Answer:

1. Deductive method is also named as analytical or abstract method.
2. It consists in deriving conclusions from general truths,
3. It takes few general principles and applies them to draw conclusions.
4. The classical and neo – classical school of economists notably, Ricardo, JS Mill, Malthus Marshall, Pigou applied the deductive method in their economic investigations.

Question 25.
Give a short note on Sen’s ‘Choice of Technique’?
Answer:
Sen’s ‘Choice of Technique’ was a research work where he argued that in a labour surplus economy, generation of employment cannot be increased at the initial stage by the adaptation of capital – intensive technique.

Question 26.
Give the meaning of non – renewable energy?
Answer:
Non – renewable energy sources:

1. The sources of energy which cannot be renewed or re – used are called non – renewable energy sources.
2. Basically these are the energy sources which will get exhausted over a period of time.
3. Some of the examples of this kind of resources are coal, oil, gas etc.

Question 27.
Distinguish goods from services?
Answer:

Question 28.
Write the meaning of Economic Growth?
Answer:

1. Economic growth is usually measured by National Income, indicated by cross domestic product. [GDP].
2. The GDP is the total monetary value of the goods and services produced by that country over a specific period of time, usually one year.
3. On the basis of the level of economic development, nations are classified as developed and developing economies.

Question 29.
Name the basic approaches to consumer behaviour?
Answer:
There are two basic approaches, namely:

1. Utility approach

1. The utility approach involves the use of measurable (cardinal) utility to study consumer behaviour.
2. Marshall is the chief exponent of the utility approach to the theory of demand. It is known cardinal utility analysis or marginal utility analysis or marshallian utility analysis.

2. Indifference curve approach
The indifference curve approach was the idea of comparable utility [ordinal utility] J.R. Hicks and R.G.D. Allen introduced the indifference curve approach.

Question 30.
What do you mean by fixed cost?
Answer:

1. Fixed Cost does not change with the change in the quality of output.
2. Fixed Cost is also called as “Supplementary Cost “or Overhead Cost”.
3. All payments for the fixed factors of production are known as Total Fixed Cost.

PART – III

Answer any seven question in which Question No. 40 is compulsory. [7 × 3 = 21]

Question 31.
Write the formula of consumers surplus?
Answer:
Consumer’s Surplus = Total utility [Actual price × Units of commodity]
= TU – [P × Q]
20 – [2 × 5] = 20 – 10 =10
Total utility = 20
Actual price = 2
Quantity = 5

Question 32.
Mention any two type of price discrimination?
Answer:

1. Personal: Different prices are charged for different individuals. For example, the railways give tickets at concessional rate to the ‘Senior citizens’ for the same journey.
2. Geographical: Different prices are charged at different places for the same product. For example, a book sold within India at a price is sold in a foreign countiy at lower price.

Question 33.
Explain different types of economic activities?
Answer:
The seven types of economic activities are:

1. Micro Economics: Micro Economics is the study of the economic actions of individuals say households, firms or industries.
Micro economics covers:-

1. Value theory [product pricing and factor pricing]
2. Theory of economic welfare.

2. Macro – Economics:

1. Macro economics is the obverse of micro economics.
2. The general theory of employment, Interest and money published by Keynes is the basis of modem macro economics.

3. International Economics:

1. In the modem world, no country can grow in isolation.
2. Every country is having links with the other countries through foreign capital, investment [foreign direct investment] and international trade.

4. Public Economics:

1. Public finance is concerned with the income or revenue raising and expenditure incurring activities.
2. The scope of public finance covers public expenditure, public revenue, public debt and financial administration.

5. Developmental Economics:
The development economics, deals with features of developed nations, obstacles for development, .economic and non- economic factors influencing development, various growth models and strategies.

6. Health Economics:

1. Health economics is an area of applied economics.
2. It covers health indicators , preventive and curative measures medical research and education, rural health mission, drug price control, neo – natal care, maternity and child health, budgetary allocation for health.

7. Environmental Economics:

1. Depletion of natural resources stock and pollution result from rapid economic development.
2. Environmental economics is a study of inter disciplinary tools for the problems of ecology, economy and environment.

