ISC 2024

ANALYSIS OF PUPIL
PERFORMANCE
ECONOMICS

Research Development and Consultancy Division

Council for the Indian School Certificate Examinations
New Delhi
November 2024
____________________________________________________________________________________________

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Examinations.
Council for the Indian School Certificate Examinations (CISCE)

MISSION STATEMENT

The Council for the Indian School Certificate

Examinations is committed to serving the nation's
children, through high quality educational
endeavours, empowering them to contribute towards
a humane, just and pluralistic society, promoting
introspective living, by creating exciting learning
opportunities, with a commitment to excellence.

ETHOS OF CISCE

Trust and fair play.

Minimum monitoring.
Allowing schools to evolve their own niche.
Catering to the needs of the children.
Giving freedom to experiment with new ideas
and practices.
Diversity and plurality - the basic strength for
evolution of ideas.
Schools to motivate pupils towards the
cultivation of:
Excellence - The Indian and Global
experience.
Values - Spiritual and cultural - to be the bedrock
of the educational experience.
Schools to have an 'Indian Ethos', strong roots in
the national psyche and be sensitive to national
aspirations.
 FOREWORD
The National Education Policy 2020 emphasises building 21st-century skills and competencies
through systemic reforms in pedagogy and assessments. It is an endeavour of Council for Indian
School Certificate Examinations (CISCE) to ensure that assessments are utilised as tools for
promoting learning and development in students rather than a mere end to the instruction year.

With the objective to provide feedback on the common errors made by the students in the board
examinations of both ISC and ICSE and to provide information on the question-wise performance of
students, CISCE releases the Analysis of Pupils’ Performance document every year. It is one of the
unique and best practice of the CISCE board, which supports the candidates in their preparation for
the upcoming board examinations.
We would like to extend our appreciation to the Research Development and Consultancy Division
(RDCD) of the CISCE for their efforts in creating this detailed document for the benefit of our
students. We also express our gratitude to the examiners who have provided meticulous feedback on
the candidates’ performance during the examinations and also suggested pedagogical interventions
for the teachers to mitigate the common errors made by the candidates.
We are sanguine that students, teachers, and parents would make the best use of this document by
going through the various sections in detail and implementing the learnings from the same for
successful performance in the upcoming examinations.

November 2024 Dr. Joseph Emmanuel

Chief Executive & Secretary
CISCE

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 PREFACE
As you are aware, the Analysis of Pupil Performance document has been developed by the Council
for Indian School Certificate Examinations (CISCE) with the objective to provide feedback to
teachers on the performance of students in the ICSE and ISC examinations. These subject-wise
documents highlight the misconceptions that students might have related to certain topics that are
reflected as common errors made by them while answering questions in the examinations. The
document also contains certain suggestive teaching strategies to reduce the occurrence of similar
errors in forthcoming examinations by students. The criteria used for marking each question has also
been provided in brief so that the teachers and students can comprehend the scope of the question
and the correct approach to answer it. Topics in the question paper that were found to be difficult or
unclear by the majority of the candidates have also been highlighted so that teachers can lay more
stress on bringing clarity to them, along with recommendations for candidates to attempt the
examination of a particular subject keeping in mind subject-specific nitty-gritty and techniques of
answering.
The Analysis of Pupil Performance document for ICSE for the Examination Year 2024 covers the
following 16 subjects - English Language, Literature in English, Hindi, History and Civics,
Geography, Mathematics, Physics, Chemistry, Biology, Commercial Studies, Economics, Computer
Applications, Economic Applications, Commercial Applications, Environmental Science and Home
Science.
The 20 subjects covered in the ISC Analysis of Pupil Performance document for the Year 2024 are -
Accounts, English Language, Literature in English, Hindi, Economics, Commerce, Business Studies,
Mathematics, Physics, Chemistry, Biology, Elective English, History, Political Science, Geography,
Psychology, Sociology, Computer Science, Environmental Science and Home Science
I extend my appreciation and gratitude to all the ICSE and ISC examiners who have shared their
valuable comments on each question. I also acknowledge the efforts of the RDCD team of Dr. Manika
Sharma, Ms. Parul Kohli, Ms. Lyimee Saikia and Ms. Mansi Guleria, for their focused hard work
and diligence towards the preparation of this document.
We are hopeful that this document will be helpful to teachers to bring in timely interventions for the
topics required, in order to support the students in their preparation and readiness towards the
upcoming ICSE and ISC examinations. We also hope the students learn from the detailed notes on
the common errors made while answering, so as to be well-prepared with the correct answering
strategies for the upcoming ICSE and ISC examinations.

November 2024 Dr. Bhawna Taragi

Deputy Head
RDCD, CISCE

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 ECONOMICS
SECTION A – 16 MARKS
Question 1
(i) If the price elasticity of demand for a commodity is 2 and the percentage change in [1]
price is 5, the percentage change in quantity demanded will be:
(a) 3
(b) 2·5
(c) 10
(d) 7

(ii) Assertion: An increase in public expenditure during recession can help to control [1]
the situation.
Reason: Government reduces subsidies to overcome its budget deficit.
(a) Both Assertion and Reason are true, and Reason is the correct explanation of
Assertion.
(b) Both Assertion and Reason are true, but Reason is not the correct explanation
of Assertion.
(c) Assertion is true but Reason is false.
(d) Assertion is false but Reason is true.

(iii) At the point of inflexion, _______ is maximum. [1]

(a) total product
(b) total cost
(c) average product
(d) marginal product

(iv) In which one of the following types of market, are Average Revenue curve and [1]
Market Demand curve the same?
(a) Monopoly
(b) Oligopoly
(c) Perfect Competition
(d) Monopolistic Competition

(v) The diagram given below shows the change in price of cotton shirts. Which one of [1]
the following causes the equilibrium price to move from P 1 to P 2 ?

