# PSEB 9th Class SST Solutions Economics Chapter 1 Story of a Village

Punjab State Board PSEB 9th Class Social Science Book Solutions Economics Chapter 1 Story of a Village Textbook Exercise Questions and Answers.

## PSEB Solutions for Class 9 Social Science Economics Chapter 1 Story of a Village

SST Guide for Class 9 PSEB Story of a Village Textbook Questions and Answers

I. Fill in the Blanks :

Question 1.
Human wants are ___________
Unlimited

Question 2.
___________ bears risk.
Entrepreneur

Question 3.
___________ is a natural factor of production.
Land

Question 4.
To grow more than one crop on a piece of land during a year is known as ___________
Multiple cropping

Question 5.
Some labourers who migrate from one state to other state for work are called ___________
Migrant Labourers

Question 6.
Punjab is known as ___________ of country.

II. Multiple Choice Questions :

Question 1.
Which factor of production is immobile?
(a) Land
(b) Labour
(c) Capital
(d) Entrepreneur.
(a) Land

Question 2.
Economic activity which is concerned with increasing utility or value of the goods and services is called :
(a) Production
(b) Consumption
(c) Distribution
(d) Labour.
(a) Production

Question 3.
Extraordinary increase in agriculture production especially in wheat and rice is called
(a) Green Revolution
(b) Wheat Revolution
(c) Rice Revolution
(d) White Revolution.
Green Revolution

Question 4.
What is the currency of England known ___________ as?
(a) Rupees
(b) Dollar
(c) Yen
(d) Pound.
Pound.

III. True/False :

Question 1.
Supply of land is limited.
True

Question 2.
Limited wants of human beings are satisfied by unlimited resources.
False.

Question 3.
Supply of labour cannot be increased or decreased.
False.

Question 4.
Entrepreneur bears risks.
True

Question 5.
Work done by machines and animals is called labour.
False.

Question 6.
When price of goods in the market is high then the demand for these goods is also high.
False.

IV. Very Short Answer Type Questions :

Question 1.
What is the meaning of economics?
Economics is the study of unlimited human wants and the activities done to satisfy these wants through limited resources.

Question 2.
Which is the main productive activity of the villages of India?
Farming is the main productive activity of the villages of India.

Question 3.
Name two sources of irrigation in the villages.

1. Tubewells,
2. Canals.

Question 4.
What is the meaning of labour in Economics?
In economics labour means all human efforts, physical as well as mental, done for the sake of monetary gain.

Question 5.
The activity done by a mother while teaching her son is considered labour or not.
This activity is not considered as labour because it is not done for the sake of monetary gain.

Question 6.
In what form do the labourers get their wages?
The labourers get their wages in form of cash or kind such as rice or wheat.

Question 7.
Give two non-farm activities done by the villagers of a village.
Following are the two non-farm activities :

1. Dairy,
2. Poultry farming.

Question 8.
From where do the large and small scale farmers get capital needed for farming?
The large farmers get capital needed for farming out of their own savings from farming while small farmers have to take loans on high ratess of interest from the large farmers.

Question 9.
Write any one feature of land.
Land is a free gift of nature.

Question 10.
Why do labourers migrate from one state to other state?
Labourers migrate from one state to other state in search of work for their livelihood.

Question 11.
Why do farmers burn Stubble?
Formers burned stubble after harvest to dispose of the left over straw and to control disease and past problems of the field. They used to improve the health of the field.

V. Short Answer Type Questions:

Question 1.
Why do we study Economics?
We study economics because it is a science concerned with the allocation of scarce means of resources in such a manner that consumers can maximize their satisfaction, producers can maximize their profits and society can maximize its social welfare. So by studying economics we can satisfy our unlimited wants with limited and scarce resources.

Question 2.
What is an economic activity? Give one example.
An activity which is carried out by a person to satisfy his unlimited wants by using limited and scarce resources is known as economic activity. This activity is undertaken to earn wealth.
Example : A teacher is teaching in a school.

Question 3.
Explain the difference between economic and non-economic activities.
Economic activities are those activities which are concerned with consumption, production, exchange and distribution of wealth.

Non-Economic activities are undertaken for the welfare of a country, family well being, social cause, health, entertainment etc. Economic activities are undertaken to earn wealth but the non-economic activities are undertaken not for earning wealth.

Question 4.
Explain two different ways of increasing production on the same piece of land.
To grow more than one crop on a piece of land during a year is known as multiple cropping. It is the most common way of increasing production on a given piece of land. This is possible by electric tubewells and continuous power supply being provided to the farmers.