Question 34.
Write a note on Risk – bearing theory of profit?
Answer:

1. Risk bearing theory of profit was propounded by the American economist F.B. Hawley in 1907.
2. According to him, profit is the reward of risk taking in business.
3. Risk taking is an essential function of the entrepreneur and is the basis of profits.
4. It is a well know fact that every business involves some risks.
5. Since the entrepreneur undertakes the risks, he receives profit.
6. If the entrepreneur does not receive the reward, he will not be prepared to undertake the risks.
7. Every entrepreneur products goods in anticipation of demand.
8. It is the profit that induces the entrepreneurs to undertake such risks.

Question 35.
Distinguish between Fixed cost and Variable cost?
Answer:

Question 36.
What are the characteristics of land?
Answer:

1. Land is a primary factor of production
2. Land is a passive factor of production
3. Land is the free gift of nature
4. Land has no cost of production
5. Land is fixed in supply. It is inelastic in supply
6. Land is permanent
7. Land is immovable
8. Land is heterogeneous as it differs in fertility
9. Land has alternative uses
10. Land is subject to Law of Diminishing Returns.

Question 37.
What are the factors governing elasticity of supply?
Answer:
1. Nature of the commodity:
Durable goods can be stored for a long time. So, the producers can wait until they get a high price. Once they get higher price, larger supply is possible. The elasticity of supply of durable goods is high. But perishables are to be sold immediately. So perishables have low elasticity of supply.

2. Cost of production:
When production is subject to either constant or increasing returns, additional production and therefore increased supply is possible. So elasticity of supply is greater. Under diminishing returns, increase in output leads to high cost. So elasticity of supply is less.

3. Technical condition:
In large scale production with huge capital investment, supply cannot be adjusted easily. So elasticity of supply is lesser. Where capital equipment is less and technology simple, the supply is more elastic.

4. Time factor:
During very short period when supply cannot be adjusted, elasticity of demand is very low. In short period, variable factors can be added and so supply can be adjusted to some extent. So elasticity of supply is more. In long period, even the fixed factors can be added and hence supply is highly elastic.

Question 38.
Mention the similarities between perfect competition and monopolistic competition?
Answer:

Question 39.
Write any three objectives of Industrial Policy 1991?
Answer:

1. Economic development of a country particularly depends on the process of Industrialisation.
2. At the time of Independence, India inherited a weak and shallow Industrial base.
3. Therefore dining the post-Independence period, the Government of India took special emphasis on the development of a solid Industrial base.

Question 40.
Enumerate the remedial measures to rural poverty?
Answer:
Remedial measures:

1. Since rural unemployment and rural poverty are interrelated, creation of employment opportunities would support elimination of poverty.
2. Poverty alleviation schemes and programmes have been implemented, modified, consolidated, expanded and improved over time.
3. However, unemployment, begging, rag-picking and slumming continues.
4. Unless employment is given to all the people poverty cannot be eliminated.

PART – IV

Answer all the questions. [7 × 5 = 35]

Question 41 (a).
Explain the objectives of nationalization of commercial banks?
Answer:
The Government of India nationalized the commercial banks to achieve the following objectives:

1. The main objective of nationalization was to attain Social Welfare. Sectors such as agriculture, small and village industries were in need of funds for their expansion and further economic development.
2. Nationalisation of banks helped to curb private monopolies in order to ensure a smooth supply of credit to socially desirable sections.
3. In India, nearly 70% of population lived in rural areas. Therefore it was needed to encourage the banking habit among the rural population.
4. Nationalisation of banks was required to reduce the regional imbalances where the banking facilities were not available.
5. Before Independence, the numbers of banks were certainly inadequate. After nationalization, new bank branches were opened in both rural and urban areas.
6. Banks created credit facilities mainly to the agriculture sector and its allied activities after nationalization.
   After New Economic Policy 1991, the Indian banking Industry has been facing the new horizons of competitions, efficiency and productivity.

