ICSE Class 10 Economics Board Exam Question Paper 2025 with Solutions

ICSE Class 10 Economics Board Exam Question Paper with Solutions

SECTION A

Question 1 [16 Marks]
Choose the correct answers to the questions from the given options.
(Do not copy the question, write the correct answers only.)

(i) In economics, what does the capital earn as income? [1 Mark]
(A) Wages
(B) Rent
(C) Profit
(D) Interest

Answer: (D) Interest

Teacher's Note:
a) Capital is a factor of production that earns interest as its factor income.
b) Wages are earned by labour, rent by land, and profit by the entrepreneur.

(ii) Which of the following are examples of substitute goods? [1 Mark]
(A) Coke and Coffee
(B) Pencil and Eraser
(C) Tea and Sugar
(D) Apple iPhones and Samsung Smart Phones

Answer: (D) Apple iPhones and Samsung Smart Phones

Teacher's Note:
a) Substitute goods are alternative products that can be used in place of one another to satisfy the same want.
b) Coke and coffee are not direct substitutes, while tea and sugar are complementary goods.

(iii) Assertion (A): Mr. Gupta earns a fixed income every month, but he tends to get adversely affected during inflation.
Reason (R): The prices of goods, services and the cost of living, does not rise in the same proportion as income, during inflation. [1 Mark]
(A) Both (A) and (R) are true and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(C) Both (A) and (R) are false.
(D) (A) is false and (R) is true.

Answer: (A) Both (A) and (R) are true and (R) is the correct explanation of (A).

Teacher's Note:
a) Fixed income earners lose purchasing power during inflation because prices rise faster than their constant income.
b) The lag or disproportionate rise in fixed income relative to the cost of living causes this hardship.

(iv) Amit buys 1 kg of mangoes at Rs. 120 per kg. Other things remaining constant, when the price of mangoes falls to Rs. 90 per kg, he buys 2 kg of mangoes. Amit's choice in the given situation shows which concept? [1 Mark]
(A) Demand schedule
(B) Market demand
(C) Contraction of demand
(D) Expansion of demand

Answer: (D) Expansion of demand

Teacher's Note:
a) Expansion of demand refers to a rise in quantity demanded due to a fall in the price of the commodity alone.
b) Do not confuse expansion with an increase in demand, which occurs due to factors other than price.

(v) The rate of tax, which is uniform for all the taxpayers, is termed as: [1 Mark]
(A) Progressive
(B) Proportional
(C) Regressive
(D) Direct

Answer: (B) Proportional

Teacher's Note:
a) Under a proportional tax system, a fixed percentage is levied on all incomes regardless of the taxpayer's earnings.
b) A progressive tax rate increases as income increases, unlike a proportional tax.

(vi) Which factor will be responsible for 'product diversification' through innovation? [1 Mark]
(A) Labour
(B) Entrepreneur
(C) Capital
(D) Landowner

Answer: (B) Entrepreneur

Teacher's Note:
a) The entrepreneur takes risks and introduces innovations to bring new products into the market.
b) Product diversification is a key function of entrepreneurial ability in modern business economics.

(vii) Statement 1: The primary function of money is to act as a 'store of value'.
Statement 2: Money helps in monetary expression of the market value of the commodity. [1 Mark]
(A) Both Statement 1 and Statement 2 are true.
(B) Both Statement 1 and Statement 2 are false.
(C) Statement 1 is true and Statement 2 is false.
(D) Statement 1 is false and Statement 2 is true.

Answer: (D) Statement 1 is false and Statement 2 is true.

Teacher's Note:
a) The primary function of money is to act as a medium of exchange, not a store of value.
b) Acting as a measure of value (monetary expression) is another primary function of money.

(viii) BIS stands for: [1 Mark]
(A) Bureau of Indian States
(B) Bureau of Indian Standards
(C) Bureau of Indian System
(D) Bureau of Indian Solutions

Answer: (B) Bureau of Indian Standards

Teacher's Note:
a) BIS is the national standards body of India responsible for standardization and quality certification.
b) Students must remember standard consumer protection acronyms like BIS, AGMARK, and FPO.

(ix) Study the table and examine the relation between price and quantity supplied: [1 Mark]

(A) Positive
(B) Negative
(C) Indirect
(D) Proportional

Answer: (A) Positive

Teacher's Note:
a) As the price increases from Rs. 10 to Rs. 14, the quantity supplied increases from 5 kg to 9 kg.
b) This direct and positive relationship illustrates the fundamental Law of Supply.

