ECONOMICS

Class IX

Department of School Education

Ministry of Education and Skills Development
Royal Government of Bhutan
Thimphu
Published by: Department of School Education(DSE)
Ministry of Education and Skills Development (MoESD)
Thimphu.
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© Copyright 2023, DSE, MoESD, Thimphu.

All rights reserved. No part of this book may be reproduced in any form without the
permission from the DSE,MoESD, Thimphu
We would like to sincerely acknowledge the retrieval and use of ideas and pictures
from various sources. We reaffirm that this book is purely for educational purposes.
 Acknowledgement
Acknowledgement

The Royal Education Council would like to thank all specialists, professionals, lecturers
and teachers from different agencies, colleges and schools for their valuable contributions
towards the development of this book.
Advisors:
1. Kinga Dakpa, Director, Royal Education Council, Paro
2. Wangpo Tenzin, Dean, Royal Education Council, Paro
3. Norbu Wangchuk, Curriculum Specialist, Royal Education Council, Paro

Research & Writing

1. Rinchen Dorji, Lecturer, Gedu College of Business Studies, Chukha
2. Ugyen Lhendup, Curriculum Developer, Royal Education Council, Paro
3. Bal Bahadur Ghalay, Teacher(CLT), Mendrelgang Central School, Tsirang
4. Tashi Wangmo, Teacher, Damphu Central School, Tsirang
5. Samten Wangmo, Teacher, Darla Middle Secondary School, Tsirang
6. Radhika Rai, Teacher, Khendrup Higher Secondary School, Sarpang
7. Jamyang Choden, Teacher, Chukha Central School, Chukha
8. Deki Wangmo, Teacher, Motithang Higher Secondary School, Thimphu
9. Bhuwan Chandra Ghalley, Principal, Dashiding Higher Secondary School, Punakha
10. Pema, Teacher, Pelrithang Middle Secondary School, Sarpang
11. Kencho, Teacher, Jakar Higher Secondary School, Bumthang
12. Sonam Lhamo, Teacher, Shaba Higher Secondary School, Paro
13. Dawa, Teacher, Loselling Middle Secondary School, Thimphu
14. Thandey Zangmo, Punakha Central School, Punakha
15. Sonam Phuntsho, Curriculum Developer III, Royal Education Council, Paro

Review and Refinement

1. Sonam Phuntsho, Senior Lecturer, Financial Institutions Training Institute, Thimphu
2. Dawa, Teacher, Loselling Middle Secondary School, Thimphu
3. Pema, Teacher, Pelrithang Middle Secondary School, Sarpang
4. Deki Wangmo, Teacher, Motithang Higher Secondary School, Thimphu
5. Sonam Lhamo, Teacher, Shaba Higher Secondary School, Paro
6. Padma Zimba, Teacher, Gedu Higher Secondary School, Chukha
7. Kelzang Tshomo, Teacher, Yangchenphug Higher Secondary School, Thimphu
8. Karma Lhaden, Teacher, Punakha Central School, Punakha
9. Tashi Wangmo, Teacher, Damphu, Tsirang
10. Nidup, Teacher, Gongzim Ugyen Dorji Central School, Haa
11. Phuntsho Om, Teacher, Samtengang Central School, Wangdue
12. Noubu Wangchuk, Royal Education Council, Paro
Copy Editor

