ICSE Class 10 Economics Sample Paper 2024 with Solutions

SECTION A

Question 1

(i) The ___________has to decide the reward for each factor of production. [1 Mark]
(a) Organiser
(b) Worker
(c) Consumer
(d) Entrepreneur

Answer: (d) Entrepreneur

The entrepreneur is the ultimate risk-bearer and organizer who combines factors of production and decides the rewards (rent, wages, interest, profit) for each factor.

Teacher's Note:
a) Recall that the entrepreneur coordinates the other three factors of production (land, labour, capital) and pays them their respective factor rewards.
b) Students often confuse the entrepreneur with a regular manager or worker.

(ii) Capital expenditure is _________ in nature. [1 Mark]
(a) Recurring
(b) Non recurring
(c) Positive
(d) Persuasive

Answer: (b) Non recurring

Capital expenditure is incurred for creating long term assets and is non-recurring in nature, unlike revenue expenditure which is recurring.

Teacher's Note:
a) Capital expenditure involves huge outlays to acquire fixed assets which yield benefits over several years.
b) Do not mistake capital expenditure for routine operating expenses.

(iii) As a result of rise in consumer’s income, the demand curve for coarse-grain (inferior good) will: [1 Mark]
(a) move upward along the same demand curve
(b) move downward along the same demand curve
(c) the demand curve will shift to the right
(d) the demand curve will shift to the left

Answer: (d) the demand curve will shift to the left

An inferior good has a negative income elasticity of demand; thus, as income rises, demand falls, shifting the demand curve to the left.

Teacher's Note:
a) Remember that for inferior goods, increase in income leads to a decrease in demand, causing a leftward shift.
b) Do not confuse a shift in demand caused by income with a movement along the curve caused by price changes.

(iv) There was difficulty in future payments under barter system due to: [1 Mark]
(a) Lack of divisibility
(b) Lack of common measure of value
(c) Lack of storage system
(d) Lack of standard of deferred payments

Answer: (d) Lack of standard of deferred payments

Future or contractual payments were difficult under barter because goods could not be reliably measured or agreed upon for future valuation.

Teacher's Note:
a) Standard of deferred payments refers to payments to be made in the future.
b) Students frequently confuse this with lack of common measure of value.

(v) Jute industry is an example of __________ division of labour. [1 Mark]
(a) Product based
(b) Geographical based
(c) Marketing based
(d) Production based

Answer: (a) Product based

When division of labour is based on the specific final product being manufactured, such as jute goods, it is known as product-based division of labour.

Teacher's Note:
a) Product-based division of labour occurs when different workers or industries specialize in producing a distinct product.
b) Geographical division depends on regional specialization.

(vi) From the above visual depiction, identify the specific factor of production showcased in the image. [1 Mark]
(a) land
(b) capital
(c) labour
(d) entrepreneur

[Figure: Collage showing various natural resources and primary materials such as wood, gold, sugar, salt, and coal]

Answer: (a) land

The images depict natural resources like coal, gold, timber, and agricultural produce, which constitute land in economics.

Teacher's Note:
a) In economics, 'land' includes all free gifts of nature available to mankind.
b) Carefully observe all visual elements representing natural gifts before answering.

(vii) __________ market has one seller and many buyers. [1 Mark]
(a) Perfect
(b) Perfectly
(c) Monopoly
(d) Monopsony

Answer: (c) Monopoly

A monopoly market structure is characterized by a single seller and a large number of buyers.

Teacher's Note:
a) Monopoly gives the single seller absolute market power to determine price or output.
b) Do not confuse monopoly (one seller) with monopsony (one buyer).

(viii) If you make investments in insurances or mutual funds, then it will be called a __________ type of capital. [1 Mark]
(a) Investment
(b) Financial
(c) Physical
(d) Profitable

Answer: (b) Financial

Investments in financial instruments like mutual funds, shares, and insurance policies represent financial capital.