The other way of increasing production from the same piece of land is by using modem farming methods such as use of high-yielding varieties of seeds, adequate amount of chemical or bio fertilizers, pesticides, improved agricultural implements etc.

Question 5.
What is Multiple cropping? Explain it.
To grow more than one crop on a piece of land during a year is known as mulitple cropping. It is the most common way of increasing production on a given piece of land. This is possible by electric tubewells aifd continuous power supply being provided to the farmers. A small water cannal also passes by the fields which provides water for agriculture. With the help of multiple cropping system, the farmers are able to grow three crops in a year. Due to developed irrigation system and good electricity supply, no land is left idle.

Question 6.
What is Green Revolution? How was it possible?
An extraordinary increase in agricultural production especially in wheat and rice is known as Green Revolution. The year 1966-67 was the initial year of Green Revolution. This was made possible due to the adoption of new techniques of HYV seeds, more use of chemical fertilizers, more irrigations facilities etc. Farmers of Punjab, Haryana and Western Uttar Pradesh were the first to try out the modern farming methods.

Question 7.
What are the adverse effects of modern farming methods and tube- well irrigation on land?
Land being a natural resource, the modern farming methods have reduced its soil fertility. By the use of modern farming methods total crop yield may increase in the initial stage but it will gradually decrease with increased use of chemical fertilizers.

The water level below the ground is reducing by the continuous use of water for irrigation by tubewells. Every year the farmers of Punjab have to dig their tubewells deeper. In these conditions there is a fear of complete loss of water in the next 20 years.

Question 8.
Why do the quality of soil deteriorate due to fuming of agricultural waste in the fields?
There is no denying the fact that the quality of soil deteriorate with the burning of agricultural waste in the fields. Actually soil contains many practicles, nutrients and living organisms which are required for the continuity of productivity of soil. If farmers with burn agricultural waste in the fields, all those nutrients, living organisms etc. will also remain no more. It will reduce the feltility of soil and there is a danger of becoming that land into a barren land. So, agricultural waste must not be burnt. Some other way out should be devised you its disposal.

Question 9.
In what way is the land distributed amongst the farmers of a village?
In this village, unfortunately not all the people engaged in agriculture have sufficient land for cultivation. Only about 20 families own majority of the land in the village and 100 families own medium size agriculture fields. Some families own very small size fields. There are 50 such families who own no agriculture land at all. They earn their living by working in the fields of other families.

Question 10.
Give two sources of labour for farming in the village.
Farmers themselves provide the labour required for farming. Besides this, some landless families work as labourers in the fields of big landlords to earn their living.

Some farm labourers of other states such as Bihar and Uttar Pradesh have also migrated to this village to work in the fields of landlords. These are called migrant labourers.

Question 11.
What are the main features of labour?
The main features of labour are :

• Labour is the only active factor of production.
• Supply of labour can be increased or decreased.
• Labour is available in abundance in India.
• Labour means all human efforts done for the sake of monetary gain.
• Labour can be bought or sold.
• Labour is mobile.

Question 12.
How do the small farmers arrange capital needed for farming?
The small farmers arrange capital needed for farming by taking loans on high rates of interest from the large scale farmers or the village money lenders or the traders. Sometimes they have to mortgage their houses or small land holdings to repay the loans. If they are unable to repay the loans, their property is seized. Sometimes they also arrange capital needed for farming from institutional sources.

Question 13.
What do the large-scale farmers do with the surplus farm products?
The large-scale farmers sell the surplus farm products in a near by Mandi (market). The large-scale farmers supply crops to the market. They earn a lot by selling a part of these products and use the savings for lending to small farmers who are in need of loan. They also use a part of the savings to arrange for working capital for farming in the next season which increases their fixed capital.

Question 14.
What are the different non-farm activities being carried out in the rural areas of India?
The different non-farm activities being carried out in the rural areas of India are dairy, poultry farming, keeping of bees, some families work as carpenters, weavers and some are even running small general stores in their houses. Some families are producing jaggery and sell them to the traders. Some very poor families earn their livelihood by ferrying people and goods from one place to another through rickshaws, tongas, bullock carts etc. At present, the non-farm sector in the village is not very large. Out of every 100 workers in the rural areas in India, only 24 are engaged in non-farm activities.

Question 15.
What can be done so that non-farm production activities can be started in villages?
Non-farm production activities require little land. At present, the non-farm sector in the village is not very large. Out of every 100 workers in the rural areas in India, only 24 are engaged in non-farm activities. People can set up non-farm activities either from their savings or by taking loans. As more villages get connected to towns and cities through good roads, transport and telecommunication, it is possible that the opportunities for non-farm activities in the village would increase in the coming years.