Lhendup Dorji, Assist. Professor, Gyalpozhing College Of Information Technology,

Mongar

Illustration, Cover Design & Layout

Surjay Lepcha
 Foreword

Human wants are unlimited while the resources of the world are limited. So the
disproportion between unlimited human wants and resource available to meet
those desires gives rise to the problem of choice and decision making. This leads
to a need for a system of rationalizing the distribution of these finite resources
against the infinite human desires. An answer to such a question can be found
in the field of study called Economics. It explores the best possible means to
achieve the desired economic goals to the optimal level with resources at our
disposal. In a nut shell, Economics is a study about production, distribution and
consumption of goods and services.
Economics education in Bhutan is intended to help our learners to keep abreast
with the fast changing economic trends not only within the country but also in
the rest of the world to explore the opportunities that lie ahead. It will also help
them equip themselves for the world of work and make informed decisions to
become responsible, accountable, and productive citizens of the nation and the
world.
Economics curriculum is entrenched in Bhutan’s philosophy of holistic path to
development, otherwise known as Gross National Happiness, that aims to bring
about a balance between spiritual and material well-being.
It is my ardent aspiration that our learners reap colossal benefits of acquiring
required knowledge, skills and values out of this reformed curriculum for
Economics. I am very much positive that acquisition of all those economic
concepts, principles, theories, skills, and values will nurture our learners to be
nationally rooted and globally competent. This will also facilitate the achievement
of His Majesty’s vision to nurture SMART citizens of Bhutan.

Tashi Delek!

Kinga Dakpa
Director
 Table of Conents

Acknowledgment III
Foreword V

Chapter 1- Introduction to Economics 1

Chapter 2- Scarcity and Choice 5

Chapter 3- Economic Resources and Production 13

Chapter 4- Economic and Non-economic Activities 23

Chapter 5- Demand and Law of Demand 33

Chapter 6- Supply and Law of Supply 45

Chapter 7- Economic System 55

Chapter 8- Money 61

Chapter 9- Market 71

Chapter 10- Trade 77

Chapter 11- Financial Institutions 87

Assessments 97
 CHAPTER
Introduction
to
1 Economics

Learning Objectives

• Define economics
• Discuss the nature and scope of economics
• Outline the key ideas to define economics

1.0 Introduction

Economics deals with the study of human behaviour with respect to production,
consumption and distribution of goods and services to satisfy human wants. Human
wants are unlimited while resources to satisfy them are limited. Therefore, the study
of economics provides insight into usage of limited resources to satisfy human wants.
It enables us to understand the decision-making process in allocating the resources.

This chapter discusses the key ideas that explain the major definitions, nature and
scope of economics.

1.1 Understanding Economics

The term Economics was originally derived from the Greek word “Oikonomia” which
means household management. With the process of civilization and change in the
economic conditions, the definition of economics has evolved over time.

The key ideas of major definitions of economics are discussed below.

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 Economics Class IX

a. Wealth Oriented Definition

Adam Smith in his book ‘An Enquiry into Nature and Causes
of Wealth of Nation’ regards economics as science of wealth
which studies the process of production, consumption
and accumulation of wealth. According to him wealth
means goods and services that can be transacted with
the help of money.

Adam Smith (1723-1790)

b. Welfare Oriented Definition

Alfred Marshall in his book “Principles of Economics”

places more emphasis on human welfare than wealth.
According to him, wealth is only a means to satisfy
human wants and not an end in itself.

Alfred Marshall (1842-1924)

c. Scarcity Oriented Definition

Lionel Robbins defines Economics as a study of human

behaviour in relation to unlimited human wants and scarce
resources which have alternative uses. This ultimately leads
to problem of choice.

Lionel Robbins (1898-1984) d. Grow th Oriente d

Definition

According to Prof. Samuelson, Economics is the study of

how people and society choose to employ scarce productive
resources which has alternative uses to produce various goods
and services over time with or without use of money. These goods Professor Paul A
and services are distributed for consumption across the membersSamuelson (1915-2009)
of a society and over generations.

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 Chapter 1 Introduction to Economics

Learning Activity 1.1

1. Sort the jumbled words given in Figure 1.1 under the following category.
Wealth Oriented Definition, Growth Oriented Definition, Scarcity Oriented
Definition, and Welfare Oriented Definition.

Wealth Oriented
Definition
Growth Oriented
Definition

Wealth accumulation, Alfred Marshall,

well-being, prosperity self-interest,
limited resources, Lionel Robbins,
unlimited wants, Paul A. Samuelson,
problem of choice, equal distribution,
sustainability, production, Adam Smith,
spiritual well-being, consumerism,
economic development,

Scarcity Oriented
Definition
Welfare Oriented
Definition
Figure 1.1
Share your work with your friends in class.

