Easy2Siksha Sample Paper
GNDU Most Repeated (Important) Quesons
B.A. 1st Semester
ECONOMICS (Micro Economics)(2022-2024)
Must-Prepare Quesons (80-100% Probability)
SECTION-A
1. 󷄧󼿒 Indierence Curve & Consumer Equilibrium (4 mes)
2. 󷄧󼿒 Basic Economic Problems faced by Economy (3 mes)
󹵍󹵉󹵎󹵏󹵐 2025 Smart Predicon Table
Based on 4-Year Queson Paper Analysis + Latest Set
SECTION-A (Nature of Economics & Consumer Behaviour)
Queson Topic
Repeats
Years Appeared
Priority
Indierence Curve & Consumer
Equilibrium
4 Times
2021 (Q2), 2022 (implied), 2023
(Q2), 2024 (Q2b)
󹻦󹻧 Very
High
Basic Economic Problems
3 Times
2021 (Q1ii), 2023 (Q1b), 2024 (Q1)
󹻦󹻧 Very
High
Easy2Siksha Sample Paper
GNDU Most Repeated (Important) Quesons
B.A. 1st Semester
ECONOMICS (Micro Economics)(2022-2024)
Must-Prepare Quesons (80-100% Probability)
SECTION-A
1. 󷄧󼿒 Indierence Curve & Consumer Equilibrium (4 mes)
Ans: Imagine Riya, a college student who just got ₹100 to spend for the weekend. She
loves chocolates 󷏽󷏾󷏿󷐀󷐁󷐂 and coffee 󼿙󼿔󼿕󼿖󼿗󼿘 — both make her happy, but in different ways.
Now, she can’t spend all her money on chocolates (though she’d love to!) because then
she’d have no coffee to enjoy.
On the other hand, if she buys only coffee, she’ll miss the sweetness of chocolates.
So Riya wants to balance both — she wants to be as happy as possible, given her limited
money.
This simple idea — balancing happiness and limited money — is what Indifference Curve
and Consumer Equilibrium are all about.
Let’s break it down beautifully and clearly.
󷋇󷋈󷋉󷋊󷋋󷋌 1. Understanding the Concept of Utility
Before we jump into indifference curves, let’s understand utility — the economist’s
word for satisfaction or happiness.
When Riya eats one chocolate, she feels happy — that’s utility.
But if she eats 10 chocolates in one go, the happiness from each extra chocolate
decreases.
That’s called Diminishing Marginal Utility — the more you consume something, the
lesser satisfaction you get from each additional unit.
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So, Riya wants to combine chocolates and coffee in a way that gives her the highest
total happiness.
Economists represent this idea visually using an Indifference Curve.
󷏽󷏾󷏿󷐀󷐁󷐂󼿙󼿔󼿕󼿖󼿗󼿘 2. What is an Indifference Curve?
An Indifference Curve (IC) shows all combinations of two goods that give equal
satisfaction to the consumer.
That means — along a single curve — the consumer is “indifferent” between different
bundles, because each one makes her equally happy.
Let’s say Riya can have these combinations:
Combination
Chocolates
Cups of Coffee
A
2
5
B
3
3
C
4
2
In all three combinations (A, B, C), Riya’s happiness level remains the same — 100 units.
This curve that connects A, B, and C is called an Indifference Curve.
It’s like saying: “Riya is equally happy with 2 chocolates & 5 coffees as she is with 4
chocolates & 2 coffees.”
󷗿󷘀󷘁󷘂󷘃 Diagram: Indifference Curve
Here’s a simple sketch of how it looks:
Each point (A, B, C) lies on the same curve — giving the same satisfaction.
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󷊷󷊸󷊺󷊹 3. Important Properties of Indifference Curves
Let’s now look at some easy-to-grasp rules about ICs:
(i) They slope downward from left to right
Because if you consume more of one good, you have to consume less of another to keep
the same level of happiness.
Example: If Riya has more chocolates, she can be okay with less coffee — her total
happiness remains unchanged.
(ii) They never intersect
If two curves cross, it would mean one combination gives two different satisfaction
levels — which is impossible.
Happiness can’t be both high and low at the same time!
(iii) Higher curves show higher satisfaction
If Riya moves to a higher curve, that means she’s getting more of both goods — more
chocolates and more coffee — which obviously makes her happier.
(iv) They are convex to the origin
Why? Because of the diminishing marginal rate of substitution (MRS).
In simple terms: as Riya keeps giving up coffee to get more chocolates, she becomes less
and less willing to give up coffee.
Her willingness to trade one for the other decreases — and that gives the curve its
rounded, inward shape.