VI. Intext Questions and Answers:

Question 1.
Visit your nearby fields, talk to some farmers and try to find out.
The kind of farming methods that the farmers are using i.e., traditional or modern or both and the reasons for using these methods.
In my nearby fields some farmers having low small holding were using traditional methods of farming but some farmers with larger size of holding were also using modern farming methods. Farmers with smaller size of holding were not able to adopt modern methods of farming due to their low income level. On the other hand, farmers with larger size of holding were able to adopt modern methods of farming due to their high level of income.

Question 2.
What are the main sources of irrigation being used in the village?
In my village most of the farmers are dependent on rain for irrigating their fields. But some big farmers are using tubewells and pump sets for irrigation.

Question 3.
Kinds of crops sown by the farmers and also the time of sowing and harvesting of these crops.
The farmers of my village sow both Kharif and Rabi crops. In Kharif season crops of maize, sunflower and rice are sown and harvested before winter. They sow wheat, barley, gram, mustard in winter and harvest in the month of April.

Question 4.
Name the fertilizers and pesticides used by the farmers.
Fertilizers

• Urea
• Vermicompost
• Gypsum

Pesticides

• Emanectin Benzoate
• RDX Bio Pesticide
• Bifenthrin 2.5% EC
• Star one.

Question 5.
Visit your village’s field or a near by village’s field and find out whether the farmers are burning the stubble in the filed and if they are doing so then explain to them about the bad consequences of doing so.
I visited my near by village’s field and found that farmers were in hury to prepare the field for next crop, specially after harvesting rice crop and before sowing of wheat crop. The farmers were forced to burn the stubble due to non-availability of any quick solution for the management of solid waste. I explained them about the bad consequences of doing so, as burning of stubble leads to serious environment pollution as well as ecological imbalance. Due to increase in temperature of top soil, different kinds of bacteria, fungi, friendly beasts die and important minerals of the soil are destroyed.

Question 6.
Why do farmers with small land holdings have to work in the fields of big landlords as labourers?
The farmers with small land holdings have to work in the fields of big land¬lords as labourers because they have to give up their land to big landlords for repayment of their loans taken from the big landlords. So they have to work as labourers in the fields of big landlords to earn their living.

Question 7.
Do the farm labourers get employment for the whole year?
No, the farm labourers do not get employment for the whole year. They are employed on a daily basis or for one particular farm activity like harvesting, sowing etc. Thus they are seasonally employed.

Question 8.
In what form do the farm labourers get their wages?
The farm labourers get their wages in cash or in kind. For example rice, wheat etc.

Question 9.
Who are migrant labourers?
Some farm labourers of other states migrate to the village to work in the fields of landlords. These are called mirgant labourers.

Question 10.
Why do labourers migrate? Discuss with your teachers.
Labourers migrate due to the non-availability of work at their own place of living. We often see some people from other states to come to our place of living in search of work. They are called migrant labourers.

PSEB 9th Class Social Science Guide Story of a Village Important Questions and Answers

Multiple Choice Questions:

Question 1.
Which one is the function of money?
(a) Medium of Exchange
(b) Measure of Value
(c) Store of Wealth
(d) All of the above.
(d) All of the above.

Question 2.
Which one is not a part of goods?
(a) Physical
(b) Equilibrium
(c) Perishable
(d) Durable.
(b) Equilibrium.

Question 3.
Which one is a reward of Entrepreneur?
(a) Profit
(b) Reject
(e) Wages
(d) Interest.
(a) Profit.

Question 4.
Interest is given for:
(a) Land
(b) Entrepreneurship
(c) Capital
(d) Labour.
(c) Capital,

Question 5.
The income received by a firm from selling its product is known as the ___________ of the firm.
(a) Revenue
(b) Utility
(c) Demand
(d) Cost.
(a) Revenue.

Question 6.
Scarcity signifies the __________________ of supply relative to demand.
(a) Shortage
(b) More
(c) Equal
(d) None of these.
(a) Shortage.

Question 7.
State the formula to calculate Average Income.
(a) $$\frac{\text { Output }}{\text { Total Income }}$$
(b) $$\frac{\text { Total Income}}{\text { Output }}$$
(c) Total Income × Output
(d) None of these.
(b) $$\frac{\text { Total Income}}{\text { Output }}$$

Question 8.
Which one is the feature of Perfect Competition?
(a) Homogeneous product
(b) Same price
(c) Perfect knowledge
(d) All of the above.
(b) Same price.

