\n2. It is progressive tax.<\/td>\n | It is regressive tax.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n (d) \n<\/strong>Supply curve is a graphical presentation of quantity supplied in market at various prices. On X axis, quantity supplied is taken whereas on Y-axis, different price level is taken. Supply curve has positive slope which shows direct and positive relationship between price and quantity supplied, i.e. if price increases supply increases, if price decreases, supply decreases.<\/p>\n(e)<\/strong> Status Symbol Goods:<\/strong> The purchase of such costly items adds to the status of the purchaser and in such a situation, the desirability of the goods is measured only by their price. The purchaser will only buy high priced goods. \nExample:<\/strong> Diamonds, Rolex Watches, BMW Cars etc.<\/p>\nSECTION-II \u00a0(40 Marks)<\/strong><\/span> \n(Answer any four<\/strong> questions from this section)<\/em><\/p>\nQuestion 5:<\/strong> \n (a)<\/strong> Define land. Explain four characteristics of land as a factor of production. [5]<\/strong> \n(b)<\/strong> Define efficiency of labour. \nExplain four factors that influence the efficiency of labour. [5]<\/strong><\/p>\nAnswer:<\/strong> \n (a)<\/strong> In economics, the word \u2018land\u2019 is defined to include not only the surface of the earth but also all other free gifts of nature. For instance, mineral resources, forest resources and, indeed, anything that helps us to carry out the production of goods and services, but is provided by nature, free of cost. In fact, \u2018Land is a stock of free gifts of nature.\u2019 \nThe features of land are as follows:<\/strong><\/p>\n\n- Supply of land is fixed:<\/strong>\u00a0The supply of land is fixed. It is given by nature. It is true that, from time to time, we can increase the quantity of operational land available in the country by clearing forests. However, the potentially available amount of land in the country is fixed.<\/li>\n
- Production of land is costless:<\/strong> Another peculiarity of land is that, it does not have any cost of production. It is already there, ready to be used. All other agents of production have to be produced at a cost. For instance, labour has to meet his cost of living and his cost of training and education has also to be accounted for. Land, however, is a free gift of nature.<\/li>\n
- Land is immobile:<\/strong> A third peculiarity of land is that, it is immobile. Land can not move in the sense in which labour or capital can. Therefore, there are persistent differences between the rent of land in different regions. Such differences may be caused by differences in fertility, location etc.<\/li>\n
- Land is heterogeneous:<\/strong> Different types of land indicate wide variations in productive capacity. It depends on the chemical composition of the soil, availability of irrigatiorihl facilities, climatic conditions etc. Hence, some plots of land may be so infertile that cultivation is not worthwhile in such cases, while some other plots of land may be very fertile.<\/li>\n<\/ol>\n
(b)<\/strong> Efficiency of labour implies the quality and quantity of goods and services which can be produced within a given time and under certain conditions. In other words, productive capacity of a worker is termed as efficiency of labour. \nBy \u2018efficiency of labour1 means the productive capacity or productivity of labour. \nThe efficiency of labour depends on the following factors:<\/strong><\/p>\n\n- Climatic Factors:<\/strong> Climatic differences also affect the efficiency of labour. Working under extreme climatic conditions is always more difficult than working in the temperate zones.<\/li>\n
- Geographical differences:<\/strong> Locational differences also sometimes play a significant role. A person who has been bom and brought up in the plains, will find it hard to display much efficiency if he is forced to work at high altitudes hilly areas.<\/li>\n
- Mental abilities: Mental<\/strong> abilities are also important. General training helps a worker in assimilating new skills and technical knowledge. Moral qualities also play a role in this connection. A worker is likely to be more efficient, the greater is his Sense of discipline, self respect, self-sufficiency, punctuality etc.<\/li>\n
- Favourable Working conditions:<\/strong> A healthy and conducive work environment increases the level of efficiency. The facilities enjoyed by the worker determine labour efficiency to a significant extent. Employer-employee relations also plays an important part of the work environment. An employer, therefore, can contribute to labour efficiency by building a cordial relationship with his workers.<\/li>\n<\/ol>\n
Question 6:<\/strong> \n (a)<\/strong> Define capital formation. Explain three important stages of capital formation. [5]<\/strong> \n(b)<\/strong> Draw a demand curve with the help of a hypothetical individual demand schedule. [5]<\/strong><\/p>\nAnswer:<\/strong> \n Capital Formation:<\/strong> \u201cCapital formation consists of both tangible assests like plants, tools and machinery and intangible Assets like high standard of education, health, scientific progress and research.\u201d \nStages of Capital Formation:<\/strong> \nA change in the stock of capital in any economy during any particular time period is called capital formation. The process of capital formation consists of the following steps:<\/p>\n\n- Creation of Savings:<\/strong> It is the first step in the process of capital formation. It is savings which are transformed into capital. If there is no saving, there can not be any capital formation, even if all other conditions are favourable for capital formation. Savings are done by households and it depends on their income and willingness to save.<\/li>\n
- Mobilization of Savings:<\/strong> If savings are kept in the form of idle cash at home, they will not lead to capital formation. In this case, the rate of investment in the country will be low, even though the rate of saving is high. The savings must be mobilized from the savers. In a modern society, financial and other institutions as well as the capital markets perform this function. People may keep their savings in the banks or other financial institutions. They can also buy shares or bonds issued by companies.<\/li>\n
- Investment of Mobilized Savings:<\/strong> Even mobilization of savings is not sufficient for a high rate of capital formation. The mobilized savings must be actually used by producers for-the purpose of investment. For instance, the money kept by the people in the banks must be lent out by the banks to the producers who can use the money, for ex., installing new machines in their factories.<\/li>\n<\/ol>\n
(b) According to Samuelson:<\/strong> \u201cLaw of demand states that people will buy more at lower prices and buy less at higher prices, (ceteris paribus) other things remaining constant.\u201d \nDemand Schedule:<\/strong> According to Prof. Marshall, demand schedule is a fist of prices and quantities. It is a tabular statement of price-quantity relationship between two variables.<\/p>\n |