Price S1
D S2

e1
P1

P2 e2
S
S D1
O Q1 Q2 Quantity

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2024 ISC- Economics
(a) Increase in excise duty on raw cotton.
(b) Expected fall in future price of cotton shirts.
(c) Fall in the price of synthetic shirts.
(d) Increase in wage rate.

(vi) Refer to the diagram given below and choose the incorrect statement. [1]

Y
MC AC
Cost and Revenue

E
P1
C AR1 = MR1
P2
AR2 = MR2
Output
O X

(a) E is the equilibrium point.

(b) The diagram shows a situation of normal profit.
(c) C is the shut down point.
(d) E is the break even point.

(vii) Government of India purchased Raffle aircrafts from France in recent times. Which [1]
one of the following market forms is applicable for this product in India?
(a) Monopsony
(b) Monopoly
(c) Oligopoly
(d) Monopolistic Competition

(viii) Revenue receipts in the government’s budget: [1]

(a) create liability.
(b) reduce liability and create assets.
(c) reduce assets.
(d) keep liability and assets unaltered.

(ix) If S > I, it will lead to: [1]

(a) excess demand.
(b) deficient demand.
(c) notional demand.
(d) actual demand.

(x) An increase in the number of firms in the market causes a rightward shift in the [1]
market supply curve, but the individual supply curve may shift leftwards.
Justify the statement.

(xi) State whether the following is True or False. Give a reason for your answer. [1]
TVC is an avoidable cost.

(xii) Mention any one difference between Induced investment and Autonomous [1]
investment.

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(xiii) Why is the demand curve for foreign exchange negatively sloped? [1]

(xiv) Mention any one difference between Balance of Trade and Balance of Payment. [1]

(xv) How is APS obtained from APC? [1]

(xvi) With reference to Simple Keynesian model, give the meaning of ex-ante demand. [1]

Comments of Examiners
(i) Majority of the candidates answered this Suggestions for teachers
question correctly. However, a few − Provide additional and thorough practice
candidates were unclear about the formula of numerical problems related to price
for calculating price elasticity of demand elasticity of demand.
and could not answer correctly. − Instruct students to apply the correct
(ii) Most of the candidates answered this formula in solving the numerical.
question correctly, but some failed to − Conduct drill with students for solving
decipher the meaning of an Assertion Assertion and Reason-based questions.
statement and a Reason statement. − Explain clearly all three stages of the law
(iii) Some candidates answered this question of variable proportions and the
correctly, but most found it confusing as relationship between total product and
they were unsure about the difference marginal product, with special emphasis
between ‘Marginal Product’ and ‘Average on their behaviour in all three stages.
Product.’ − Illustrate the point of inflexion with the
help of a diagram showing the behaviour
(iv) Only a few candidates answered this
of Total Product and Marginal Product.
question correctly, while most found it − Clarify the basic difference between a
confusing as they were uncertain about the firm and industry.
distinction between ‘Perfect Competition’ − Discuss every feature of the market,
and ‘Monopoly.’ including their implications and the logic
(v) Most of the candidates overlooked ‘future used behind that feature.
price’ and responded with option (c) instead − Familiarise students with all types of
of option (b), which was incorrect. revenue curves, especially the AR curve
(vi) Most of the candidates did not answer this in different types of markets. Also,
question correctly. They selected point E, explain the market demand curves for
the break-even point, instead of point C, the various market structures.
shutdown point. Candidates failed to − Teach the law of supply and the concept
identify the various points in the diagram of supply in relation to price.
correctly. Additionally, many answered − Emphasize the concepts of equilibrium
price and equilibrium quantity, along
incorrectly because they overlooked the
with the effects of shifts in supply.
word ‘incorrect’ in the question.
− Provide drills on higher-order MCQs
(vii) Majority of the candidates answered this based on diagrammatic types related to
question correctly; however, a few the shutdown point, break-even point,
appeared to be confused by the concepts. losses, normal profit and supernormal
(viii) A few candidates answered this question profits.
correctly, while others were confused about − Teach the meaning of different forms of
the increase or decrease in assets and market structure with real-life examples.
liabilities. The basic concept of the − Explain the number of sellers and buyers
government budget was not clear to them. under each market structure in detail.
(ix) Most of the candidates answered this − Discuss the differences between revenue
question well. However, some wrote receipts and capital receipts with detailed
‘excess demand’ instead of ‘deficient examples.
demand’ due to a lack of conceptual clarity.

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2024 ISC- Economics
(x) Most candidates did not answer this
question well. However, a few could not
justify the leftward shift of the individual Suggestions for teachers
supply curve. This was an open-ended − Train students to write focused answers
question, allowing candidates to justify pertaining to the concept without
their answers with any reasoning of their deviating to another concept.
choice. Instead, they wrote about other − Categorically explain the meanings of
factors influencing supply, aside from the TC, TFC and TVC with real-life situation
number of firms. and examples.
(xi) Majority of the candidates answered this − Clearly teach and explain the differences
question correctly, explaining that TVC is between autonomous consumption and
autonomous investment and autonomous
an avoidable cost; however, a few could not
capital flows.
justify their answers.
− Teach the meaning of demand for foreign
(xii) Only a few candidates answered this exchange and supply of foreign exchange
question correctly. They failed to relate diagrammatically using an example.
investment expenditure to income for these − Teach the derivation of the formula APC
two concepts. Some candidates explained + APS = 1 and further derivation by
the shapes of the autonomous investment taking APC or APS to the other side of
and induced investment curves in words the equation.
rather than with diagrams. − Explain the concept of ex-ante demand
(xiii) Some candidates answered this question from both micro and macro perspectives.
correctly, but many failed to incorporate the − Teach the concept of aggregate
role of imports in making the demand curve expenditure from the economy’s point of
for foreign exchange negatively sloped. view.
(xiv) Some candidates answered this question
correctly, while a few got confused about
the concept of the balance of trade and wrote about visible trade in goods and services.
(xv) Majority of the candidates answered this question correctly. Most of the candidates explained
the relationship between APC and APS correctly. However, some wrote APC + APS = Y
instead of APC +APS = 1.
(xvi) Some candidates answered this question correctly, but many candidates did not explain the
macro concept of ex-ante demand, and the terms ‘sum-total’ or ‘aggregate’ were missing from
their answers. A few candidates listed the components of aggregate demand instead of
explaining the meaning of ex-ante demand.