Fill in the Blanks:

Question 1.
All those items which fulfill the human wants are called ___________
Goods

Question 2.
___________ cost is the overall cost per unit of output.
Average

Question 3.
Under Perfect Competition, AR and MR happen to be ___________ to each other.
Equal

Question 4.
Factors of production are of types.
Four

Question 5.
___________ signifies a market situation in which there is a large number of sellers of a homogeneous product.
Perfect Competition

Question 6.
Economic rent is the price paid for the use of ___________
Land

Question 7.
___________ signifies the shortage of supply relative to demand.
Scarcity

Question 8.
___________ is a basic unit of production which utilizes Various means of production to produce.
Firm

Question 9.
___________ is a market in which there is a single seller.
Monopol

Question 10.
___________ is that power of a commodity which statisfies human wants.
Utility.

True/False:

Question 1.
Currency of USA is Dollar.
True

Question 2.
Teacher teaching his son at home is an economic activity.
False

Question 3.
Supply of land is unlimited.
False

Question 4.
One acre is equal to 8 kanals.
True

Question 5.
Only 40% of the total cultivated area is irrigated in our country.
True

Question 6.
Punjab is a land of five rivers.
True

Question 7.
Underground water level in Punjab is increasing.
False

Question 8.
In India about 70% of the farms are even less than 2 hectares.
True

Question 9.
Labour cannot be bought or sold.
False

Question 10.
Capital involves depreciation.
True

Very Short Answer Type Questions

Question 1.
Define Utility.
Utility may be defined as the want-satisfying power of a commodity.

Question 2.
Define Marginal Utility.
Marginal utility is the addition in total utility when one more unit of the commodity is consumed.

Question 3.
Define Goods.
In the words of Marshall, “All those items which fulfil human wants are called Goods in Economics.”

Question 4.
Explain Intermediate Goods and Final Goods.
Intermediate goods are those goods which are used in the production of other goods. Final goods are used for consumption.

Question 5.
Define Capital Goods.
Those goods which help in the production of other goods are called capital goods e.g., raw material, machinery, etc.

Question 6.
Distinguish between Goods and Services.
Those items which can be seen, touched and transferred from one place to another are called goods whereas services cannot be seen, touched and transferred.

Question 7.
Define Wealth.
All those goods and services which possess the qualities of utility, scarcity and transferability are called wealth.

Question 8.
Explain the term Scarcity.
Scarcity signifies the shortage of supply relative to demand.

Question 9.
Are BA, degree and Business Goodwill, Wealth?

1. The degree of BA is not wealth because it lacks the attribute of transferability.
2. Credibility (goodwill) of business is wealth because it possesses all the three attributes of wealth i.e., utility, scarcity and transferability.

Question 10.
Define Money.
Money is anything which is generally acceptable as a medium of exchange and acts as a store of value.

Question 11.
What do you mean by the term demand?
Demand for anything is the amount of it which a consumer is willing and able to buy at a given price during some specified period of time.

Question 12.
What do you mean by the term Supply?
Supply of a commodity is that amount of it which a seller is willing to sell at a given price during some specified period of time.

Question 13.
Define Monetary Cost.
Monetary cost signifies that aggregate money expenditure which is incurred on the production of a specified quantity of commodity.

Question 14.
Define Marginal Cost.
Marginal cost is the addition in total cost when one more unit of the commodity is produced.

Question 15.
What do you mean by Average Cost?
Average cost is the overall cost per unit of output. It can be obtained by dividing the total cost by the corresponding output.

Question 16.
Define Revenue.
The income received by a firm from selling its product is known as the revenue of the firm.

Question 17.
Define Marginal Revenue.
Marginal revenue is the addition in total revenue when one more unit of the output is sold.

Question 18.
Define Price.
The amount of money paid for a unit of a commodity is called its price.

Question 19.
Explain the relationship between Marginal Revenue and Average Revenue under perfect competition.
Under perfect competition, AR and MR happen to be equal to each other.

Question 20.
Explain the relationship between Marginal Revenue and Average Revenue under Monopoly.
Under monopoly, AR slopes downward from left to right and MR also slopes downward from left to right and lies below AR.

Question 21.
Define Perfect Competition.
Perfect competition signifies a market situation in which there is a large number of sellers of a homogeneous product and price is determined by the industry.

Question 22.
Define Monopoly.
It is a market situation in which there is a single seller selling a commodity which has no close substitutes.

Question 23.
Define Market.
By the term ‘market’, we mean the whole of any region in which buyers and sellers are in such a free intercourse with one another that the prices of the same goods tend to equalise, easily and quickly.

Question 24.
What do you understand by factors of production?
Those goods or services which help in the production of wealth are called agents or factors of production.

