KSLU Solved Question Papers
Economics I (old course)
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 2
2013 Dec Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 2 Economics I (old course) 2013 Dec 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 2013 Dec examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2013 Dec examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2013 Dec 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 3 hours · Total marks 100 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all 5 Questions. (2) One essay type and one short note question or problem from each unit have to be attempted, which is referred as part (a) and (b) in all the Units. (3) Figures to the right indicate marks. (4) Answers should be written either in English or Kannada completely.
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.
Q1
Unit I
(a)Briefly explain the subject matter of Economics.[15]
Answer
For full marks, cover: what is meant by the subject matter of a science; economic and non-economic activities, with examples; Marshall's description of the field, in his words; how each definition marked out the subject matter (wealth, welfare, scarcity, growth); the economic problem at the centre of it; the topics studied under consumption, production, exchange, distribution and public finance; the micro and macro split and the static and dynamic approach; positive and normative questions; what lies outside the subject matter; and a conclusion.
1. What "subject matter" means
The subject matter of a science is the set of facts and problems it studies. Physics studies matter and energy; botany studies plants. Economics studies one side of human life: how people get their living and how they use the means they get.
2. Economic and non-economic activities
The simplest way to see the subject matter is to sort human activities into two groups.
Economic activities are those undertaken to earn income or to use income to satisfy wants. A farmer selling paddy, a clerk working for a salary, a shopkeeper buying stock and a family buying vegetables are all engaged in economic activity.
Non-economic activities are undertaken for love, duty, religion, recreation or social service, not for income. A mother cooking for her children, a student playing cricket for fun and a volunteer helping at a temple festival are examples.
The same act can fall on either side. A cook preparing a meal in a hotel for wages is engaged in economic activity. The same cook preparing a meal at home for the family is not. What matters is the purpose and the link with income, not the act itself.
This line has a practical result. Unpaid work at home, such as cooking, cleaning and caring for children, is left out of the national income, though it plainly has value. Economists have long noted this gap. It shows that the subject matter, as usually drawn, follows the market and money more closely than human effort as such.
3. Marshall's description of the field
Alfred Marshall drew the field in words that are still quoted. Economics "is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing."
Three points follow.
- It studies people, not things alone.
- It studies the ordinary business of life, the daily work of earning and spending.
- It studies both the getting and the using of the means of well-being.
4. How the definitions marked out the subject matter
- The classical writers (Adam Smith, 1776; J.S. Mill, 1848) made wealth the subject: its production, exchange and distribution.
- Marshall (first published 1890) and Pigou (1920) made material welfare the subject. Pigou limited the field to "that part of social welfare that can be brought directly or indirectly into relation with the measuring-rod of money."
- Lionel Robbins (1932) made choice under scarcity the subject, whatever the end pursued.
- Paul Samuelson added growth over time and the distribution of output among groups.
Each step widened the field. Today the subject matter covers every problem that arises because means are scarce and ends compete.
5. The economic problem at the centre
Scarcity forces every society to settle a few questions. What goods shall be produced, and how much of each? By what methods? For whom, that is, how shall output be shared? And is the society using all its resources and growing? These questions sit at the heart of the subject matter, whether a society answers them through markets, through planning or through both, as India does.
6. The topics within the field
1. Consumption. Wants and their satisfaction: utility, the laws of diminishing marginal utility and equi-marginal utility, demand and its elasticity, consumer's surplus and the consumer's equilibrium.
2. Production. The factors of production, land, labour, capital and organisation, and how they are combined. The laws of returns, returns to scale, costs and the size of firms belong here.
3. Exchange. How prices are settled. This covers market forms from perfect competition to monopoly, the role of money and credit, and trade between regions and nations.
4. Distribution. How the income from production is divided among the factors as rent, wages, interest and profit, and why some incomes are higher than others.
5. Public finance. The revenue, spending and borrowing of the State: taxes, budgets and public debt.
7. Ways of studying the field
Micro and macro. Ragnar Frisch introduced the terms in 1933. Micro economics studies small units: one household, one firm, one price. Macro economics, built on Keynes's General Theory (1936), studies aggregates: national income, total employment, the price level and growth. Both cover the same economy at different scales.
Static and dynamic. Static analysis compares positions of rest, such as an equilibrium price. Dynamic analysis traces change over time, such as the path of prices through a trade cycle. Frisch also drew the line between micro-dynamic and macro-dynamic analysis.
Positive and normative. The subject matter includes both what is, such as "a rise in interest rates reduces borrowing", and what ought to be, such as "interest rates should be cut to help farmers".
8. What lies outside the subject matter
- Acts done for love, duty or pleasure without any link to income, as in the examples above.
- Isolated individuals with no exchange, like a hermit living alone.
- Irrational or abnormal conduct. Economics studies the normal behaviour of ordinary people.
- Final judgments of value, on the scarcity view. Robbins held that economics studies how means serve ends, not which ends are worthy. Many economists today disagree and accept welfare questions as part of the subject.
9. An Indian illustration
A family in Dharwad runs a small dairy. Buying fodder and selling milk are matters of exchange. Choosing between hand milking and a milking machine is a matter of production. Paying the helper's wages is distribution. Deciding how much of the income to spend on schooling is consumption. The GST on its purchases and any support it receives from a government scheme are public finance. If milk prices rise across the country, the effect on inflation is a macro question. When the daughter milks the cow for the family's own tea, that act lies outside the subject matter.
Conclusion. The subject matter of economics is mankind in the ordinary business of life. It covers the economic activities by which people earn their living and use their incomes. It was first drawn as wealth, then as material welfare, then as choice under scarcity and finally as choice over time with growth. Its core is the economic problem of what, how and for whom to produce. Its topics fall under consumption, production, exchange, distribution and public finance, studied through micro and macro, static and dynamic, and positive and normative approaches. Acts done for love or duty, and the conduct of isolated or irrational persons, lie outside it.
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