[OR]

(b) Describe the Salient features of EXIM policy [2015 – 2020]?
Answer:
The new EXIM policy has been formulated focusing on increasing in exports Scenario, boosting production and supporting the concepts like Make in India and Digital India.
Salient Features:

1. Reduce export obligations by 25% and give boost to domestic manufacturing supporting the “Make in India” concept.
2. As a step to Digital India concept, online procedure to upload digitally signed document by CA /CS / Cost Accountant are developed and further mobile app for filing tax, stamp duty has been developed.
3. Repeated submission of physical copies of documents available on Exporter Importer Profile is not required.
4. Export obligation period for export items related to defence, military store, aerospace and nuclear energy to be 24 months.
5. EXIM policy 2015 – 2020 is expected to double the share of India in World Trade from present level of 3% by the year 2020. This appears to be too ambitions.

Question 42 (a).
Describe the wastes of monopolistic competition?
Answer:
Wastes of Monopolistic Competition:
Generally there are five kinds of wastages under monopolistic competition.

(I) Idle capacity:

1. Un – utilized capacity is the difference between the optimum output that can be produced and the actual output produced by the firm.
2. In the long run, a monopolistic firm produces delibourately output which is less than the optimum output that is the output corresponding to the minimum average cost.
3. This leads to excess capacity which is actually as waste in monopolistic competition.

(II) Unemployment:

1. Under monopolistic competition, the firms produce less than optimum output.
2. As a result, the productive capacity is not used to the fullest extent.
3. This will lead to unemployment of human resources also.

(III) Advertisement:

1. There is a lot of waste in competitive advertisements under monopolistic competition.
2. The wasteful and competitive advertisements lead to high cost to consumers.

(IV) Too many varieties of Goods:

• The goods differ in size, shape, style and colour. A reasonable number of varieties would be sufficient.

(v) Inefficient firms:
Under monopolistic competition, inefficient firms charge prices higher than their marginal cost. Efficient firms cannot drive out the inefficient firms.

[OR]

(b) Illustrate the Ricardian Theory of Rent?
Answer:

1. The Classical theory of Rent is called “ Ricardian Theory of Rent.”
2. “ Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil” – David Ricardo

Ricardian theory of rent assumes the following:

1. Land differs in fertility.
2. The law of diminishing returns operates in agriculture.
3. Rent depends upon fertility and location of land.
4. Theory assumes perfect competition.
5. It is based on the assumption of long period.
6. There is existence of marginal land or no – rent land.
7. Land has certain “Original and indestructible powers”.
8. Land is used for cultivation only.
9. Most fertile lands are cultivated first.

Question 43 (a).
State the differences between money cost and real cost?
Answer:

[OR]

(b) Explain the Keynesian Theory of Interest?
Answer:

1. Keynes Liquidity Preference Theory of Interest or The monetary Theory of Interest
2. Keynes propounded the Liquidity Preference Theory of Interest in his famous book,
   “ The General Theory of Employment, Interest and Money “ in 1936.
3. According to Keynes, interest is purely a monetary phenomenon because the rate of interest is calculated in terms of money.
4. “Interest is the reward for parting with liquidity for a specified period of time”.

Meaning of Liquidity Preference:

1. Liquidity preference means the preference of the people to hold wealth in the form of liquid cash rather than in other non – liquid assets like bonds, securities, bills of exchange, land, building, gold etc.
2. “ Liquidity Preference is the preference to have an amount of cash rather than of claims against others” – Meyer.

Motives of Demand for Money:
According to Keynes, there are three motives for liquidity preferences. They are:

1. The Transaction Motive:
The transaction motive relates to the desire of the people to hold cash for the current transactions [ or-day-to-day expenses ] M( = f(y)

2. The Precautionary Motive:

1. The precautionary motive relates to the desire of the people to hold cash to meet unexpected or unforeseen expenditures such as sickness, accidents, fire and theft.
2. The amount saved for this motive also depends on the level of Income Mp = f(y)..

3. The Speculative Motive:

1. The speculative motive relates to the desire of the people to hold cash in order to take
   advantage of market movements regarding the future changes in the price of bonds and securities in the capital market. M – f(i)
2. There is inverse relation between liquidity preference and rate of interest.