Teacher's Note:
a) Financial capital refers to monetary funds or paper claims representing wealth.
b) Physical capital consists of tangible assets like machinery and buildings.

(ix) Ms. Sakshi, an economics teacher, was explaining the concept of ‘minimum percentage of the total deposits to be kept by any commercial bank with the Central Bank of the country, as per norms prevailing in the country’. From the following choose the correct alternative which specifies towards the concept explained by her? [1 Mark]
(a) Cash reserve ratio
(b) Repo rate
(c) Bank rate
(d) Statutory liquidity ratio

Answer: (a) Cash reserve ratio

Cash Reserve Ratio (CRR) is the fraction of total deposits that commercial banks must keep with the Central Bank.

Teacher's Note:
a) CRR is a vital quantitative credit control instrument used by the Central Bank.
b) SLR is kept by the bank with itself, whereas CRR is deposited with the Central Bank.

(x) This refers to the legal definition of money- [1 Mark]
(a) Anything which generally acts as money
(b) Money are those things which are used as a medium of exchange
(c) Anything declared by the government as money is called money.
(d) Money consists of those things which have a high degree of portability.

Answer: (c) Anything declared by the government as money is called money.

Legally, money is whatever the state or government declares as legal tender for discharging debts.

Teacher's Note:
a) The legal definition emphasizes the backing of law and government sanction.
b) Functional definition focuses on what money does (medium of exchange, measure of value).

(xi) Which factor out of the following serves as the primary source of consumption? [1 Mark]
(a) Land
(b) Labour
(c) Capital
(d) Entrepreneur

Answer: (b) Labour

[Note: The official key shows (b); the correct answer is (b) because labour earns wages which form the primary source of income for immediate consumption for the majority of households.]

Labour earns wages and salaries, which constitute the primary income source for consumer spending.

Teacher's Note:
a) Workers earn wages which are spent directly on consumer goods.
b) Read the question carefully to link factor earnings with consumption sources.

(xii) Which of the following is a determinant of market demand? [1 Mark]
(a) Taste and Preferences
(b) Consumer Credit Facility
(c) Income of the consumer
(d) Government policy

Answer: (c) Income of the consumer

Consumer income is a fundamental determinant of both individual and market demand.

Teacher's Note:
a) Changes in consumer income shift the demand curve.
b) Other determinants include price of substitutes, tastes, and population size.

(xiii) In perfect competition the sellers are selling _____________ products. [1 Mark]
(a) Identical
(b) Different
(c) Unique
(d) Inexpensive

Answer: (a) Identical

A key characteristic of perfect competition is that all firms sell homogeneous or identical products.

Teacher's Note:
a) Homogeneous products ensure that buyers have no preference for one seller over another based on quality.
b) Product differentiation is a feature of monopolistic competition.

(xiv) During barter exchange the rate of exchange was arbitrarily fixed. This resulted from: [1 Mark]
(a) Lack of common measure of Value
(b) Lack of divisibility
(c) Problem of storing wealth
(d) Problem of deferred payment

Answer: (a) Lack of common measure of Value

Without a common unit of account or measure of value, exchanging goods depended on mutual bargaining, leading to arbitrary exchange rates.

Teacher's Note:
a) A common denominator of value eliminates arbitrary valuation in exchange.
b) Students should distinguish between lack of common measure and lack of double coincidence of wants.

(xv) Indian farmers are an example of __________ type of labour. [1 Mark]
(a) Process based
(b) Monopoly based
(c) Product based
(d) Complex based

Answer: (c) Product based

Farmers specialize in agricultural production (crop cultivation), which represents product-based division of labour.

Teacher's Note:
a) Agricultural workers focus on specific end products like foodgrains or cash crops.
b) Understand the classification of division of labour clearly.