MARKING SCHEME
Question 1
(i) (c) or 10

(ii) (b) or Both Assertion and Reason are true, but Reason is not the correct explanation of
Assertion.

(iii) (d) or marginal product

(iv) (a) or Monopoly

(v) (b) or Expected fall in future price of cotton shirts.

(vi) (c) or C is the shut-down point.

(vii) (a) or Monopsony

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2024 ISC- Economics

(viii) (d) or keep liability and assets unaltered.

(ix) (b) or deficient demand.

(x) As number of firms increases, market supply will increase at the same price which causes
a rightward shift of market supply curve, whereas scope of supply of individual firms may
be reduced in the market as market gets shared by more firms.
(Any other relevant explanation may be accepted)

(xi) True.
Avoidable cost is generated only when production takes place. / TVC is zero at zero output.

(xii)
Induced Investment Autonomous Investment

1. It changes with a change in the It remains the same despite the

level of income. changes in the level of income.

2. It is income elastic. It is income inelastic.

3.
Investmen
Investmen

I
I

Income Income

(Any one difference)

(xiii) As the exchange rate rises, imports become expensive and demand for imports fall. So, the
demand for foreign exchange falls. Hence, demand curve is negatively sloped. / As the
exchange rate falls, imports become cheap and so demand for foreign exchange rises.

(xiv)
BOP BOT

1. It is a systematic record of all It is a systematic record of

economic transactions of the transaction in visible goods only
citizens of a country with citizens between citizens of a country with
of other countries over a period of the rest of the world in one year.
one year.

2. It is always in balance in the It may be surplus or deficit.

accounting sense.

3. A deficit in BOP is a cause to A deficit in BOT is not a reason to

worry about and the deficit must worry.
be corrected.

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2024 ISC- Economics

4. It is a comprehensive concept as it It is a narrow concept as it is a

includes BOT. component of BOP.

(Any one difference from the above or any other correct difference is to be accepted)

(xv) APC + APS = 1

APS = 1 – APC

(xvi) Ex-ante demand refers to the aggregate desired expenditure of the people of the economy.
It is also known as the planned demand / anticipated demand / notional demand.

SECTION B – 32 MARKS
Question 2
(i) Milk is used for making curd, sweets and chocolates. What type of demand does [1]
milk have? Give a reason.
(ii) Figures (A), (B) and (C) given below represent different types of Demand curves. [3]

D
D
Price of Y
Price of Y
Income

D
Demand for X
(A) Demand for X Demand for X
(B) (C)
What kind of goods do each of these Demand curves represents? Give a reason for
each of the curves.

Comments of Examiners
(i) This question was answered well by some Suggestions for teachers
candidates. However, a few candidates
− Explain the meaning of derived demand
confused composite demand with derived
and composite demand using real-life
demand. As a result, they referenced the situations or examples for conceptual
example given in the question instead of clarity.
mentioning “various uses.” − Teach the differences between various
(ii) Most candidates answered the second part types of goods with the help of real-life
of the question correctly. Some candidates examples.
were able to identify the demand curves B − Explain and illustrate different types of
and C but got confused with demand curve goods using diagrams.
A. A few wrote “inexpensive goods of
necessities” instead of “normal goods.”
While some candidates provided the correct reasons, they could not identify the goods. For
demand curve B, a few candidates wrote “supplementary goods” instead of “substitute goods.”

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2024 ISC- Economics

MARKING SCHEME
Question 2
(i) Composite Demand – as milk is used for many alternative purposes.

(ii) Figure A – Normal goods – demand for commodity X varies directly with income.
Figure B – Substitute goods – as demand for X rises when price of Y rises.
Figure C – complementary goods – as demand for X falls with a rise in the price of Y.

Question 3
(i) A huge production of onions and lack of storage facilities have caused a continuous [2]
fall in its price. This may adversely affect the production of onions in the subsequent
year. With the help of a diagram, briefly explain the measure that the government
should adopt to combat this situation.

(ii) Draw and explain Average Fixed Cost curve. [2]

Comments of Examiners
(i) Majority of the candidates found this question Suggestions for teachers
confusing. Most of the candidates wrote about
− Explain the concept of a floor price using
various measures to resolve the problem of
real-life examples.
excess supply, but did not discuss the concept
− Instruct and train students to provide
of minimum support price or ‘floor price’ as diagrammatic explanations along with
part of their answer. Some candidates drew the implications for different types of
diagrams but did not label them. higher-order and analytical questions.
(ii) Some candidates answered this question − Explain the behavior of all cost concepts,
correctly. Most drew the AFC curve including diagrams and curves, to the
correctly, but their explanations were not students.
satisfactory. Key terms such as "rectangular
hyperbola" and "asymptotic" were not
mentioned. Additionally, some candidates were confused between the AFC curve and the AVC
curve.

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2024 ISC- Economics

MARKING SCHEME
Question 3
(i) Price
S

Pf
E
P

Q Quantity

P f is the floor price to be set above the equilibrium price.

Or
P f is the price fixed by the government above equilibrium price.

(ii) It is asymptotic / It is rectangular hyperbola. / It will slope negatively and not touch either
of the axes.
Average fixed cost

AFC

O Output
(Any other relevant explanation to be accepted.)

