KSLU Solved Question Papers
Economics I (Hons)
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 2
2016 Jun Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 2 Economics I (Hons) 2016 Jun Question Paper with Solutions
First published on munotes.in on 23 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2016 Jun examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2016 Jun examination, in the order it was set.
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2016 Jun examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 2½ hours · Total marks 70 · 12 questions answered
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1Explain the nature and scope of Economics.[10]
Answer
For full marks, cover: what "nature" and "scope" mean; the nature of economics: a social science, positive and normative, an art as well as a science, and a science whose laws are tendencies (Marshall's tides); the scope of economics: its subject matter as the main definitions see it (wealth, welfare, scarcity, growth), its divisions (consumption, production, exchange, distribution, public finance) and its two branches (micro and macro); its use for a law student; and a conclusion.
Meaning of nature and scope
The nature of economics asks what kind of subject it is: a science or an art, positive or normative. The scope of economics asks what it studies: its subject matter, its divisions and its limits.
The nature of economics
1. A social science. Economics studies human behaviour in society, in earning and spending, producing and exchanging. It is a science because it studies facts in a systematic way and finds relations of cause and effect between them. Lionel Robbins, in 1932, put it this way: "Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."
2. A positive science. A positive statement says what is, was or will be, and can be tested by evidence. "A tax on petrol will reduce the quantity sold" is positive.
3. A normative science. A normative statement says what ought to be and rests on a value judgment. "Petrol should be taxed more" is normative. Robbins wanted economics to be positive only. Marshall, Pigou and most modern economists accept that economics is both, because policy needs both facts and values.
4. An art as well as a science. An art is the practical use of knowledge to reach a goal. When a finance minister frames a Budget, or the Reserve Bank sets the repo rate, economics is applied as an art.
5. A science of tendencies. Economic laws are not exact like the laws of physics, because human behaviour varies. Marshall wrote: "The laws of economics are to be compared with the laws of the tides, rather than with the simple and exact law of gravitation." They state what will tend to happen, other things being equal.
The scope of economics: its subject matter
Each definition widened or changed the subject matter.
| Definition | Author and year | Subject matter |
|---|---|---|
| Wealth definition | Adam Smith, 1776 | The production and growth of the wealth of nations |
| Welfare definition | Alfred Marshall, first published 1890 | Wealth as a means to human welfare |
| Scarcity definition | Lionel Robbins, 1932 | Choice between scarce means with alternative uses |
| Growth definition | Paul Samuelson | Choice over time, and growth |
Today the subject matter is taken to be the problems of scarcity and choice faced by every society. It also covers the growth of that society's income over time.
The scope of economics: its divisions
- Consumption: how consumers satisfy their wants, including the laws of utility and demand.
- Production: how land, labour, capital and organisation are combined to produce goods.
- Exchange: how prices are fixed in different markets, and the role of money and trade.
- Distribution: how the income from production is shared as rent, wages, interest and profit.
- Public finance: how the State raises revenue, spends it and borrows.
The scope of economics: its two branches
- Micro economics studies individual units: one consumer, one firm, one market, one price.
- Macro economics studies the economy as a whole: national income, employment, the general price level, growth and trade cycles.
The words micro and macro were introduced by Ragnar Frisch in 1933.
Economics and the other social sciences
Economics shares its field with other studies of society, and its scope touches theirs.
- Politics. Taxes, public spending and planning are decided by governments, so economics and politics meet in policy.
- Ethics. Questions of fair wages, fair prices and the distribution of income carry moral judgments.
- Sociology and history. Customs, caste, the family and past institutions shape how people earn and spend.
- Law. Property, contract and company law set the rules within which markets work.
Economics keeps its own focus: the use of scarce resources to meet human wants.
Why the scope matters to a law student
Economics explains the reasons behind many laws. Competition law rests on the theory of markets. Labour codes rest on theories of wages. Tax and Budget law rest on public finance. A lawyer who knows the scope of economics can read these laws with their purpose in mind.
Conclusion. In nature, economics is a social science that is both positive and normative. It is also an art when it is applied to policy, and its laws are tendencies rather than exact rules. In scope, it studies the problem of scarce means and many ends. Its divisions are consumption, production, exchange, distribution and public finance, and its branches are micro and macro economics. Its subject matter widened from Smith's wealth to Marshall's welfare, Robbins's scarcity and Samuelson's growth. It now covers the whole economic life of society.
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