(xvi) A shirt costing Rs.300 represents __________ function of money. [1 Mark]
(a) Measure of value
(b) Store of value
(c) Transfer of value
(d) Cognizable value

Answer: (a) Measure of value

Expressing the price of a shirt in monetary units illustrates money acting as a measure of value or unit of account.

Teacher's Note:
a) Money provides a common yardstick to measure and compare the values of different goods and services.
b) Medium of exchange allows actual payment, whereas price quotation is a measure of value.

Question 2

(i) Give any two examples of commercial revenue. [2 Marks]

Answer:
1. Fees charged for government services (such as passport fees or court fees).
2. Prices charged for goods and services supplied by public sector enterprises (such as railway fares or postal charges).

Teacher's Note:
a) Commercial revenue is earned by the government through commercial undertakings and sale of goods/services.
b) Ensure examples given are distinct from taxes and fines.

(ii) What does consumer awareness mean? [2 Marks]

Answer:
1. Consumer awareness refers to educating and making a consumer conscious about their rights, duties, and safety regarding the goods and services they purchase.
2. It empowers consumers to make informed choices and protect themselves against market exploitation.

Teacher's Note:
a) Awareness includes knowing about standardisation marks like ISI, Agmark, and Hallmark.
b) Mentioning consumer rights adds value to the answer.

(iii) ‘Specialization of labour helps the producers in their productive activities and is also beneficial to the workers’. Justify the statement with two suitable reasons. [2 Marks]

Answer:
1. For producers: It leads to higher productivity, time economy, and superior quality output due to repetitive practice.
2. For workers: It increases workers' skill and dexterity, reducing physical fatigue over time through specialized task allocation.

Teacher's Note:
a) Division of labour benefits both sides of the production process.
b) Clearly segregate the benefit to the producer and the benefit to the worker.

(iv) Explain the meaning of overdraft facility. [2 Marks]

Answer:
1. Overdraft facility is a credit facility granted by a commercial bank to current account holders, allowing them to withdraw money in excess of their actual account balance up to a specified limit.
2. Interest is charged only on the exact amount overdrawn for the period it remains unpaid.

Teacher's Note:
a) This facility is generally extended to reliable business customers holding current accounts.
b) Emphasize that interest is calculated on the utilized overdraft amount, not the sanctioned limit.

Question 3

(i) Define the term demand. [2 Marks]

Answer:
1. Demand in economics refers to the desire for a commodity backed by the willingness to pay for it and the purchasing power (ability) to buy it at a given price during a specific period of time.
2. All three elements (desire, willingness, and ability) must be present simultaneously.

Teacher's Note:
a) Mere desire without purchasing power does not constitute demand.
b) Price and time period are essential components of the definition.

(ii) Why is capital subject to depreciation? [2 Marks]

Answer:
1. Capital goods (like machinery and equipment) undergo continuous wear and tear due to regular physical use in production.
2. They also suffer obsolescence due to technological advancements and economic changes over time.

Teacher's Note:
a) Depreciation represents the loss of value of fixed capital assets.
b) Mention both physical wear and tear and technological obsolescence for full credit.

(iii) How is fixed deposit different from saving deposit? [2 Marks]

Answer:
1. Fixed Deposit (FD): Amount is deposited for a fixed period with a higher rate of interest; premature withdrawal involves a penalty.
2. Saving Deposit: Money can be deposited and withdrawn flexibly by individuals with fewer restrictions and a lower rate of interest.

Teacher's Note:
a) Frame the answer as a clear comparative distinction.
b) Highlight the difference in interest rates and liquidity.

(iv) Analyse the visual elements in the above two pictures and identify the standardisation mark required for Picture 1 and Picture 2 respectively as per the consumer protection measure. [2 Marks]

[Figure: Picture 1 shows eco-friendly products with leaf symbols; Picture 2 shows a packet of Siyaram Besan with an Agmark logo]

Answer:
1. Picture 1 (Eco-friendly products): Eco Mark.
2. Picture 2 (Food/agricultural product - Besan): Agmark.