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2024 ISC- Economics

Question 4 [4]

With the help of a diagram, explain the relationship between Average Product and Total Product
under the Law of Variable Proportions.

Comments of Examiners
Very few candidates answered this question Suggestions for teachers
correctly. Only a few answered this question − Teach the law of variable proportions and
with the help of a diagram. Most of the its stages in a systematic, step-by-step
candidates answered this question incorrectly, manner.
indicating lack of clarity in concepts like total − Explain the relationship between total
product (TP) and average product (AP). A few product (TP) and marginal product (MP),
candidates explained the relationship between TP and average product (AP), and AP and
TP and marginal product (MP) in words instead MP.
of using a diagram. − Stress upon the explanation of point of
inflexion.
− Explain the different relationships with
respect to increasing returns, diminishing
returns, and negative returns.

MARKING SCHEME
Question 4

II
Total Product and Average Product

C III

I A
TP

AP
O L1 L2
Labour

• Stage I Law of increasing returns.

TP increases at an increasing rate initially and then at diminishing rate up to A.
AP rises and reaches its maximum.
• Stage II Law of Diminishing returns
TP increases at a diminishing rate and reaches maximum at C.
AP falls.
• Stage III Law of negative returns
TP falls.
AP falls and remains positive.

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2024 ISC- Economics

Question 5
(i) Briefly discuss the implication of ‘freedom of entry and exit’ under perfect [2]
competition.

(ii) Per unit price of electricity is higher in the Commercial sector as compared to the [2]
Domestic sector. Identify and briefly describe this phenomenon. Name the market
in which it is applicable.

OR

(i) Briefly discuss the importance of Selling Cost under oligopoly market. [2]

(ii) There are many manufacturers of pencils in the market who produce pencils in [2]
different designs and colours to attract children. Which market form is referred to
here? Briefly explain the feature of this market form indicated in the given situation.

Comments of Examiners
(i) Some of the candidates answered this
question correctly. Most of the candidates Suggestions for teachers
answered this question partially correctly, as − Teach the freedom of entry and exit as a
they wrote about entry and exit in the market feature under perfect competition.
but did not mention the implications under − Discuss the implications of the entry and
perfect competition. exit feature.
(ii) Some candidates committed the common − Teach the features of different market
error of neither mentioning normal profit in forms with an emphasis on their
the long run nor providing any explanation implications.
for it. Some candidates did not elucidate the − Explain all the features of oligopoly with
concept of price discrimination; instead, special reference to intense competition
they explained the features of monopoly. and interdependence.
Additionally, some candidates confused the − Explain the meaning of product
differentiation and why it occurs,
identification of monopoly with
providing examples.
monopolistic competition market.
OR
(i) Some candidates answered this question
correctly. A few candidates failed to explain why intense competition, one of the main features
of oligopoly, requires selling costs. Most candidates answered this question incompletely, as they
did not mention other sales promotion measures except advertisement.
(ii) Most of the candidates were able to identify the market form and its features correctly. However,
some candidates failed to mention the reasons for product differentiation, such as differences in
branding, packaging, design, colour etc.

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2024 ISC- Economics

MARKING SCHEME
Question 5
(i) In the short run, super normal profits cause new firms to enter the market which leads to
increase in market supply thereby reducing the price and wiping away super normal profits.
Short run loss causes many firms to exit the market, hence reducing market supply, raises
market price ensuring normal profit in the long run.

(ii) The phenomenon is Price discrimination.

It means the seller charge different prices from different consumers for the same
commodity at the same time.
It is applicable in Monopoly market.

OR

(i) In view of the intense competition and interdependence of firms under Oligopoly, the firms
compete through various sales promotion measures like price-cutting, discounts, door-to-
door campaign, advertisement, etc. Therefore, selling costs and advertisement are of great
importance and are powerful instruments in the hands of an oligopolist.

(ii) Monopolistic Competition

Product Differentiation is the segregation among products on the basis of color, shape, size,
design, selling strategy, etc in order to promote sales.

Question 6
(i) What is meant by autonomous consumption expenditure? Show it on a diagram. [2]

(ii) When National Income rises from ₹ 600 cr. to ₹ 1000 cr., the consumption [2]
expenditure increases from ₹ 500 cr. to ₹ 800 cr. Calculate MPC and hence the value
of Investment Multiplier.

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2024 ISC- Economics

Comments of Examiners
(i) Several candidates answered this question
correctly. Most of the candidates have Suggestions for teachers
written the meaning of autonomous − Teach autonomous consumption with
consumption expenditure correctly. reference to the consumption function
However, many candidates either missed clearly, using a diagram for illustration.
labelling or, if they did, labelled it − Train students to label diagrams properly.
incorrectly. Some common errors made by − Conduct drills on the various formulas for
most of the candidates included the APC, MPC, APS, MPS, and the
consumption curve passing through the Keynesian multiplier.
origin and drawing the consumption curve − Provide sufficient practice with numerical
as a horizontal in a straight line. questions.
(ii) Some candidates did not get the correct
answer due to the application of the incorrect formulas for MPC and the multiplier, resulting in
the wrong outcome. Some candidates made the common error of using the formula for MPC to
calculate K and then used the formula for K to calculate MPC, leading to incorrect answers.

MARKING SCHEME
Question 6
(i) Meaning: It is the consumption expenditure at zero level of income.
Desired Expenditure

o Income
x

oa is the autonomous consumption expenditure.

(ii) ∆𝐶𝐶 300
MPC = ∆𝑌𝑌 = 400 = 0·75
1 1 1
K = 1−𝑀𝑀𝑀𝑀𝑀𝑀 = 1−0.75 = 0.25 = 4

Question 7
(i) A large amount of fiscal deficit proves to be counter productive. Give any two [2]
reasons in support of this statement.