Question 44 (a).
Illustrate price and output determination under monopoly?
Answer:
Price & output Determination under Monopoly:
A monopoly is a one firm – industry. Therefore, a firm under monopoly faces a downward sloping demand curve (or AR curve). Since, under monopoly AR falls, as more units of output are sold, the MR lies below the AR curve (MR < AR). The monopolist will continue to sell his product as long as his MR > MC. He attains equilibrium at the level of output when its MC is equal to MR. Beyond this point, the producer will experience loss and hence will stop selling. Let us take the following hypothetical example of Total Revenue Function and Total cost function.

TR = 100Q – 4Q² and
TC = Q³ – 18Q² + 91Q + 12
Therefore AR = 100 – 4Q;
MR = 100 – XQ;
AC = Q² – 18Q + 91 + 12/Q;
MC = 3Q² – 36Q + 91;
When Q = 3,
AR = 100 – 4(3) = 88,
AC = 3² – 8(3) + 91 + 12/3
9 – 54 + 91 + 4 = 50;
MR = 100 – 8(3) = 76;
MC = 3(3)² – 36(3) + 91
= 27 – 108 + 91 = 10

From this diagram, till he sells 3 units output, MR is greater than MC, and when he exceeds this output level, MR is less than MC. The monopoly firm will be in equilibrium at the level of output where MR is equal to MC. The price is 88.

To checkup how much profit the monopolist is making at the equilibrium output, the average revenue curves and the average cost curves are used. At equilibrium level of output is 3; the average revenue is 88 and the average cost is 50. Therefore (88 – 50 = 38) is the profit per unit.
Total profit = (Average Revenue – Average Cost) Total output = (88 – 50) × 3
= 38 × 3 = 114

[OR]

(b) Write a note on Risk – bearing theory of profit?
Answer:

1. Risk bearing theory of profit was propounded by the American economist F.B. Hawley in 1907.
2. According to him, profit is the reward of risk taking in business.
3. Risk taking is an essential function of the entrepreneur and is the basis of profits.
4. It is a well know fact that every business involves some risks.
5. Since the entrepreneur undertakes the risks, he receives profit.
6. If the entrepreneur does not receive the reward, he will not be prepared to undertake the risks.
7. Every entrepreneur products goods in anticipation of demand.
8. It is the profit that induces the entrepreneurs to undertake such risks.

Question 45 (a).
What are the ideas of information and communication technology used in economics? Introduction: Information and communication Technology [ICT] is the infrastructure that enables computing faster and accurate?
Answer:
The following table gives an idea of range of technologies that fall under the category of ICT

The evaluation of ICT has five phases:
They are evaluation in:

1. Computer
2. PC – Personal Computer
3. Micro Processor
4. Internet
5. Wireless links

In Economics, the uses of mathematical and statistical tools need the support of ICT for:

1. Data Compiling
2. Editing
3. Manipulating
4. Presenting the results

[OR]

(b) Raja purchased 6 pens and 5 pencils spending ?49, Rani purchased 3 pens and 4 pencils spending ₹42. What is the price of a pen and pencil?
Answer:
\(\begin{bmatrix} 6 & 5 \\ 3 & 4 \end{bmatrix}\) \([\begin{matrix} x_{ 1 } \\ x_{ 2 } \end{matrix}]\) = \([\begin{matrix} 49 \\ 32 \end{matrix}]\) = \(\begin{vmatrix} 6 & 5 \\ 3 & 4 \end{vmatrix}\)
= 24 – 15 = 9
x = \(\begin{vmatrix} 49 & 5 \\ 32 & 4 \end{vmatrix}\) = 196 – 160 = 36
y = \(\begin{vmatrix} 6 & 49 \\ 3 & 32 \end{vmatrix}\) = 192 – 47 = 45
x = \(\frac{36}{9}\) = 4
y = \(\frac{45}{9}\) = 5
The cost of pen = ₹4
The cost of pencil = ₹5

Question 46 (a).
Explain the weakness of Indian Economy?
Answer:
(I) Large Population:

1. India stands second in terms of size of population next to China and our country is likely to overtake China in near future.
2. Population growth rate of India is very high and this is always a hurdle to growth rate.

(II) Inequality and poverty:

1. There exists a huge economic disparity in the Indian economy.
2. The proportion of income and assets owned by top 10% of Indians goes on increasing.
3. Increase in the poverty level in the society and still Below Poverty Line [BPL] a higher percentage of individuals are living.
4. As a result of unequal distribution of the rich becomes richer and poor becomes poorer.