(x) Which market structure has the least number of sellers? [1 Mark]
(A) Oligopoly
(B) Monopolistic competition
(C) Monopsony
(D) Perfect competition

Answer: (A) Oligopoly

Teacher's Note:
a) Oligopoly features a few large dominant firms controlling the market.
b) Monopoly has only one seller, whereas perfect competition has a large number of sellers.

(xi) Direct taxes are regressive in nature. [1 Mark]
(A) True
(B) False

Answer: (B) False

Teacher's Note:
a) Direct taxes are generally progressive in nature, meaning higher income earners pay a higher percentage.
b) Indirect taxes tend to be regressive because they take a larger relative bite out of lower incomes.

(xii) Study the flow chart:
Savings → Mobilisation of savings → Investment
The above image depicts stages of ________. [1 Mark]
(A) Capital formation
(B) Capital returns
(C) Capital movement
(D) Investment of savings

Answer: (A) Capital formation

Teacher's Note:
a) Capital formation involves three crucial stages: creation of savings, mobilisation of savings, and investment.
b) Financial institutions play an important role in mobilising savings into productive investments.

(xiii) Radhika cannot postpone her demand for woollen clothes during winter season but at the same time can postpone her demand for a car. This is because her demand for woollen clothes is: [1 Mark]
(A) Elastic
(B) Inelastic
(C) Highly Elastic
(D) Unit Elastic

Answer: (B) Inelastic

Teacher's Note:
a) Necessities and seasonal items whose consumption cannot be delayed have inelastic demand.
b) Luxury goods or items whose purchase can be postponed typically have elastic demand.

(xiv) Study the relationship in the first pair of words and complete the second pair.
1. Revenue earned by the government through railway fares: Commercial revenue
2. Revenue earned through Special Assessment: ________ [1 Mark]
(A) Direct tax
(B) Indirect tax
(C) Administrative
(D) Commercial

Answer: (C) Administrative

Teacher's Note:
a) Special assessment is a compulsory contribution levied on property owners who benefit from public infrastructure.
b) It is classified under non-tax administrative revenue for the government.

(xv) Efficiency of labour shows the productive capacity of a labourer, whereas division of labour shows of labour. [1 Mark]
(A) Specialisation
(B) Utilisation
(C) Quantity
(D) Perishability

Answer: (A) Specialisation

Teacher's Note:
a) Division of labour breaks production into sub-tasks, allowing workers to specialise in specific areas.
b) Specialisation leads to higher productivity and skill development.

(xvi) Identify the type of debt raised by the government for organising relief camps during natural disasters. [1 Mark]
(A) Productive
(B) Unproductive
(C) Gross
(D) Funded

Answer: (B) Unproductive

Teacher's Note:
a) Unproductive debt refers to loans raised for consumption or relief purposes that do not generate direct financial returns.
b) Productive debts are invested in capital assets that yield income to service the loan.

Question 2

(i) Explain capital as a factor of production. [2 Marks]

Answer:
1. Capital refers to all man-made goods that are used in the further production of wealth, such as machinery, tools, factories, and raw materials.
2. Unlike land and labour which are primary factors, capital is a secondary or produced factor of production that significantly enhances human productivity.

Teacher's Note:
a) Emphasize that capital is man-made and acts as an active aid to further production.
b) Mention examples like tools and machinery to secure full credit.

(ii) There is a positive correlation between entrepreneurship and economic development. Justify the statement with two suitable reasons. [2 Marks]

Answer:
1. Entrepreneurs organise and coordinate other factors of production (land, labour, capital) to generate goods and services, driving national output.
2. They introduce innovations, take business risks, and create employment opportunities, which stimulate overall economic growth.

Teacher's Note:
a) Point out that the entrepreneur acts as the captain of industry.
b) Keep the two reasons distinct: coordination of resources and innovation/employment creation.

(iii) What is extension of supply? [2 Marks]

Answer:
1. Extension of supply refers to an increase in the quantity supplied of a commodity due to a rise in its price, other things remaining constant.
2. It is represented graphically by an upward movement along the same supply curve.

Teacher's Note:
a) Highlight that other determinants of supply remain unchanged (ceteris paribus).
b) Clarify that extension occurs along the curve, unlike a shift in supply.

(iv) Identify and explain the type of division of labour shown in the above images. [2 Marks]

[Figure: Images showing Cotton Textile production and Sugarcane Industry in India]

Answer:
1. The images depict Process-based Division of Labour (or Division of Labour by Process).
2. In this type of division, production is divided into distinct sequential stages performed by different workers or departments (e.g., spinning, weaving, and finishing in textiles).