(ii) What is meant by no quid pro quo of a tax? Name any two direct taxes. [2]

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2024 ISC- Economics

Comments of Examiners
(i) Some candidates answered this question Suggestions for teachers
correctly. Most of the candidates failed to − Explain in detail the implications of
understand the meaning of the phrase fiscal deficit and how a large fiscal
‘counterproductive’ and therefore wrote deficit leads to significant borrowings.
incorrect answers, stating the positive − Highlight the impact of fiscal deficit on
aspects of fiscal deficit instead of negative the functioning of an economy for
implications. students.
(ii) Most of the candidates answered this − Teach the meaning and implications of
question correctly by accurately defining a deficit budget, including revenue
the meaning of ‘quid pro quo’ in relation deficit, fiscal deficit, and primary
to a tax. However, some candidates deficit.
provided incorrect examples of direct − Clearly explain the difference between
taxes, such as toll tax, service tax, gift tax ‘no return’ and ‘no proportional or
direct return’.
and lottery tax.
− Explain the features of a tax clearly,
providing proper examples of direct tax.

MARKING SCHEME
Question 7
(i) Reasons for fiscal deficit being counter productive
• It increases the future liability of the government in the form of payment of interest
and repayment of loans. The government is required to borrow more to pay interest
and repay old loans. This is known as Debt trap.
• Payment of interest increases revenue expenditure which may increase the revenue
deficit.
• It generally leads to wasteful and unnecessary expenditure.
• It may lead to inflationary pressure.
(Any two reasons)

(ii) No quid pro quo means no direct or proportional return i.e., when one pays a tax, they
cannot expect a direct benefit against it.
Direct taxes: income tax, corporation tax, property tax, capital gains tax, wealth tax,
etc.
(Any two direct taxes)

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2024 ISC- Economics

Question 8
(i) Categorise the following items into Current Account or Capital Account of Balance [2]
of Payment of India.
(a) Acquisition of land in India by an American firm
(b) Use of transport by Indian tourists in Dubai
(c) Dividend paid to foreigners on their investment in shares in India
(d) Loan taken by India from International Monetary Fund (IMF) to cover its BOP
deficit

(ii) Briefly explain the effect of the following on the Balance of Payment of a country. [2]
(a) Inflationary pressure in the economy.
(b) Appreciation in domestic exchange rate.
OR
(i) Suppose the exchange rate was $1 = ₹ 80 and later changed to $ 1 = ₹ 92. [2]
What will be its effect on the following?
(a) Export of cotton garments by India to the USA
(b) Export of technical knowledge by the USA to India
(c) Import of wheat by India from the USA
(d) Import of gold jewellery by the USA from India

(ii) Briefly discuss the fixed exchange rate system of determining foreign exchange rate. [2]

Comments of Examiners
(i) Some of the candidates answered this question Suggestions for teachers
correctly, while many others were confused − Teach students about the different
about categorising different items under the components of BOP using various
Current Account and Capital Account. examples from real-life situations.
(ii) Few candidates answered this question − Explain the concept of inflation and the
correctly. Some candidates failed to give situation in which it occurs.
proper explanation of how inflationary − Clearly outline the implications of
pressure creates an adverse effect on the BOP inflation on the BOP.
through a fall in exports. A few candidates − Teach the meaning of appreciation, along
were confused between depreciation and with examples and the impact of
devaluation of currency. Additionally, some exchange rates on imports and exports.
candidates explained depression phase for − Clearly explain the meaning of
inflationary pressure instead of prosperity appreciation and depreciation of foreign
exchange with examples.
phase. Furthermore, candidates did not
− Enlighten students about trading that take
explain the impact of appreciation on the place between two countries.
exchange rate. − Discuss high order multiple-choice
OR questions (MCQs) involving different
situations with the students.
(i) Some candidates answered this question − Teach the functioning of Central bank
correctly. However, a few candidates were under the fixed exchange rate system.
confused and wrote their answers in case of − Make students aware about the meaning
certain items given in the question from the of flexible exchange rate.
perspective of the USA rather than India.
Additionally, a few candidates resorted to
using vague terms for explaining the situation.

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2024 ISC- Economics
(ii) This question was answered well by some candidates. However, a few candidates had given an
inadequate and incomplete explanation of the fixed exchange rate system. Some candidates did
not mention that the stability of the exchange rate is ensured by the sale and purchase of foreign
currency by the Central bank.

MARKING SCHEME
Question 8
(i) (a) Capital Account
(b) Current Account
(c) Current Account
(d) Capital Account

(ii)(a) • A high rate of inflation in the economy encourages imports as they become relatively
cheap.
• It also reduces exports as it brings down the country’s competitiveness in the global
markets and makes exports expensive.
Thus, causing an adverse effect on Balance of Payments.

(b) • Appreciation of the country’s currency increases the external value of the currency.
• This makes imports cheap and exports expensive.
• Thus, exports decrease and imports increase leading to adverse effect on Balance of
Payments.
OR

(i) (a) Rise

(b) Fall
(c) Fall
(d) Rise
(ii) In this exchange rate system, the foreign exchange rate is fixed by the central bank. It
intervenes in foreign exchange market through purchase and sale of foreign currency to
ensure the stability of foreign exchange rate.

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2024 ISC- Economics

Question 9 [4]

Draw a well labelled diagram and explain the circular flow of income in a four-sector model.

Comments of Examiners
Several candidates answered this question Suggestions for teachers
correctly. However, some of the candidates did not
draw the ‘rest of the world’ sector. Additionally, − Teach each sector step by step.
some of the candidates made common errors by − Explain the differences between money
failing to mention about the capital market, real flow and real flow, as well as leakages
flow and money flow, savings and investment, and and injections.
leakages and injections. Furthermore, a few − Provide practice in drawing diagrams and
candidates did mark the arrows properly in the marking them with precision.
diagram. − Teach all four sectors in detail.