(III) Increasing Prices of Essential Goods:

1. Even though there has been a constant growth in the GDP and growth opportunities in the Indian economy, there have been steady increase in the prices of essential goods.
2. The continuous rise in prices erodes the purchasing power and adversely affects the poor people, whose income is not protected.

(IV) Weak Infrastructure:

1. A gradual improvement in the infrastructural development.
2. There is still a scarcity of the basic infrastructure like power, transport, storage etc.

(V) Inadequate Employment generation:

1. Growing youth population, there is a huge need of the employment opportunities.
2. The growth in production is not accompanied by creation of job.
3. The Indian economy is characterized by “ Jobless growth”.

(VI) Outdated technology:
The level of technology in agriculture and small scale Industries is still outdated and obsolete.

[OR]

(b) Discuss the problems of Rural Economy?
Answer:
Rural areas are facing number of problems relating to,

1. People
2. Agriculture
3. Infrastructure
4. Economy
5. Society and Culture
6. Leadership and
7. Administration.

(I) People Related Problems:
The problems related to individuals and their standard of living consist of illiteracy, lack of technical know how, low level of confidence, dependence on sentiments and beliefs etc.

(II) Agriculture Related Problems:
The problems related to agriculture include as follows,

1. Lack of expected awareness, knowledge, skill and attitude.
2. Unavailability of inputs.
3. Poor marketing facility.

(III) Infrastructural Related problems:
Poor infrastructure facilities like, water, electricity, transport, educational institutions, communication, health, employment, storage facility, banking and insurance are found in rural areas.

(IV) Economics related problems:
The economic problems related to rural areas are,

1. Inability to adopt high cost technology.
2. High cost of inputs.
3. Under privileged rural industries.
4. Low income
5. Indebtedness
6. Existence of inequality in land holdings and assets.

(V) Leadership Related Problems:
The Specific leadership related problems found in rural areas are,

1. Leadership among the hands of inactive and incompetent people
2. Self – interest of leaders
3. Biased political will
4. Less bargaining power
5. Negation skills and dominance of political leaders

(VI) Administrative Problems:
The rural administrative problems are,

1. Political interference
2. Lack of motivation and interest
3. Low wages in villages
4. Improper utilization of budget
5. Absence of monitoring
6. Implementation of rural development programme.

Question 47 (a).
Explain the role of SSIs in Economic development?
Answer:
1. Provide Employment

1. SSIs use labour intensive techniques. Hence, they provide employment opportunities to a large number of people. Thus, they reduce the unemployment problem to a great extent.
2. SSIs provide employment to artisans, technically qualified persons and professionals, people engaged in traditional arts, people in villages and unorganized sectors.
3. The employment-capital ratio is high for the SSIs.

2. Bring Balanced Regional Development

1. SSIs promote decentralized development of industries as most of the SSIs are set up in backward and rural areas.
2. They remove regional disparities by industrializing rural and backward areas and bring balanced regional development.
3. They help to reduce the problems of congestion, slums, sanitation and pollution in cities. They are mostly found in outside city limits.
4. They help in improving the standard of living of people residing in suburban and rural areas in India.
5. The entrepreneurial talent is tapped in different regions and the income is also distributed instead of being concentrated in the hands of a few individuals or business families.

[OR]

(b) Explain the objectives and characteristics of SEZs?
Answer:

1. The Special Economic Zones [SEZs] Policy was announced in April 2000.
2. The Special Economic Zones Act of 2005, the government has so far notified about 400 such zones in the country.

Major objectives of SEZs:

1. To enhance foreign investment, especially to attract foreign direct investment [FDI] and thereby increasing GDP.
2. To increase shares in Global Export. (International Business)
3. To generate additional economic activity.
4. To create employment opportunities.
5. To develop infrastructure facilities.
6. To exchange technology in the global market.

Main Characteristics of SEZ:

1. Geographically demarked area with physical security.
2. Administrated by single body authority.
3. Streamlined procedures.
4. Having separate custom area.
5. Governed by more liberal economic laws.
6. Greater freedom to the firms located in SEZs.