2. Explain Economics in your own words.

1.2 Nature and Scope of Economics

The continuous evolvement in the subject matter of economics has led to different
views about the scope of economics. Economics is considered as a science as well as
an art.

a. Economics as a Science

Economics is considered a science since the subject matter has laws and theories,

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 Economics Class
ClassIX
IX

which are universally accepted. Like science, the economics is a systematic study of
knowledge and facts which helps in developing the correlation-ship between cause
and effect. The facts are systemically collected, classified and analyzed to make future
predictions. Therefore, economics is considered as a science.

b. Economics as an Art

Economics is an art because different theories and laws are explained with the help
of graphs, figures, tables, and equations. It makes use of assumptions which help to
define the conditions for the application of theories, laws and relationship between
economic variables.

In addition, the principles of economics can be used to help in providing solutions

to all economic problems. Therefore, economics is considered as an art.

Review Questions

1. Economics is considered as science as well as an art. Discuss.

2. Can we consider economics as a social science as well? Why?

3. Discuss how studying Economics would benefit:

i) producers.
ii) consumers.
iii) policy makers.
4. Which definition of Economics is the most suitable for Bhutan? Give reasons.

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 CHAPTER
Scarcity
and
2 Choice

Learning Objectives

• Explain human wants and their types

• Explain the basic economic problems and their causes
• Illustrate the concept of opportunity cost using Production Possibility Curve
• Explain the process of making choice by individual and government

2.0 Introduction

Human wants are unlimited but

the resources to satisfy the wants
are limited. Therefore, individuals
and society face economic
problems. This chapter discusses
the concept of human wants and
the causes of economic problems.
The process of making choice from
various alternatives at individual
and national level is also included.
RESOURCES
2.1 Human Wants

Human desires for better living,

change, knowledge and many HUMAN
more. All these desires and WANTS
aspirations are known as human
Figure 2.1 Human wants and resources
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 Economics Class IX

wants in ordinary sense. In economics, human want is an effective desire for a

particular thing by putting an effort to acquire it. From the day a person is born,
wants arise and change over a period of time. At the same time, human wants differ
from person to person and place to place.

I WANT IT
ALL!
What do humans
really want?

Can all the wa

nt

b
es
s

Did atis
you
ever fied?
put
some
effort
to acquire a want?

Figure 2.2 Human wants

2.2 Types of Human Want

a. Necessities

Commodities which are essential in nature are called necessities or needs. Necessities
can be for existence as well as for efficient living. Food, clothing and shelter are
examples of necessities for existence. On the other hand, books for students and
computers in the office are examples of necessities for efficient living.

b. Comforts

Comforts are those commodities which make life easier and comfortable. Comforts
are the additional wants after necessities. For a student in a classroom, a simple chair
could be a necessity, while a cushioned chair could be a comfort. Similarly, in a hot
place, a fan could be a necessity in an office, while air conditioner could be a comfort..

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 Chapter 2 Scarcity and Choice

c. Luxuries

Those commodities which are very expensive and acquired to show wealth and
position of a person in the society are known as luxuries. Some of the examples of
luxuries are gold ornaments, expensive electronic gadgets, branded clothes.

Want for more luxuries and comfort commodities results in mass consumerism. There
are some non-economic wants, such as love, affection and happiness, which cannot be
acquired by making monetary payment. Mass consumerism can be addressed by the
philosophy of Gross National Happiness (GNH) to promote healthy and harmonious
society.

Learning Activity 2.1

1. Classify the following products given in Figure 2.3 into different wants for
different set of people. Give justification to your answer.
i) Teacher
ii) Student
iii) Patient

Water Medicines Books Car

Food Mobile phone Shoes Pens Laptop

Figure 2.3

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 Economics Class IX

2.3 Economic Problems

Scarcity is the universal economic problem faced by individuals, institutions and
economy as a whole. Scarcity is a situation where human wants exceed available
resources. Economic problem, therefore, is the problem of scarcity and choice.