MARKING SCHEME
Question 9

GOVERNMENT

S I
HOUSEHOLDS CAPITAL MARKET FIRMS

REST OF THE WORLD

(A brief explanation of the diagram)

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2024 ISC- Economics

SECTION C – 32 MARKS
Question 10
(i) How is Total Revenue under perfect competition different from Total Revenue under [2]
imperfect competition? Give two points to show the difference.

(ii) Explain the short run equilibrium of a perfectly competitive firm earning [6]
supernormal profit with the help of a diagram.

Comments of Examiners
(i) Several candidates answered this question
correctly. However, some candidates did not Suggestions for teachers
explain total revenue under imperfect − Explain the nature, shape, and slope of
competition. A few candidates wrote about the TR curves under different market
the differences between markets under structures using diagrams.
perfect competition and imperfect − Teach students to draw the diagrams
competition. Additionally, some candidates based on the behaviour of economic
drew incorrect slopes and shapes for the TR variables concerned instead of merely
curve. drawing the diagram.
(ii) Some candidates gave correct answers to this − Explain all three cases of supernormal
question. However, the diagrams drawn by profit, normal profit, and losses of a firm
the candidates to explain short-run under perfect competition with proper
equilibrium were not marked accurately, as diagrams and stepwise explanation.
the MC curve did not intersect the AC curve − Discuss the shape, slope, and position of
different curves as per their economic
at its minimum point. A few candidates could
behaviour, as well as the equilibrium
not substantiate their answer with proper point satisfying conditions.
explanations, as they skipped mentioning the
conditions of equilibrium, and the area of
profit was marked incorrectly.

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2024 ISC- Economics

MARKING SCHEME
Question 10
(i)
TR under perfect competition TR under imperfect competition

1 TR increase at constant rate with TR increases at a diminishing rate with

increase in sale. increase in sale.

2 TR curve is a positively sloped straight TR curve is concave to the horizontal

line passing through origin. axis

3 Y
Y
T

Total Revenue
Total Revenue

TR

O Quantity X Quantity X

(Any two differences)

(ii) A perfectly competitive firm is in equilibrium when it’s making maximum profits.
(optional explanation)
Conditions:
MR=MC
MC curve must cut the MR curve from below
Y
AC
MC
Cost & Revenue

E
P
R AR = MR
F

O Q X
Output

Equilibrium point: E
Equilibrium price: OP or EQ = Average revenue
Equilibrium quantity: OQ
Average cost: OR or FQ
Profit per unit: OP – OR or EQ - FQ = PR or EF
Total profits: PR × RF = Area of the shaded region, PRFE

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2024 ISC- Economics

Question 11
(i) Draw a straight-line demand curve joining both the axes. Indicate the following on [2]
the demand curve.

(a) Elasticity of demand is equal to zero

(b) Elasticity of demand is greater than one

(ii) Observe the graph given below and answer the questions that follow.

Y IC
Good Y

O Good X X

(a) Give a reason to explain if the graph shown above can be a common [2]
phenomenon or not.

(b) What is an indifference map? Draw its diagram. [2]

(c) State any two differences between cardinal utility and ordinal utility. [2]

OR

(i) Give two differences between intended supply and actual supply. [2]

(ii) Refer to the diagram given below and answer the questions that follow.

F
Good Y

E IC3
L
IC2
IC1
D
O M B X
Good X
(a) What does the line AB represent? Why is the line AB negatively sloped? [2]
(b) At which one of the given points, D, E and F, will the consumer attain [2]
equilibrium? Explain.
(c) Briefly explain why the consumer is not in equilibrium at the other two points. [2]

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2024 ISC- Economics

Comments of Examiners
(i) (a) Many candidates were unable to draw the
demand curve correctly. The demand Suggestions for teachers
curve was not touching either of the axis in
− Teach students the difference between
the diagram; thus, elasticity of demand = 0 the degrees/types of elasticity of demand
could not be shown correctly. A few and elasticity of demand according to the
candidates also drew a non-linear curve Geometric or point method.
and failed to indicate elasticity of demand − Provide thorough practice of diagrams
> 1 correctly. pertaining to elasticity of demand for
(b) A few candidates drew the standard both linear and non-linear curves.
diagram on the degrees of elasticity of − Explain the concept of the indifference
demand with reference to Ep>1 rather than curve along with the law of diminishing
according to the point method. marginal rate of substitution, detailing
(ii) (a) Most of the candidates answered this part how one consumer will sacrifice one
of the question correctly; however, they commodity for another to achieve equal
could not accurately justify their answers satisfaction from both goods.
− Explain the concept and importance of
by providing satisfactory reasons.
indifference map to the students in detail,
(b) Most of the candidates were able to draw along with a diagram.
the correct diagram; however, they did not − Explain the differences between cardinal
mention the term “set,” “family,” “group,” and ordinal utility clearly, with reference
or any similar term. to one-commodity case and two-
(c) Some candidates failed to provide proper commodity case, including their
distinctions to substantiate their answers respective equilibrium conditions.
regarding why the consumer is not in − Teach the basic difference between
equilibrium. A few candidates mentioned ‘Actual supply’ and ‘Intended supply’ by
the names of economists as points of explaining the meaning of both with
difference. examples.
− Illustrate the meaning of the budget line
OR with the help of a schedule and diagram
(i) Several candidates did not clearly write the and explain the reason of negative slope.
definitions of intended supply and actual − Explain the conditions of equilibrium for
supply; instead, they presented them as ‘stock’ the ordinal utility, with special focus on
MRSxy = Px/Py and the convexity of the
and ‘supply’. Additionally, some candidates
Indifference Curve.
did not mention the time dimension in relation
to intended and actual supply.
(ii) (a)For this question, a few candidates repeated the diagram as their answer. Some candidates failed
to explain why the AB curve is negatively sloped in relation to budget or income.
(b)Some candidates identified the equilibrium point clearly but failed to write the tangency
conditions.
(c)Most candidates correctly identified and explained point F but were unclear about point D. A
few candidates did not mention the level of satisfaction at points D and point F.