󼿙󼿔󼿕󼿖󼿗󼿘 4. The Budget Line: The Money Wall
Now, let’s talk about money — the real-world limit.
Riya may dream of having unlimited chocolates and coffee, but her budget says
otherwise.
She only has ₹100, and each item has a price.
Let’s say:
• One chocolate = ₹10
• One cup of coffee = ₹20
Her budget equation would be:
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10C + 20K = 100
(where C = chocolates, K = coffee)
This means she can spend all her money in different combinations like:
• 10 chocolates, 0 coffee
• 5 chocolates, 2.5 coffees
• 0 chocolates, 5 coffees
All these combinations form a Budget Line — a straight line showing all ways she can
spend all her money.
󷗿󷘀󷘁󷘂󷘃 Diagram: Budget Line and Indifference Curves
󷊻󷊼󷊽 5. Consumer Equilibrium: The Perfect Balance
Now comes the magical part — Consumer Equilibrium.
It’s the point where Riya gets maximum satisfaction within her budget.
Look at the diagram again — the budget line touches the highest possible indifference
curve at exactly one point.
That’s the point of consumer equilibrium.
At this point, two conditions are satisfied:
Easy2Siksha Sample Paper
(i) Slope of Indifference Curve = Slope of Budget Line
In economics terms:
MRSxy = Px / Py
This means:
• The rate at which Riya is willing to substitute chocolates for coffee (MRS)
• equals
• The rate at which the market allows her to do so (price ratio)
(ii) The Indifference Curve is tangent to the Budget Line
They just touch — not cut each other.
If the IC were higher, it would be beyond her budget.
If it were lower, she wouldn’t be fully satisfied.
At the tangent point, Riya achieves perfect balance — maximum happiness within her
income.
󷊭󷊮󷊯󷊱󷊰󷊲󷊳󷊴󷊵󷊶 6. Why is it Called "Equilibrium"?
Because, at that point, Riya has no reason to change her spending pattern.
She’s fully satisfied, given her money and the prices.
If she tried to move to another combination:
• Either she’d go beyond her budget, or
• She’d end up on a lower indifference curve (less happy).
So, she stays where she is — that’s consumer equilibrium.
󷋍󷋎 7. Mathematical Explanation (Simple Way)
Let:
• MUx / Px = MUy / Py
This means the marginal utility per rupee spent on each good is the same.
If it’s not equal, Riya would shift her money toward the good giving more satisfaction
per rupee — until equality is restored.
When:
Easy2Siksha Sample Paper
MUx / Px = MUy / Py
She reaches equilibrium — maximum satisfaction.
󷊪󷊫󷊬 8. Real-Life Example
Let’s take another daily-life example.
Suppose you go to a café with ₹200. You can buy burgers or fries.
You love both, but you can’t buy unlimited amounts.
So, you keep thinking:
• “If I skip one burger, how many fries would make me just as happy?”
That’s the MRS — Marginal Rate of Substitution.
You’ll keep adjusting until the money you spend on both gives you equal satisfaction per
rupee.
That’s when you stop — you’ve reached your consumer equilibrium.
󷇍󷇎󷇏󷇐󷇑󷇒 9. In Short – The Essence of the Story
Concept
Meaning
Indifference Curve
All combinations of two goods giving equal satisfaction
Budget Line
All combinations the consumer can afford
Consumer
Equilibrium
Point where consumer gets maximum satisfaction within
budget
Condition
MRS = Price Ratio (Px/Py)
󹲴󹲵 10. The Moral of the Story
Economics, at its heart, is about human behavior — about choices we make every day
with limited money.
Riya’s story teaches us that:
• Every person tries to maximize happiness,
• within the limits of income and prices.
The Indifference Curve and Consumer Equilibrium beautifully capture that simple truth
—
Easy2Siksha Sample Paper
that life is about balance, not extremes.
We can’t have everything we love, but we can choose wisely to get the maximum joy
out of what we have.
2. 󷄧󼿒 Basic Economic Problems faced by Economy (3 mes)
Ans: 󷇮󷇭 The Story of Basic Economic Problems Faced by an Economy
Imagine you are the mayor of a small town. The town has fertile land, hardworking
people, and some money to invest. But here’s the twist: the people of the town want
everything—more food, better houses, schools, hospitals, entertainment, and jobs.
The problem? Resources are limited.
This is the heart of economics: scarcity. Because resources are scarce and human wants
are unlimited, every economy—whether rich or poor—faces the same fundamental
problems. These are called the basic economic problems.