Causes of Economic
Problems

Limited Resources Unlimited Wants

Alternative Uses Different Priorities

Figure 2.4 Causes of economic problems

The main causes of economic problems are explained below:

a. Unlimited wants with different priorities

Human wants differ in their urgency. Some wants are more urgent while others are
less. Some people may prefer a smart phone to a laptop computer while some may
want a laptop computer more than a smart phone. It becomes difficult to decide which
one is to be produced or consumed.
If resources are available in abundance, economic problem would not arise. Limited
resources force individuals and societies to choose from among various alternative
goods and services. Hence, economic problem of scarcity and choice arises.

b. Limited Resources have Alternative Uses

Limited resources can be put to alternative uses. For example, a plot of land can be
used for cultivation of crops or construction of building but not both at the same time.
Similarly, one can use leisure time to either read books or play football. Therefore,
one must decide which one to choose from among the available alternatives.

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 Chapter 2 Scarcity and Choice

2.4 Basic Economic Problems

The basic economic problem is about scarcity and choice. Any individual, organisation,
society or nation has to make three fundamental choices about how to allocate the
available resources.

Basic Economic
Problems

For whom to
What to Produce? How to Produce?
Produce?

Labour intensive
Those who need
Capital Goods technique

Consumer
Goods Capital intensive Those who have
technique purchasing power

Figure 2.5 Basic economic problems

a. What to produce?

Should the economy use its resources to build more hospitals, roads, schools or
luxurious hotels? Should Bhutan export more oranges than apple? Do we invest more
on hydropower or tourism industry? Is tourism industry or hydro power a priority
for the growth of Bhutanese economy? The economy must decide what goods and
services to be produced and how much of each is to be produced.

b. How to produce?

Does Bhutan have enough human resources to enhance economic prosperity? Will
the available machineries and technologies help in boosting the production level?
Should countries design new methods of production? The method of production
involves judicious selection of different factor combinations, techniques and other
alternatives of production.

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 Economics Class IX

c. For whom to produce?

Who should get the maximum share of goods and services? How are income
distributed? Why does inequality exist in society? Why do you think inequality
exist in a society? This problem deals with the distribution of total income among
different sections of society.
Due to scarcity of resources, all the wants cannot be satisfied. Hence, society faces
the problem of choosing those wants which should be prioritised.

Scarcity of
Goods and
Services
Limited Resources Unlimited Wants
Figure 2.6 Scarcity of resources

Learning Activity 2.2

Use Figure 2.5 to answer the following questions.

1. What goods and services should Bhutan prioritize to produce?
2. What techniques of production should Bhutan use?
3. For whom should the goods and services be produced to narrow the income
gap in Bhutan? Why?

2.5 Opportunity Cost

Opportunity cost arises because of scarcity of resources and the fact that resources
have alternative uses. Every choice involves a trade-off, i.e. giving up one thing to
get something else. Thus, opportunity cost of every choice is the cost of next best
alternative that is given up in making that choice.

Tshering has an hour of leisure time. He can use this time to play either football or
read a book. Tshering plays football instead of reading a book. The opportunity cost
of playing football is the knowledge that a Tshering could have gained by reading a
book. If a person decides to spend Nu. 2000 on buying a pair of shoes, the opportunity
cost would be not being able to save that amount. An economy may decide to invest
in building roads but at the cost of providing education. Bhutan may choose clean

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 Chapter 2 Scarcity and Choice

environment at the cost of industrialisation.

The concept of opportunity cost can be explained by using Production Possibility
Curve (PPC). PPC is a curve which shows various combinations of two goods that
can be produced by using the available resources.