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2024 ISC- Economics

MARKING SCHEME
Question 11
(i)
A
C ep > 1
PRICE

ep = 0
O B X
QUANTITY

(a) At B 𝑒𝑒𝑝𝑝 = 0 or indicated in the diagram

(b) At C 𝑒𝑒𝑝𝑝 > 1 or indicated in the diagram

(ii)(a) It is not a common phenomenon because as per the assumptions of IC, an increase in
consumption of both the commodities will lead to an increase in utility on the same IC
which is conceptually incorrect.

(b) It is a set / group/ cluster of indifference curves exhibiting / showing different levels of
satisfaction/ utility.
Y
GOOD Y

IC4
IC3
IC2
IC1
O X
GOOD X

(c) Cardinal Utility Ordinal Utility

1. Utility can be expressed numerically Utility is ranked in order of preference.
2. This approach is subject to law of This is subject to indiffernece curve
DMU and law of equlibrium analysis
marginal utility etc.
3. Conditions for equilibrium Conditions for equilibirum
MU x = P x Px
(a) MRS xy = Py
OR
(b) Indifference curves should be convex
MUx
=
MUy to the origin.
Px Py

(Any two, any other relevant difference to be accepted)

OR

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2024 ISC- Economics

(i) Supply/Actual Supply Stock /Intended supply/Potential

supply
1. Supply of a commodity refers to the It implies the total quantity of a
quantity of a commodity which commodity with seller or producer at a
producers or sellers are willing to particular point of time that can be
produce and offer for sale at a given brought into the market for sale at a
price during a particular period of short notice.
time.
2. Supply is expressed over a period of Stock is expressed at a point of time.
time.
3. Supply depends on the market price. Stock depends on production,
procurement price of good etc.

(Any two, any other relevant difference is to be accepted)

(ii)(a) Line AB is the Budget line.

When consumer wants to buy more of one commodity then she has to sacrifice the
consumption of another commodity as income is given. Therefore, it is negatively sloped.

(b) At point E the consumer is in equilibrium.

(c) Point D provides less satisfaction at the same expenditure in comparison to E as it is on

a lower IC.
Point F is beyond the reach of the consumer.

Question 12
(i) State whether the following items will be included in the estimation of National [2]
Income or not? Give a reason for your answer.
(a) Government expenditure on street lighting.
(b) Profit earned by State Bank of India in a foreign country.

(ii) Calculate GNP MP and NNP FC from the following data by Expenditure Method. [6]
PARTICULARS ₹ (crores)
(i) Mixed income of self employed 550
(ii) Private Final Consumption Expenditure 1100
(iii) Net factor income from abroad (-) 120
(iv) Net indirect taxes 250
(v) Consumption of fixed capital 270
(vi) Net domestic capital formation 480
(vii) Net exports (-) 130
(viii) Interest 300
(ix) Government Final Consumption Expenditure 650

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2024 ISC- Economics

OR

(i) State whether the following items will be included in the estimation of National [2]
Income or not? Give a reason for your answer.
(a) Fresh tomatoes used by a food processing company.
(b) Wooden cupboard purchased by a family.

(ii) Calculate National Income using Income method and Output method. [6]
PARTICULARS ₹ (crores)
(i) Value of output 1200
(ii) Wages and salaries 165
(iii) Rent 60
(iv) Subsidies 15
(v) Mixed Income of self employed 180
(vi) Employer’s contribution to social security 15
(vii) Value of intermediate consumption 600
(viii) Interest 7
(ix) Factor income earned from abroad 15
(x) Indirect taxes 90
(xi) Profits 23
(xii) Depreciation 75
(xiii) Factor income paid abroad 30

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2024 ISC- Economics

Comments of Examiners
(i) (a) Majority of the candidates could answer Suggestions for teachers
correctly with ‘yes’ but could not explain
− Explain clearly the concept of
the reason correctly with reference to Government final consumption
government final consumption expenditure and why it is included in
expenditure. calculation of national income.
(b) Most of the candidates answered this − Teach students the difference between
question correctly but could not explain the domestic income and income earned
reason correctly with reference to net from abroad, using examples.
factor income earned from abroad. Some − Explain the steps and components
of the candidates were unclear about the involved in the different methods of
question and could not answer correctly. calculating national income.
(ii) Some of the candidates answered this − Discuss in detail the concepts of GDP,
question correctly. However, a few NDP, GNP, and NNP along with the
candidates were unclear about the concepts of market price and factor cost.
components which fall under the expenditure − Provide rigorous practice in solving a
variety of sums on national income to
method and did not write them correctly.
the students.
Additionally, some candidates made
− Explain the concept of intermediate
incorrect substitutions. goods and double counting in detail,
with different examples.
OR − Teach the difference between goods for
self-consumption and final goods, using
(i) (a) Many candidates answered this question
examples.
with partially correct responses. They
− Explain the formula and components for
correctly identified the inclusion of items the output method and income method,
for the calculation of national income but depending on the data provided.
provided improper reasons. Most − Emphasise the items that need to be
candidates wrote ‘intermediate goods’ but included under the income method and
failed to address the double counting output method, with examples.
problem, thereby losing marks.
(b) Many candidates have given the wrong
answer regarding inclusion or exclusion. A few candidates have mentioned about self-
consumption to be the reason for the answer rather than final good.
(ii) Some candidates were confused about incorporating different components for calculating NNPfc
using both the output method and the income method. They made incorrect component entries,
and a few candidates failed to indicate positive and negative signs. Additionally, some candidates
were confused about calculating GDP and NDP while using the income method.