Teacher's Note:
a) Identify the specific category correctly as process-based division.
b) Explain how breaking down an industry into sequential manufacturing steps constitutes this form of labour division.

Question 3

(i) How was Standard of Deferred payment a problem for Barter System of Exchange? [2 Marks]

Answer:
1. In a barter system, there was a lack of a universally accepted standard commodity to measure the value of goods for future payments.
2. Goods used for payments could fluctuate in quality and value over time, leading to disputes between debtors and creditors.

Teacher's Note:
a) Deferred payments refer to future contracts and loans.
b) Point out the lack of a standard unit of value over time as the core difficulty.

(ii) Identify and explain the type of revenue mentioned in the above statement.
[Figure: National Highways Authority of India Toll Plaza image showing "Tolls as a source of revenue for State as well as Central government"] [2 Marks]

Answer:
1. The statement refers to Non-Tax Revenue (specifically commercial revenue or fee/toll collection).
2. Toll charges are collected for the use of public infrastructure built and maintained by the government, functioning as a service fee rather than a tax.

Teacher's Note:
a) Clarify the distinction between tax and non-tax revenue receipts.
b) Explain that tolls are payments for specific public services rendered.

(iii) State one difference between Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). [2 Marks]

Answer:
1. CRR is the percentage of a bank's total deposits that must be kept with the central bank (RBI) in cash form.
2. SLR is the percentage of total deposits that commercial banks must maintain themselves in liquid assets such as cash, gold, or approved securities.

Teacher's Note:
a) Focus on where the reserves are kept (central bank vs. with the bank itself).
b) Both are crucial quantitative instruments of credit control.

(iv) Explain the term revenue expenditure? [2 Marks]

Answer:
1. Revenue expenditure refers to government expenditure that neither creates physical or financial assets nor reduces government liabilities.
2. It is recurring in nature and incurred for the normal day-to-day functioning of government departments, payment of salaries, and interest.

Teacher's Note:
a) Use the twin conditions: no asset creation and no liability reduction.
b) Give examples such as administrative costs, subsidies, and interest payments.

Question 4

(i) 'Mobile phone and laptop are examples of composite demand'. Justify the statement with a suitable reason. [2 Marks]

Answer:
1. Composite demand refers to demand for a good that has multiple alternative uses.
2. Mobile phones and laptops are used for various purposes like communication, entertainment, education, and online transactions, creating composite demand for them.

Teacher's Note:
a) Define composite demand clearly in the first point.
b) Link the multiple uses of electronic gadgets directly to the definition.

(ii) Why is capital considered to be 'result of past savings'? [2 Marks]

Answer:
1. Capital formation requires individuals or nations to abstain from immediate consumption by saving a portion of their income.
2. These accumulated savings are subsequently channeled into productive investments like machinery and infrastructure, making capital the direct result of past savings.

Teacher's Note:
a) Explain the transition from income to savings and then to investment.
b) Emphasize that without savings, capital creation is impossible.

(iii) What is the implication of 'restricted entry of new firms' in a monopoly market? [2 Marks]

Answer:
1. The restriction of entry allows the single monopolist firm to exercise complete control over supply and price without threat from competitors.
2. It enables the monopolist to earn abnormal (supernormal) profits even in the long run.

Teacher's Note:
a) Connect entry barriers directly to market power and price-making ability.
b) Mention the persistence of supernormal profits as a key long-run implication.

(iv) A shopkeeper adds brick powder to chilli powder and he colours different vegetables with harmful dyes to make them look bright and fresh. Identify the concept expressed in the above statement and mention the consumer right which has been violated. [2 Marks]

Answer:
1. The concept expressed is Adulteration.
2. The consumer right that has been violated is the Right to Safety.

Teacher's Note:
a) Identify both parts of the question accurately: adulteration as the malpractice and right to safety as the violated right.
b) Mentioning Consumer Protection Act safeguards adds clarity.

SECTION B

Question 5

(i) (a) Define Inflation. [2 Marks]
(b) Write any three causes of 'Cost Push Inflation'. [3 Marks]

Answer:
(a) Inflation is defined as a sustained and persistent increase in the general price level of goods and services in an economy over a period of time, leading to a fall in the purchasing power of money.
(b) 1. Increase in Wages: Higher wages negotiated by trade unions raise production costs, which producers pass on to consumers.
2. Rising Prices of Raw Materials: An increase in the cost of essential inputs like crude oil or agricultural products raises overall production costs.
3. Higher Taxes and Import Duties: Increased indirect taxation on goods and services or higher import tariffs raise costs, leading to inflation.