Table 2.1 shows the possible combinations of rice and cloth that a producer can
produce when all its resources are efficiently utilised. The combination A shows a
point where the producer produces 10 kilograms of rice and nothing of cloth. On the
contrary, the combination F shows that the producer produces 5 metres of cloth, but
does not produce any rice. As the producer moves from combination A to B and B
to C, the producer has to sacrifice 2 kilograms of rice to produce 1 additional metre
of cloth. Thus, the opportunity cost of producing 1 extra metre of cloth is equal to
2 kilograms of rice.
Table 2.1 Production possibility
Cloth Rice Opportunity cost of cloth in terms of rice =
Combination
(m) (kg) Change in rice/Change in cloth
A 0 10 -
B 1 8 2
C 2 6 2
D 3 4 2
E 4 2 2
F 5 0 2
y
A
10
B
8
PPC
6 C
Rice (kilogram)

D
4
E
2
F
0 1 2 3 4 5 x
Cloth (metre)
Figure 2.7 Production Possibility Curve
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 Economics Class IX

Table 2.1 can be represented in the form of a graph as shown in Figure 2.7. The X
axis represents cloth and the Y axis represents rice. Points A, B, C, D, E and F shows
various combinations of two commodities that can be produced by efficient use of
resources. The movement along the curve shows opportunity cost of cloth in terms
of rice.

Learning Activity 2.3

1. Suppose you have Nu. 5000. Show how you would spend your money.
Table 2.2
Income Areas of Expenditure Total Expenditure in Nu.
Food
Stationeries
Nu. 5000
Entertainment
Saving

2. How would you divide 24 hours among different activities?

Illustrate with the help of a graph.

Review Questions

1. Why does human want change over a period of time?

2. How do you think non-economic wants help in promoting social welfare?

3. What are the causes of economic problem?

4. Explain the concept of opportunity cost with an appropriate example.

5. How does the concept of opportunity cost help consumers to make informed
decision?

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 CHAPTER Economic
Resources
3 and
Production

Learning Objectives

• Describe resources
• Explain the factors of production
• Explain the characteristics of an entrepreneur as a factor of production
• Explain the concept of production and consumption
• Explain the concept of utility and forms of utility

3.0 Introduction

Nature has bestowed us with many gifts which are commonly known as natural
resources. These resources are not enough to satisfy all human wants. Hence, the
limited resources have to be used efficiently. This chapter discusses different types
of resources and factors of production.

3.1 Resources
Resources
Resources are anything
which can be used for
production of goods and
services to satisfy human Natural Human-made
Resources Resources
wants. They are broadly
categorised into natural and
human-made resources.
Renewable Non- Renewable
Resources Resources

Figure 3.1 Category of Resources

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 Economics Class IX

a. Natural Resources

Natural resources are free gifts provided by nature that can be used for production of
goods and services. They can be classified into renewable and non-renewable natural
resources.

Figure 3.2 Natural resources

A renewable natural resources are those which can refill to replace the depleted
portions through natural reproduction or other recurring processes. Some of the
examples are sunlight, water and forest. While non-renewable natural resources are
those that cannot be replaced such as coal, petroleum and natural gas.

NATURAL RESOURCES

RENEWABLE RESOURCES NON-RENEWABLE RESOURCES

Bio-mass Hydro Wind Coal Fossil fuels

Natural gas

Solar Tidal Geothermal Nuclear energy Minerals

Figure 3.3 Renewable and non-renewable resources

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 Chapter 3 Economic Resources and Production

b. Human-made Resources

Resources that are created by humans are called human-made resources. Machine,
tools and chemical fertilisers are some examples of human-made resources. They
can be improved through research and development.

3.2 Human Resources

Human resources are people who make up the workforce, be it skilled or unskilled.
The qualities of human resources include skill, knowledge, energy and talents. Some
examples of human resources are farmer, teacher, engineer, carpenter, welder, mason
and plumber.