󺄄󺄅󺄌󺄆󺄇󺄈󺄉󺄊󺄋󺄍 Diagram of Basic Economic Problems
󷊆󷊇 1. What to Produce? – The Dilemma of Choices
The first problem every economy faces is deciding what goods and services should be
produced.
• Should more land be used to grow wheat or cotton?
• Should the government spend more on defense or education?
• Should industries focus on luxury cars or affordable bicycles?
Easy2Siksha Sample Paper
Story Analogy: Imagine you’re running a restaurant with limited ingredients. You must
decide whether to cook pasta, pizza, or soup. You can’t cook everything at once because
your resources (ingredients, chefs, time) are limited.
Real Example: In India, policymakers often face the choice between investing in rural
development (basic needs) or high-tech industries (future growth).
󷫿󷬀󷬁󷬄󷬅󷬆󷬇󷬈󷬉󷬊󷬋󷬂󷬃 2. How to Produce? – The Question of Methods
Once the “what” is decided, the next question is how to produce.
• Should goods be produced using labor-intensive techniques (more workers, less
machinery) or capital-intensive techniques (more machines, fewer workers)?
• Should energy come from coal (cheap but polluting) or solar power (clean but
costly)?
Story Analogy: In our restaurant, once you decide to cook pasta, you must choose
whether to make it by hand (labor-intensive, traditional) or use a pasta machine
(capital-intensive, modern).
Real Example: Developing countries often prefer labor-intensive methods to create jobs,
while developed countries rely on machines for efficiency.
󷹢󷹣 3. For Whom to Produce? – The Distribution Puzzle
The third problem is who gets the goods and services produced.
• Should resources be distributed equally among all citizens?
• Should the rich get more luxury goods while the poor get only basics?
• Should the government provide free healthcare and education for all, or only for
those who can pay?
Story Analogy: In our restaurant, after cooking pasta, you must decide who gets to eat
it. Do you serve only the wealthy customers who can pay high prices, or do you also
serve the poor at subsidized rates?
Real Example: In many economies, debates about inequality, subsidies, and welfare
programs reflect this problem.
󹵈󹵉󹵊 4. Efficiency and Growth – The Long-Term Challenge
Beyond the three central problems, economies also face the issue of how to use
resources efficiently and ensure growth.
• Are resources being wasted?
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• Is the economy investing enough in technology, education, and infrastructure for
future generations?
• How can unemployment and underutilization of resources be reduced?
Story Analogy: In our restaurant, efficiency means using every ingredient wisely (no
wastage), and growth means expanding the restaurant in the future—maybe opening
new branches or introducing new dishes.
Real Example: Countries like Japan, with limited natural resources, focus on efficiency
and innovation to maintain growth.
󷇮󷇭 Why Do These Problems Arise?
The root cause is scarcity.
• Resources are limited: Land, labor, capital, and entrepreneurship are finite.
• Wants are unlimited: People always desire more—better food, clothing, housing,
entertainment.
• Choice is inevitable: Because of scarcity, societies must choose what, how, and
for whom to produce.
Story Analogy: If you had infinite ingredients in your restaurant, you could cook
everything for everyone. But since you don’t, you must make choices. That’s economics.
󹵍󹵉󹵎󹵏󹵐 Comparative Table of Basic Economic Problems
Problem
Key Question
Story Analogy
What to
Produce?
Which goods/services to
make?
Pasta vs. Pizza
How to Produce?
Which method to use?
Handmade vs.
Machine pasta
For Whom to
Produce?
Who gets the output?
Who eats the pasta
Efficiency &
Growth
How to use resources &
grow?
Expand restaurant
󼩺󼩻 Different Economic Systems and Their Approach
Different economies solve these problems in different ways:
1. Capitalist Economy (Market System):
o Decisions are made by market forces (demand and supply).
o Example: USA.
o Story: Customers in the restaurant decide what dishes are cooked by
ordering them.
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2. Socialist Economy (Planned System):
o Government decides what, how, and for whom to produce.
o Example: Former USSR.
o Story: The restaurant manager decides the menu for everyone.
3. Mixed Economy:
o Both government and market share decision-making.
o Example: India.
o Story: Customers can order, but the manager ensures some dishes are
reserved for the poor.
󷈷󷈸󷈹󷈺󷈻󷈼 Bringing It All Together
The basic economic problems—what to produce, how to produce, for whom to
produce, and how to ensure efficiency and growth—are like the daily dilemmas of
running a restaurant or a town. They arise because resources are limited but human
wants are unlimited.
Every economy, whether rich or poor, capitalist or socialist, must answer these
questions. The answers may differ, but the problems remain universal.
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