Teacher's Note:
a) Eco Mark is used for environment-friendly consumer products.
b) Agmark is the certification mark for agricultural and food products in India.

Question 4

(i) How does net debt differ from gross debt? [2 Marks]

Answer:
1. Gross total debt represents the total absolute liabilities or borrowings of the government.
2. Net debt is obtained by subtracting the government's financial assets (such as cash balances and loans given) from gross debt.

Teacher's Note:
a) Net debt gives a more accurate picture of a government's actual financial burden.
b) Keep the distinction crisp and concise.

(ii) Explain the term elasticity of demand. [2 Marks]

Answer:
1. Elasticity of demand measures the degree of responsiveness of quantity demanded of a good to a change in any of its determinants (price, consumer income, or price of related goods).
2. Price elasticity is the most commonly used measure, expressed as the percentage change in quantity demanded divided by the percentage change in price.

Teacher's Note:
a) Mention responsiveness and determinants clearly.
b) Mentioning the formula adds analytical depth.

(iii) Ram and Shyam were both travelling by train from Delhi to Chennai separately. However, the cost of their tickets is different. Why? Give a reason for the railways charging different prices to different customers. [2 Marks]

Answer:
1. This is an example of price discrimination practiced by the railways.
2. It happens because they travel in different classes (such as AC First Class vs. Sleeper Class), where fares vary according to the comfort level, facilities provided, and the paying capacity of different consumer groups.

Teacher's Note:
a) Railways segment the market and charge different prices for different services.
b) Connect the concept to price discrimination in monopoly or public utility pricing.

(iv) Under what conditions does the supply of good exhibit unitary elasticity? [2 Marks]

Answer:
1. Supply exhibits unitary elasticity when the percentage change in quantity supplied is exactly equal to the percentage change in price (\(E_s = 1\)).
2. Graphically, a straight-line supply curve with unitary elasticity passes exactly through the origin.

Teacher's Note:
a) State the exact mathematical condition (\(E_s = 1\)).
b) Mention the geometric property of the supply curve for completeness.

SECTION B

Question 5

(i) With the help of a graph explain the increase in demand concept. [5 Marks]

Answer:
1. Meaning: Increase in demand refers to a situation where more quantity is demanded at the same price due to favorable changes in other factors (like rise in consumer income or tastes), other things remaining constant.
2. Graph Description:
- On the X-axis, quantity demanded is represented, and on the Y-axis, price is represented.
- The original demand curve is \(DD\).
- Due to an increase in demand, the entire demand curve shifts to the right from \(DD\) to \(D_1D_1\).
- At price \(OP\), quantity demanded increases from \(OQ\) to \(OQ_1\).
3. Reasons: Rise in consumer income for normal goods, increase in population, or favorable change in taste.

Teacher's Note:
a) Emphasize that an increase in demand involves a rightward shift of the entire curve, not a movement along the curve.
b) Clear labeling of axes and shift direction in the graph is essential for full marks.

(ii) Explain any five demerits of direct tax? [5 Marks]

Answer:
1. Unpopular: Direct taxes are directly paid by citizens, making them highly visible and unpopular among taxpayers.
2. Inconvenient: Calculating taxable income, maintaining accounts, and filing tax returns involve a cumbersome and inconvenient procedure.
3. Evasion and Avoidance: High rates of direct taxation encourage tax evasion and legal tax avoidance through loopholes.
4. Adverse Effect on Savings and Investment: Heavy direct taxes reduce disposable income, which in turn discourages savings and capital formation.
5. Uncertain Yield: The revenue from direct taxes can be uncertain, as it fluctuates with economic conditions, employment levels, and national income.

Teacher's Note:
a) List five distinct and well-explained points.
b) Use headings for each point to ensure structured presentation.