3.3 Factors of production

Resources are called the factors

of production as they are used to

LABOUR
produce goods and services. There ENTREPRENEUR
are four categories of factors of
production.
CAPITAL
a. Land

Land includes all the free gift of

nature, such as land, forest, minerals LAND
and wildlife.

b. Labour Figure 3.4 Factors of production

Labour consists of physical and mental human efforts that are used in the production
of goods and services.

c. Capital

Capital refers to those human-made goods used for further production.

d. Entrepreneur

A person who organises the production of goods and services by combining several
factors of production is called an entrepreneur.

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 Economics Class IX

Learning Activity 3.1

1. Classify the following items into natural and human-made resources.

Wood Cotton Concrete block Glass

Plastic Stone Gold Leather

i) Give few examples of resources that are at the risk of depletion.

ii) As a responsible citizen, what would you do to preserve these resources?

3.4 Entrepreneur

The word entrepreneur is derived from the French word ‘entreprendre’, which means
‘to undertake’. The word was originally used to describe people who 'take on the risk'
in business or who 'undertake' a task such as starting a new venture.

Entrepreneurs are those who organise and combine all the factors of production to
produce goods and services in an economy. They take important decisions regarding
production and bear the risks involved in production. Successful entrepreneurs are
rewarded with profit.

Entrepreneurs have certain common characteristics such as passion, self-confidence,

creativity and the ability to confront challenges. They are ready to take risks and
are willing to learn new things. Entrepreneurs are also self-reliant as they are self-
supportive and independent. They are self-starters who do not wait for others to tell

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 Chapter 3 Economic Resources and Production

them what to do. While they may actively compete with others, they also constantly
try to improve their own performance and competence.

In addition, the success of an entrepreneur is supplemented by skills such as planning,

communication, marketing, interpersonal, basic management, leadership, team
building and ICT skills.

Learning Activity 3.2

1. Plan and prepare a field study in your respective teams to carry out an
interview with an entrepreneur in your locality.

Use the questionnaire provided below to interview an entrepreneur.

Entrepreneur’s profile and questions

Name of the entrepreneur: …………………................................

Nature of the venture: ………………………..........................
Location: ………………………………….............................
Year of establishment: …………………….....................................

a. What made you start this venture?

b. What were some of the challenges you faced when starting your venture?
c. How did you overcome those challenges?
d. What are some of the current challenges and how do you overcome them?
e. What are your strengths or weaknesses as an entrepreneur?
f. Do you have any plans to expand your business?
g. What advice would you give to youths who want to become entrepreneurs?
2. Based on the information obtained from the interview, mention some of the
characteristics that enables the person to be a successful entrepreneur.

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 Economics Class IX

3. If you aspire to be a successful entrepreneur, what are the traits you need to
possess and which are the ones that you need to acquire?

4. Discuss the role of an entrepreneur in the economic development of a country

like Bhutan.

5. Do you believe that entrepreneurs are ‘born’ and not ‘made’? Justify your
answer.

3.5 Production

Most of the things that people do every day are economic activities. Any activity
which leads to creation of goods and services to satisfy human wants is termed as
production. Inputs are converted into outputs through the production process which
adds utility to the commodity.

Figure 3.5 Production processes

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 Chapter 3 Economic Resources and Production

Land Labour Capital

Provide factor input

Productive enterprises which organise them

to produce

Output for the market

Figure 3.6 Organisation of production

Learning Activity 3.3

1. Use Figure 3.7 and answer the questions that follow.

(a) (b) (c)

Figure 3.7
i) Prepare a list of inputs required to produce each of the commodities
in Figure 3.7.
ii) Classify the inputs required to produce the commodities in Figure 3.7
into natural and human-made resources.

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 Economics Class IX

3.6 Consumption

In an economy, the production and consumption are interlinked. High consumption

will lead to more production and vice versa. Goods and services are consumed because
they possess utility or power to satisfy human wants.

Learning Activity 3.4

‘Sustainable development goal 12 is to ensure sustainable consumption

and production patterns. The transition to sustainable consumption and
production of goods and services is necessary to reduce the negative impact
on the climate and the environment, and on people’s health.’
(Illustration UN- 29/10/2015)

1. With reference to the above statement, how would sustainable consumption

and production impact the society?