Teacher's Note:
a) Ensure the definition highlights 'sustained' rise in price level and fall in purchasing power.
b) Cost-push inflation arises from supply-side pressures like rising input costs.

(ii) State and explain any five merits of Indirect taxes. [5 Marks]

Answer:
1. Convenience: Indirect taxes are included in the price of goods and services, making them easy to pay as consumers do not have to make separate tax payments.
2. Wider Coverage: These taxes are paid by all individuals who purchase goods and services, ensuring a broader tax base compared to direct taxes.
3. Equity in Taxation: Since people who consume luxury goods pay higher taxes, indirect taxes ensure that those with higher incomes contribute more to the government's revenue.
4. Revenue Generation: Indirect taxes provide a continuous source of income to the government, helping finance public services and development projects.
5. Control Over Consumption: The government can discourage the consumption of harmful products like cigarettes and alcohol by imposing higher indirect taxes on them.

Teacher's Note:
a) List five distinct economic advantages of indirect taxation.
b) Use clear headings for each merit to secure maximum marks.

Question 6

(i) The following table represents increase in demand, answer the following questions: [5 Marks]

(a) Give a diagrammatic representation based on the above data.
(b) Explain any two factors that affect increase in demand.

Answer:
(a) [Figure: Diagram showing demand curves shifting rightwards from D to D1 at a constant price of Rs. 10, with quantity changing from 5 to 7]
(b) 1. Increase in Consumer Income: When people's income rises, they can afford to buy more goods, leading to an increase in demand.
2. Rise in the Price of Substitutes: When the price of substitute goods rises, the goods become relatively cheaper, leading consumers to shift to the goods, increasing demand at current prices.

Teacher's Note:
a) Ensure the diagram shows a rightward shift of the demand curve at a constant price level.
b) Clearly explain non-price factors causing an increase in demand.

(ii) (a) Mention any two features of COPRA 2019. [2 Marks]
(b) State and explain any three reasons why consumers are exploited by retailers or producers. [3 Marks]

Answer:
(a) 1. E-commerce Regulations: The Act extends consumer protection to online transactions, ensuring fair trade practices in digital markets.
2. Consumer Dispute Redressal Commissions: The Act strengthens the grievance redressal mechanism by establishing a three-tier structure (District, State, and National Commissions) with enhanced powers and pecuniary jurisdiction.
(b) 1. Lack of Knowledge: Several consumers do not have knowledge about the price, quality, and service-related commodities, making them rely blindly on sellers.
2. Illiteracy: When consumers are uneducated, sellers can easily cheat them regarding product quality and pricing.
3. Malpractice of Businessmen: Fraudulent and unethical trade practices by businessmen lead to exploitation, including sub-standard goods and underweight measures.

Teacher's Note:
a) Mention recent amendments under COPRA 2019 such as e-commerce provisions.
b) Ground consumer exploitation reasons in everyday market realities.

Question 7

(i) RBI's latest demonetisation measure was declared on 19 May 2023. As per RBI's 'clean note' policy, it withdrew all Rs. 2,000 notes from circulation.
In context of the above statement answer the following questions:
(a) What is demonetisation? [2 Marks]
(b) State any three objectives of demonetisation. [3 Marks]

Answer:
(a) Demonetisation is the process by which a government declares certain currency notes invalid as legal tender, usually implemented to curb black money.
(b) 1. Curbing Black Money: It aims to eliminate unaccounted cash and reduce tax evasion.
2. Reducing Corruption: By restricting the use of high-denomination currency, it helps in reducing bribery and illegal transactions.
3. Promoting Digital Transactions: Encourages people to adopt cashless payment methods such as online banking and mobile wallets.

Teacher's Note:
a) Define demonetisation as the withdrawal of legal tender status from currency units.
b) List economic objectives like tackling black money and promoting digital payments clearly.

(ii) [Figure: Image showing various fast-food brand logos like McDonald's, Taco Bell, Subway, Red Lobster]
(a) Identify and define the market structure depicted in the above image. [2 Marks]
(b) Give three differences between Perfect Competition Market and Oligopoly market. [3 Marks]

Answer:
(a) The image depicts an oligopoly market structure, where a few large firms dominate the industry and compete primarily through branding, advertising, and product differentiation.
(b)

Teacher's Note:
a) Identify oligopoly from the few dominant brand examples shown in the image.
b) Tabulate differences clearly based on number of sellers, product nature, and price control.