Question 25.
Define Land.
By the term land is meant not only land in the strict sense but whole of the material or the other forces which nature gives freely for man’s aid in land and water, in air, light and heat.

Question 26.
What do you mean by Labour?
In Economics labour implies all such physical or mental exertion which is undertaken in order to earn income.

Question 27.
Define Capital.
In the words of Marshall, “Capital consists of those kinds of wealth, other than the free gifts of nature, which yield income.”

Question 28.
What do you mean by Entrepreneur?
An entrepreneur is one who combines other factors of production (Land, Labour and Capital), makes economic decisions and bears risks of business.

Question 29.
Give traditional definition of Rent.
According to the classical economists, rent is the price paid for the use of land.

Question 30.
Give modern definition of Rent.
Economic rent is a surplus return to any factor of production whose supply is less than perfectly elastic.

Question 31.
Define Wages.
In Economics, wage means the payment or reward to the workers in return for all mental or physical exertions.

Question 32.
What do you mean by Real Wages?
Real wage includes money wage and other tangible as well as intangible benefits that accrue to a worker for his services.

Question 33.
What do you mean by Money Wages?
Money wages are those which are paid to the workers in terms of money.

Question 34.
Define Interest.
Interest is the payment by the borrower to the lender for the use of a sum of money over a specified period of time.

Question 35.
Distinguish between Gross Interest and Net Interest.
Gross interest is the total amount received by the owner of capital by way of interest. Net interest, on the other hand, is the payment made to the capitalist purely for the use of capital.

Question 36.
What do you mean by the term Profit?
Profit is the residual payment which is left as the producer’s income after all other payments have been met.

Question 37.
Distinguish between Gross Profit and Net Profit.
Gross Profit = Total Revenue – Total Explicit Costs
Net Profit = Total Revenue – Total Costs (Explicit Costs + Implicit Costs)

Question 38.
Define Gross Profit.
Gross profit is the amount which an entrepreneur receives when all the expenses of production like rent, wages, interest, expenses on raw material, cost of fuel and power, etc. are deducted out of the total revenues of the firm.

Question 39.
What do you mean by Net Profit?
Net profit is the reward or payment purely for the services of an entrepreneur.
Net Profit = Gross Profit – Implicit Cost – Insurance and Depreciation.

Short Answer Type Questions
Answer the following questions within 50-60 words :

Question 1.
Define Utility. Explain its features.
Definition of Utility. Utility is that power of a commodity which satisfies human wants.

Features of Utility: Utility has the following features:

• Utility is Subjective. Utility is subjective because it deals with the mental satisfaction of a man.
• Utility is Relative. Utility of a commodity is not always consistent. It changes with time, place and individual.
• Utility differs from usefulness.
• Utility is not concerned with Good and Bad.

Question 2.
Explain Total Utility and Average Utility with the help of the examples.
The total utility is derived from the consumption of different quantities of a commodity. For example, you consume 6 Bananas at one sitting. The sum of the utilities you got from the consumption of these 6 Bananas will be called the total utility.

Average utility is derived by dividing total utility with number of units consumed.
For example, by the consumption of 10 Rasgullas at one sitting a person gets 50 units of utility. Then the average utility will be 5 units.
Average utility = $$\frac{\text { Total utility }}{\text { No. of units consumed }}$$
A.U. = $$\frac{50}{10}$$ = 5 units.

Question 3.
Define Goods and give its classification.
Definition of Goods. In the words of Dr. Marshall, “Goods are desirable things. All things that satisfy human wants are called goods.”

Classification of Goods. The goods can be classified in the following ways :

• Public Goods: All those goods which are owned by the government are called public goods such as Roads, Parks, etc.
• Private Goods: All those goods which are owned by an individual privately are called private goods such as a pen, a shirt, etc.
• Economic Goods: Economic goods are’ those which are in limited supply, so they command prices.
• Non-Economic or Free Goods: Free goods are those which are unlimited in supply and which don’t have any price.
• Consumer Goods: Consumer goods are those which satisfy the consumer’s wants directly.
• Producer Goods: Producer goods are those goods which help in the production of other goods.
• Perishable Goods; These are the goods which perish in a short time and can be used only once.
• Durable Goods: These are the goods which can be used for a long period of time.
• Intermediate Goods: These goods are purchased for resale.
• Final Goods: These goods are purchased for final consumption and not for resale.
• Natural Goods: All those goods which are produced by nature are called natural goods such as land, forest, minerals etc.
• Man Made Goods: All those goods which are produced by man are called man made goods such as furniture, cloth etc.

Question 4.
Define Money. What are the main functions of money?
Definition of Money. In the words of Crowther, “Anything that is generally accepted as a means of exchange and at the same time acts as a measure and a store of value.”