MARKING SCHEME
Question 12
(i) (a) Yes, it will be included.
Because it is part of government’s final consumption expenditure.
(b) Yes, it will be included.
Because it is factor income earned from abroad.
(ii) Expenditure Method:
GNP MP = (ii) + (v) + (vi) + (ix) + (vii) + (iii)
= 1100 + 270 + 480 + 650 + (-130) + (-120)
= 2250 Cr

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2024 ISC- Economics
NNP FC = GNP MP – (v) – (iv)
= 2250 – 270 – 250
= 1730 Cr
OR

(i) (a) It will not be included.

Because it is an intermediate goods and its inclusion (while estimating NI) will lead to
the problem of double counting.
(b) It will be included.
Because it is a final consumer good.

(ii) Income Method

NDP fc = wages and salaries + employer’s contribution to social security + rent+ interest +
profits + mixed income
= 165 + 15 + 60 + 7 + 23 + 180
= 450 cr

NNP fc = NDP fc + NFIA(factor income earned abroad-factor income paid abroad)

= 450 + (15-30)
= 450-15
= 435 cr

Output Method

NDP fc = value of output-intermediate consumption-consumption of fixed capital-net

indirect taxes
= 1200 – 600 – 75 – (90 –15)
= 450 cr

NNP fc = NDP fc +NFIA

= 450 + (15 – 30)
= 435 cr

Question 13
Read the passage given below and answer the questions that follow.
The Monetary Policy Committee (MPC) increased the repo rate, at which RBI lends short term
funds to the commercial banks, from 6·25 percent to 6·50 percent. This increase in repo rate is
based on the increase in the key rate by 250 bps. The Committee also decided to continue the
withdrawal of money supply in the economy.
[Source (Edited): The Economic Times, Feb. 8, 2023]

(i) Which function of central bank is hinted at, in the passage given above? [1]

(ii) In which situation does central bank adopt the measure given in the above passage? [1]

(iii) Explain any two monetary measures that can be used to accomplish a similar [4]
objective, other than the one given in the above passage.

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2024 ISC- Economics

(iv) Differentiate between Reserve Bank of India and Commercial banks by giving [2]
any two points.

Comments of Examiners
(i) This question was answered correctly by a Suggestions for teachers
few candidates. Many candidates incorrectly − Teach students the difference between
wrote ‘credit creation’ and ‘change in repo credit creation and credit control,
rate’ as their answers. explaining how one is a function of
(ii) A few candidates answered this question commercial banks and the other is a
correctly, while several candidates wrote function of the Central bank.
about recession and deflation instead of − Clearly explain the difference between
inflation. recession, deflation, and inflation, using
(iii) Most candidates answered this question well. examples.
A few candidates wrote only the captions of − Explain how inflationary trends in the
monetary measures to control money supply economy lead to an increase in various
but did not explain the same. Some candidates interest rates to control money supply.
explained the qualitative measures to control − Clearly explain the meaning of both
quantitative and qualitative measures of
money supply, while a few could not explain
credit control and how these measures
the process of control. can help in managing excess money
(iv) Only a few candidates answered this question supply in the economy.
correctly. Many candidates were unable to − Teach all the functions of the RBI and
comprehensively enumerate the differences. commercial banks to ensure that
students can clearly differentiate
between the two.

MARKING SCHEME
Question 13
(i) Credit control function

(ii) Central bank adopts this measure during Inflation.

(iii) Brief explanation of any two of the following:

• Open Market operation
• CRR
• SLR
• Any qualitative measure can be taken

(iv)
Central Bank Commercial banks

1. It is an apex bank. It is a subsidiary bank.

2. It controls credit It creates credit.

3. It issues currency. It issues cheques.

(Any two of the above or any other relevant difference to be accepted)

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2024 ISC- Economics

GENERAL COMMENTS
Topics found difficult by candidates

• Question 1 (iv): AR and market demand curves.

• Question 1 (x): Shift of market and individual supply curve.
• Question 1(xvi): ex-ante demand in Keynesian model and in micro sense.
• Question 3: The floor price.
• Question 5 (i): Freedom of entry and exit leading to normal profit in the long run; selling
cost under Oligopoly.
• Question 7 (i): Fiscal deficit proves to be counter productive.
• Question 8 (i): Current account and capital account of BOP.
(ii): Fixed foreign rate determination.
• Question 10 (ii) : Short run equilibrium of a perfectly competitive firm.
• Question 11: Indifference curve analysis.
• Question 12: Numerical on national income.

Concepts in which candidates got confused

• Market supply curve and individual supply curve.

• AP and TP relationship
• the floor price.
• Fiscal deficit being counter productive
• The words- combat this situation, implication, etc

Suggestions for candidates

• Study all the topics given in the syllabus; candidates should not resort to selective studying.
• Practice all the numerical problems covered in the syllabus.
• Understand the meaning of the concepts thoroughly and read through the complete content
or chapters.
• Understand the diagrams and practice them correctly.
• Practice higher-order MCQs, assertion and reasoning statements from different topics, and
analytical and application-based questions.
• Clearly understand the cause-and-effect relationships for every economic concept.
• Read the question paper thoroughly during the stipulated 15 minutes allotted for reading.
• During the reading time, students should prepare a basic outline of their answers in their
minds for different questions.
• Understand all three methods of calculating national income, along with the steps and the
items that need to be included and excluded. Practice a variety of problems on national
income.
• Solve the previous years’ ISC Question papers, Specimen Papers, CFQs and inculcate time
management.
• Stay connected with real-life situations and different policies adopted by the government
and try to analyze these in relation to knowledge gained from studying various topics in
the syllabus.

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