Question 6

(i) (a) Define a market. [2 Marks]

Answer:
1. In economics, a market does not merely mean a physical geographical place.
2. It refers to an arrangement or mechanism that brings buyers and sellers into contact with one another for the purchase and sale of a commodity at mutually agreed prices.

Teacher's Note:
a) Highlight that modern markets can operate digitally without physical contact.
b) Mention buyers, sellers, and exchange mechanism.

(b) Explain any three features of a monopolistic market. [3 Marks]

Answer:
1. Large Number of Buyers and Sellers: There are many independent firms competing in the market, but each has a small market share.
2. Product Differentiation: Products sold by different firms are close substitutes but not identical (differentiated by brand name, packaging, or quality).
3. Free Entry and Exit: Firms can enter or leave the industry freely in the long run, ensuring zero economic profits in long-run equilibrium.

Teacher's Note:
a) Product differentiation is the hallmark of monopolistic competition.
b) Explain each feature concisely with a heading.

(ii) List any five important duties of a consumer? [5 Marks]

Answer:
1. Asking for cash memos and purchase bills for all purchases made as proof of transaction.
2. Checking standardisation marks such as ISI, Agmark, and Hallmark before buying goods.
3. Reading product labels carefully to check ingredients, expiry dates, and instructions for use.
4. Exercising caution against misleading advertisements and exaggerated claims made by sellers.
5. Filing a genuine complaint in consumer forums if exploited or cheated by traders.

Teacher's Note:
a) Responsibilities balance consumer rights.
b) List five clear and practical consumer duties.

Question 7

(i) (a) What is the meaning of inflation? [2 Marks]

Answer:
1. Inflation is a sustained and appreciable rise in the general price level of goods and services in an economy over a period of time.
2. It results in a continuous fall in the purchasing power of money.

Teacher's Note:
a) Emphasize that inflation is a sustained increase, not a one-time price spike.
b) Connect price rise with declining purchasing power.

(b) Explain any three evil effects of inflation on production. [3 Marks]

Answer:
1. Discourages Savings: High inflation reduces the real value of savings, leading to lower capital formation and reduced investment in productive channels.
2. Encourages Speculation: Producers tend to hoard goods and indulge in speculative activities for quick profits rather than engaging in genuine productive manufacturing.
3. Distortion of Resource Allocation: Producers shift resources away from essential goods toward luxury goods consumed by the rich, where higher profits can be made during inflation.

Teacher's Note:
a) Focus strictly on effects concerning production and investment.
b) Maintain clear economic reasoning across all three points.

(ii) Differentiate between commercial and central bank (five points). [5 Marks]

Answer:

Teacher's Note:
a) Tabular presentation is best for difference questions.
b) Ensure all five points cover distinct functional differences.

Question 8

(i) Differentiate between extension and contraction of demand. [5 Marks]

Answer:

Teacher's Note:
a) Highlight that both extension and contraction represent movements along the same demand curve (change in quantity demanded).
b) Ensure exact comparison parameters are used in the table.

(ii) (a) State the law of supply. [2 Marks]

Answer:
1. The law of supply states that, other things remaining constant (ceteris paribus), there is a direct (positive) relationship between the price of a commodity and its quantity supplied.
2. As price rises, quantity supplied increases; as price falls, quantity supplied decreases.

Teacher's Note:
a) Mentioning the ceteris paribus assumption is mandatory.
b) State clearly that price and supply move in the same direction.

(b) Explain any three factors affecting elasticity of supply. [3 Marks]

Answer:
1. Nature of Commodity: Perishable goods have inelastic supply because they cannot be stored for long, whereas durable goods have elastic supply.
2. Cost of Production: If costs rise rapidly with an increase in output, supply is inelastic; if costs rise slowly, supply is elastic.
3. Time Period: Supply is more elastic in the long run as producers have enough time to adjust their production capacity, whereas in the short run, supply is relatively inelastic.