Question 8

(i) (a) Explain the term supply. [2 Marks]
(b) Give a diagrammatic representation of Relatively Elastic Supply. [3 Marks]

Answer:
(a) Supply refers to the quantity of goods or services that producers are willing and able to offer for sale at different prices over a given period.
(b) [Figure: Diagram of Relatively Elastic Supply where the supply curve starts from the y-axis, and percentage change in quantity supplied exceeds percentage change in price, showing elasticity greater than 1]

Teacher's Note:
a) Emphasize both willingness and ability of producers in the definition of supply.
b) Ensure the elastic supply curve is flatter and intercepts the y-axis.

(ii) Explain any five characteristics of land. [5 Marks]

Answer:
1. Free Gift of Nature: Land is a natural resource not created by human effort; it exists independently.
2. Limited Supply: The total quantity of land is fixed and cannot be increased globally.
3. Immobility: Land is geographically immobile and cannot be transported from one place to another.
4. Heterogeneous in Nature: Land differs in terms of fertility, location, and climate, making some plots more productive than others.
5. Passive Factor of Production: Land cannot produce anything on its own unless combined with human labour and capital.

Teacher's Note:
a) List land characteristics precisely as a primary factor of production.
b) Use clear subheadings for each point to score full marks.

Question 9

(i) (a) Explain the overdraft facility given by a commercial bank. [2 Marks]
(b) State any three differences between Demand deposits and Fixed deposits. [3 Marks]

Answer:
(a) Overdraft facility is a credit service provided by commercial banks allowing current account holders to withdraw more money than their account balance up to a predetermined limit, subject to interest charges.
(b)

Teacher's Note:
a) Overdraft is a short-term accommodation exclusively for current account holders.
b) Distinguish clearly between demand and fixed deposits based on liquidity and interest.

(ii) Explain any five determinants affecting demand for goods. [5 Marks]

Answer:
1. Price of the Given Commodity: Generally, there is an inverse relationship between price and quantity demanded.
2. Income of the Consumer: As income increases, the demand for normal goods increases, while demand for inferior goods decreases.
3. Prices of Related Goods: Demand is affected by changes in the prices of substitutes (direct relationship) and complementary goods (inverse relationship).
4. Tastes and Preferences: Favorable changes in consumer tastes and fashion directly increase demand for a commodity.
5. Expectation of Future Price Change: If consumers expect prices to rise in the future, current demand increases.

Teacher's Note:
a) State five key determinants of demand clearly.
b) Explain how each determinant shifts or moves along the demand curve.

Question 10

(i) What factors contribute to the lower efficiency of labour in India as compared to the developed nations? [5 Marks]

Answer:
1. Unfavorable Climate: Hot tropical climate in India causes fatigue and tiredness, reducing long working hours without adequate cooling facilities.
2. Low Wages and Poor Living Standards: Inadequate wages fail to meet basic necessities, resulting in poor health and low efficiency.
3. Lack of Education and Training: Deficiencies in vocational training and formal education restrict workers from understanding modern production techniques.
4. Poor Working Conditions: Unsafe and unventilated workplaces adversely impact worker health and productivity.
5. Excessive Working Hours: Long and fatiguing hours without adequate leisure lead to exhaustion and lower overall efficiency.

Teacher's Note:
a) Focus on socio-economic, climatic, and workplace factors affecting Indian labour.
b) Structure the answer into distinct points for clarity.

(ii) Read the extract and answer the following questions:
The Central Bank of a country is called 'central' because it is the apex institution of the entire banking system of the country. The Central Bank has a very important role in 'stabilising' the economy. All the other banks in the economy are subject to control from this bank. The Central Bank itself is subject of the overall control of the government.
(a) 'RBI provides a convenient and economical device for settling interbank claims.' Justify the statement with a valid reason. [2 Marks]
(b) Why is Central Bank called as a 'Lender of last resort'? [2 Marks]
(c) What is bank rate? [1 Mark]

Answer:
(a) RBI acts as a central clearing agency, facilitating smooth and cost-effective settlement of interbank transactions through mechanisms like RTGS and NEFT.
(b) The Central Bank acts as a lender of last resort because it provides emergency financial accommodation to commercial banks facing liquidity crises when no other source of funds is available.
(c) Bank rate is the rate at which the Central Bank lends money to commercial banks without any collateral as a lender of last resort.

Teacher's Note:
a) Explain the clearing house function of the central bank.
b) Highlight the rescue role of the central bank during financial emergencies.