Functions of Money. The main functions of money are as below :

1. Medium of Exchange: Every commodity is bought and sold with money.
2. Measure of value: To measure the value of all goods and services, money is used.
3. Standard of Deferred Payments: Money also facilitates borrowing and lending.
4. Store of Value: It is very convenient to store wealth in terms of money.
5. Transfer of Value: With the help of money it is very easy to transfer wealth from one place to another.

Question 5.
What do you mean by demand? Explain the term demand with the help of a table and a diagram.
Meaning of Demand. In the words of Benham, “The demand for anything at a given price is the amount of it which will be bought per unit of time at that price.”

Explanation: The term demand can be explaind with the help of following :
Demand Schedule: Demand schedule is a schedule which establishes a relationship between price and quantity bought.

Demand Schedule

 Price (₹) Quantity Demanded (kg.) 1 40 2 30 3 20 4 10

It is clear from the above table that as the price of the commodity rises, its quantity demanded falls.

Demand Curve is the graphic presentation of demand schedule.
Clearly, when price is Re. 1, quantity demanded is 40 kg. and when price rises to Rs. 4, quantity demanded falls to 10 kg. The demand curve DD slopes downward from left to right which indicates that with the fall in price, quantity demanded rises and with rise in price, quantity demanded decreases.

Question 6.
Define Supply. Explain the term diagram.
Definition of Supply. Supply of a commodity is the amount of it which a seller is willing to sell at a given price during some specified period of time.

In the words of Thomas, “The supply of good is the quantity offered for sale in a given market at a given time at various prices.”

Explanation. The term supply can be explained in the following way :
Supply Schedule. Supply schedule is a schedule which establishes a relationship between price and quantity supplied.

Supply Schedule

 Price of X per unit(₹) Quantity Supplied of X (kgs.) 1 0 2 10 3 20 4 30

Clearly with the increase in price of X, quantity supplied of X rises and with the decrease in price, quantity supplied decreases.

Supply Curve. Supply curve is the graphic presentation of supply schedule. In the figure, SS is the supply curve which is positively sloped indicating thereby that when price rises, supply rises and vice-versa.

Question 7.
Define Cost. Explain the concepts of Total Cost, Marginal Cost and Average Cost.
Definition of Cost: Cost signifies that aggregate money expenditure which is incurred on the production of a specified quantity of a commodity.

Total Cost: Total cost signifies the total expenditure incurred on the production of a specified quantity of commodity.

Average Cost: Average cost is the overall cost per unit of output.
Average Cost = $$\frac{\text { Total cost }}{\text { No. of units of output }}$$

Marginal Cost. Marginal cost is the addition in total cost when one more unit of the commodity is produced. Thus MCn = TCn – TCn-1
MCn = Marginal cost of nth unit
TCn = Total cost of n units
TCn-1 = Total cost of (n – 1)th unit.

Question 8.
Define Revenue. Explain Total Revenue, Marginal Revenue, and Average Revenue.
Definition of Revenue. In the words of Dooley, “The revenue of a firm is its sales, receipts or income.”
Total Revenue. The whole income received by the seller from selling a given amount of the product is called total revenue.
Marginal Revenue. Marginal revenue is the addition in total revenue when one more unit of the product is sold. In other words :
MRn = TRn – TRn-1
MRn = Marginal revenue of nth unit
TRn = Total revenue of n units
TRn-1 = Total revenue of (n – 1) units.

Average Revenue: Average revenue is nothing but the per unit revenue.
Average Revenue = $$\frac{\text { Total revenue }}{\text { Total output sold }}$$

Question 9.
Define Firm. Explain the functions of a firm as a Producer.
Definition of Firm. In the words of Watson, “A firm is a unit engaged in the production for sale at a profit and with the objective of maximizing the profit.”

Functions of Firm as a Producer. As a producer, firm produces and sells goods and services. A firm tries to minimise its production cost and hence intends to get maximum profits. As a producer, firm and entrepreneur may be used interchangeably. All the major decisions are taken by the entrepreneur.

Question 10.
Define Market. What are the main features of Market?
Definition of Market. According to Cournot, “Economists understand by the term ‘Market’ not any particular market place in which things are bought and sold, but the whole of any region in which buyers and sellers are in such a free intercourse with one another that the prices of the same goods tend to equalise easily and quickly.”