Teacher's Note:
a) Pick three distinct and prominent determinants of supply elasticity.
b) Explain how each factor influences responsiveness to price changes.

Question 9

(i) (a) What is the meaning of the Consumer Price Index (CPI)? [2 Marks]

Answer:
1. Consumer Price Index (CPI) is an index that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
2. It is widely used as a primary indicator of consumer inflation.

Teacher's Note:
a) Define CPI as a barometer of retail price inflation.
b) Mention the market basket concept.

(b) Mention any three objectives of GST. [3 Marks]

Answer:
1. One Nation, One Tax: To subsume multiple indirect taxes (like excise duty, VAT, and service tax) into a single unified national tax.
2. Elimination of Cascading Effect: To remove the burden of tax-on-tax (tax cascading) and create a seamless tax credit mechanism across the supply chain.
3. Ease of Doing Business: To simplify tax compliance, reduce logistics costs, and encourage interstate trade and commerce within the country.

Teacher's Note:
a) GST stands for Goods and Services Tax.
b) State three clear economic objectives of introducing GST.

(ii) (a) What is the meaning of consumer exploitation? [2 Marks]

Answer:
1. Consumer exploitation refers to the unfair practices adopted by manufacturers, traders, or sellers to cheat consumers for making excess profits.
2. It includes practices like charging higher prices, selling adulterated or substandard goods, and providing false weights and measures.

Teacher's Note:
a) Highlight the motive of unfair profit-making.
b) Mention common forms of exploitation.

(b) Explain any three rights of a consumer. [3 Marks]

Answer:
1. Right to Safety: The right to be protected against products and services that are hazardous to health and life.
2. Right to be Informed: The right to be informed about the quality, quantity, potency, purity, standard, and price of goods to protect against unfair trade practices.
3. Right to Seek Redressal: The right to seek legal remedy against unfair trade practices or exploitation, including compensation for damages.

Teacher's Note:
a) Choose three core rights enshrined under the Consumer Protection Act.
b) Describe each right with a clear explanation.

Question 10

(i) Explain the determinants of individual demand? [5 Marks]

Answer:
1. Price of the Commodity: There is an inverse relationship between the price of a good and its demand (higher price leads to lower demand).
2. Income of the Consumer: For normal goods, demand rises with income; for inferior goods, demand falls as income rises.
3. Prices of Related Goods: Demand is affected by substitutes (direct relationship) and complementary goods (inverse relationship).
4. Tastes and Preferences: Favorable changes in consumer tastes increase demand, while unfavorable changes decrease it.
5. Consumer Expectations: If consumers expect prices to rise in the future, current demand increases; if prices are expected to fall, current demand decreases.

Teacher's Note:
a) List five main determinants of individual demand with brief explanations.
b) Differentiate between normal and inferior goods under the income determinant.

(ii) Read the extract and answer the following questions.
Shruti and her friends have an idea to start selling makeup kits. They already have saved money for the merchandise, models and displays. Since they all own the company, they will work for free.
(a) Name the factor of production which is not mentioned. [1 Mark]

Answer:
Land.

Teacher's Note:
a) Capital (saved money), entrepreneurship (Shruti and friends owning the company), and labour (working for free) are mentioned, but land (natural resources or workspace) is missing.
b) Read the case extract carefully to identify missing economic inputs.

(b) Explain any four features/characteristics of the above (a) factor of production. [4 Marks]

Answer:
1. Free Gift of Nature: Land is provided free by nature without any human effort.
2. Fixed Supply: The total supply of land is inelastic and cannot be increased or decreased by human agency.
3. Indestructible Powers: Unlike man-made capital, the original and indestructible powers of land cannot be permanently destroyed.
4. Geographic Immobility: Land is geographically immobile, meaning it cannot be physically moved from one place to another.

Teacher's Note:
a) Link this answer directly to the factor identified in part (a), which is Land.
b) State four standard characteristics of land as a factor of production.