Features of Market: The main features of market are as follow :

1. Region. Market, in Economics, does not refer to a particular place, rather it refers to the whole of the region where buyers and sellers are in contact with one another and exchange the goods and the services.
2. One Commodity. There is a certain commodity which has to be transacted between the buyers and sellers.
3. Buyers and Sellers. Both buyers and sellers are important and integral parts of a market.
4. Free Competition. There should be free competition among the buyers and sellers in a market.
5. Tendency towards the same price. As the buyers and sellers are in free competition with one another, the price of a commodity tends to be the same over the whole of the region.

Question 11.
What do you understand by the term Equilibrium? Explain its features.
Meaning of Equilibrium. Equilibrium is a state in which forces making for change in opposing directions are perfectly in balance so that there is no tendency to change.

Features: State of equilibrium is marked by the following features :

1. The opposing forces e.g., demand and supply are equal to each other.
2. No tendency towards change.
3. Economic units are either getting maximum profits or incurring minimum losses.
4. Equilibrium is a tendency.
5. Equilibrium has nothing to do with morality.

Question 12.
Define perfect competition. Explain its features.
Definition of Perfect Competition. Perfect competition signifies a market situation in which there is a large number of buyers and sellers of a homogeneous product. Firm under perfect competition is a price-taker and not a price-maker.

Features of Perfect Competition: Perfect competition is characterised by the following features :

• Large number of buyers and sellers.
• Homogeneous Product.
• Perfect knowledge.
• Freedom of entry and exit of firms.
• Same price.
• Perfect mobility of factors of production.
• Absence of selling and transport costs.
• Same Average and Marginal Revenue.

Question 13.
Define Monopoly. Explain its features.
Definition of Monopoly. Monopoly signifies a market situation in which there is a single seller of a particular product.

Features of Monopoly: The monopoly market has the following main features :

• Single seller and large number of buyers.
• Restriction upon entry of new firms.
• No close substitutes.
• Control over price.
• Different Average and Marginal Revenue curves.

Question 14.
What are the economic activities? What are their major types?
Meaning of Economic Activities. Economic activities are those activities which are related with the consumption, production, exchange and distribution of wealth. Earning of money income is the basic objective of all economic activities.

Kinds or Types of Economic Activities: Prof. Boulding has divided economic activities into following parts :

1. Consumption. Consumption is one of the basic economic activities. Consumption is the direct and final use of goods and services in satisfying the wants of human beings.
2. Production. The process of creating utility or increase in utility is called as production.
3. Exchange. Exchange is that economic activity which is related with the sale and purchase of commodities.
4. Distribution. Distribution is concerned with the determination of the prices of factors of production.

Question 15.
Distinguish between economic activities and non-economic activities.
Any activity undertaken with a view to earn income is called economic activity. On the contrary, if the same activity is undertaken for the sake of entertainment or from religious point of view or with a view to serve the nation or on account of affection, love, sacrifice or sympathy then it will be called non-economic activity.

Question 16.
Define Land. What are its main features?
Definition of Land. Land is a factor which is freely available from nature. Main Features of Land.

The main features of land are as follow :

1. Supply of land is fixed.
2. Land is a primary factor of production.
3. Land is immobile.
4. Land differs infertility.
5. Land is limited.
6. Value of land depends upon its fertility.
7. Land is a free gift of nature.

Question 17.
Define Labour. What are its main features?
Meaning of Labour. In Economics, labour implies all such physical or mental exertion which is undertaken in order to earn income.

Features of Labour:
Labour has the following features :

• Labour differs inefficiency.
• Labour is mobile.
• Labour is human factor which is an active factor.
• Labourer sells his labour and himself.
• Labour is perishable.

Question 18.
Define Capital. What are its main features?
Definition of Capital. Capital is that part of wealth which yields income and is helpful in production e.g. Machines, fertilizers, seeds and tractors, etc.

Characteristics of Capital: Main features of capital are as follow :

1. Capital is a passive factor of production.
2. Capital is productive.
3. Capital is highly mobile.
4. Capital is man-made.
5. Capital is depreciated with use.
6. Capital is stored up labour.
7. Supply of capital can be varied.

Question 19.
Explain the term entrepreneur. Discuss its functions.
An entrepreneur is a person who starts a business, exercises control over it, makes innovations, undertakes risk and takes upon himself the responsibility of profit or loss. That is why he is rightly called as the captain of industry.

Functions of an entrepreneur :

1. To prepare a plan of production.
2. Scale of production.
3. Ideal proportion of factors of production.
4. Decision regarding the location of production unit.
5. Selection of item.
6. Distribution of reward.
7. Risk-bearing.

Question 20.
What do you mean by Rent?
Meaning of Rent. According to Prof. Caver, “Rent is the price paid for the use of land only.” However, according to the modern economists, rent is not associated with land a/one.According to the them, rent is the difference between the actual earning and transfer earning of a factor. In other words,
Rent = Actual Earning – Transfer Earning.

Question 21.
Define Wages. Distinguish between Real wages and Nominal wages.
Definition of Wages. In Economics, wages mean the payment or reward given to the workers in return for all mental or physical exertions.

Nominal or Money wages. Money wages refer to the amount of wages paid in terms of money. Money wages may be given daily, weekly, fortnightly or monthly.

Real wages. Wages received by a worker in the form of goods and services can be regarded as real wages. In other words,
Real wages = Money wages + other facilities

Question 22.
Define Interest. Distinguish between Gross Interest and Net Interest.
Definition of Interest. Interest is the payment by the borrower to the lender for the use of a sum of money over a specified period of time.

Gross Interest. Gross interest is the total amount received by the owner of capital by way of interest.
Net Interest. Net interest is the payment made to the capitalist purely for the use of capital (or money). In the words of Chapman, “Net interest is the payment for the loan of capital, when no risk, no inconvenience and no work is entailed on lender.”

Question 23.
What do you mean by Profit? Distinguish between Gross Profit and Net Profit.
Meaning of Profit. Profit is the reward which an entrepreneur gets for bearing the risk of business.

Distinction Between Gross Profit and Net Profit:
The surplus, which we get after deducting explicit costs out of total revenues of the firm, is called gross profit. Similarly, the surplus left after deducting both explicit and implicit costs out of total revenues of the firm is called net profit. In other words,
Gross Profit = Total Revenue – Explicit Costs
Net Profit = Total Revenue – (Explicit Costs + Implicit Costs)
Or
Net Profit = Gross Profit – Implicit Cost – Insurance and depreciation.

Question 24.
Explain the standard unit of measuring land in Punjab.
In Punjab the standard unit of measuring land is hectare. One hectare is equal to the area of half acre. One acre is equal to 8 kanals, one kanal is equal to 20 marlas and one maria is equal to 25 sq. yards. In other Indian villages, local units such a bigha, guintha etc. area also in use.

Question 25.
What is the situtation of irrigation in India and Punjab? Explain in brief.
Not all villages in India have such high levels of irrigation. Coastal regions in our country are well irrigated due to heavy rains. Plateau regions have low levels of irrigation. Only 40 per cent of the total cultivated area is irrigated in our country. Even today, farming is largely dependent on rainfall. Punjab, being a land of five rivers, irrigation through canals, tubewells and pumping sets is commonly being used.

Long Answer Type Questions

Question 1.
What is market? Give main bases of distribution of market.
Market. Market is that whole area where buyers arid sellers come in close contact. Basis of classification of market. Market can be divided in following parts :

1. Perfect competitive
2. Monopoly
3. Monopolistic competition.

Following are the basis of this distribution :
1. Number of buyers and sellers in Market. If number of purchasers and sellers is very high in the market then it is market of perfect competition or monopolistic competition. But in monopolistic competition number of sellers remains less than perfect competition. If there is only sellers of commodity in market and number of buyers is high then it will monopolistic market. If there are little (some) sellers of commodity then it will oligopolistic market.

2. Nature of Commodity. If commodity selling in market is same or homogeneous then it will be position of perfect competitive market, and product differentiation in its opposition is considered the base of monopolistic competition.

3. Degree of Price control. If a firm has full control on the price of selling commodity in market then it will be monopolistic. If control is partial then it will be monopolistic competition and its control is zero then it will be perfect competition.

4. Knowledge of the Market. If sellers and purchasers have full knowledge of situation of market then it will be perfect competition. In its opposite imperfect knowledge is speciality of monopoly and monopolistic competition.

5. Mobility of Factors. Production factors have full mobility in situation of perfect competition. But mobility of factors is general in other forms of market.

Question 2.
Define money. Explain its main functions.
Money is any commodity a metal or even piece of paper which is generally acceptable by people as a medium of exchange, a measure of value, store of value, and transfer of value.

The function of money: The following are the functions of money:

1. Money as a medium of exchange. Goods and services are exchanged with money. So money acts as a medium of exchange.
2. Measurement of value. The price of the goods and services is fixed in terms of money. So money measures the value of any commodity and service.
3. Store of wealth. Money acts as a store of wealth. In the barter system, it was very difficult to store perishable goods. But now money has solved this problem.
4. Standard of deferred payment. If we want to repay our loan we can return it in money term. So money acts as a standard of deferred payment.
5. Transfer of value. Money can transfer value from one place to another.
6. Money also acts as a unit of account, basis of credit, measurement of productivity, measurement of utility, basis of the income distribution, and as a liquid form of wealth.