2. As a consumer of goods and services, how would you contribute to sustainable

consumption?

Explore yourself

1. Are you aware of the Consumer Rights? Mention some of them.

2. Do you know that there is a consumer protection laws? Mention three provisions
of the law.
PROTEC TION

PRO CONS
TEC UME
TIO R
NL
AW
S

Figure 3.8 Consumer protection

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 Chapter 3 Economic Resources and Production

3.7 Utility Form Utility

Utility is the power of a

commodity to satisfy human Time Utility Possession
Utility
wants. In other words, it means
a perceived value or satisfaction
that an individual gets from UTILITY
consuming goods and services.

Place Utility Service Utility

Figure 3.9 Types of utility

Learning Activity 3.5

1. Match the types of utility in column A with their definitions in column B.

Types of utility (A) Meaning (B)

Certain goods lose utility at one time and regain it at
Form Utility
other point of time.
When services are rendered, utility is added to a com-
Possession Utility
modity.
Service Utility When ownership of a commodity is changed or created.
We can add utility to a good by transferring it from one
Time Utility
place to another.
When we alter or change the form or shape of a com-
Place Utility
modity and add utility to it.
2. Provide examples for each type of the utilities mentioned above.
3. Think of a firm in your locality and discuss the advantages of having it there.
4. What are some of the challenges faced by producers in Bhutan?

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 Economics Class
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IX

Review Questions
1. Answer the following questions.

i) Define consumption in your own words.

ii) Differentiate between renewable and non-renewable resources. Give an
example each.
iii) How is skilled labour different from unskilled labour?
2. Fill in the blanks with the appropriate words given below.
Consumer sovereignty, Commodity, Consumer, Optimum, Allocative efficiency,
Consumer goods and services, Rationality, Consumption, Cost, Labour force,
Optimum
i) The production of the ‘best’ or ‘optimal’ combination of outputs
by means of the most efficient combination of inputs is known as
___________________.
ii) ___________________ is any object which is produced for consumption
or for exchange in markets.
iii) ___________________ is any economic agent responsible for the act of
consuming final goods and services.
iv) Tangible and intangible commodities which are consumed for their own
sake to satisfy current wants are called __________________________.
v) The idea that the consumer is the best judge of his or her own welfare is
known as _________________________.
vi) The act of using goods and services to satisfy current wants is
________________.
vii) ________________ is in general, a measure of what must be given up
in order to obtain something whether by way of purchase, exchange or
production.
viii) The ____________________ consists of persons who are either working
or looking for work: it comprises the employed plus the unemployed.
ix) ______________ is the ‘best’ situation or the state of affairs.
x) __________________ is the behaviour by an economic agent (consumer,
producer, government, etc.) which is consistent with a set of rules governing
preferences.

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 CHAPTER
Economic
and
4 Non-economic
Activities

Learning Objectives

• Differentiate between economic and non-economic activities with examples

• Explain the factors affecting economic activities
• Discuss different sectors of an economy with examples
• Explain the role of primary, secondary and tertiary sectors in the economy

4.0 Introduction

All individuals engage in some forms of activities with different motivations. Some
individuals work with expectations of earning something in return, while others
devote themselves to derive intangible satisfaction such as happiness. The types of
activities people perform vary from person to person. The efficiency of the work
depends on factors such as knowledge, skill, natural resources and technology. The
economy of a nation can be broadly divided into three sectors on the basis of the
nature of the economic activities.

4.1 Economic and Non-Economic Activities

Every human being keeps themselves occupied in one or the other activity to satisfy
their wants. These activities can be economic and non-economic activities.

a. Economic Activities

All those activities which are legally undertaken with a motive to earn money are called
as economic activities. These activities are economically productive and interlinked
to one another. Every activity assumes equal importance despite differences in their

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 Economics Class IX

nature and return. Therefore, one should be sincere, mindful, astute, resilient and
timeless (SMART) in carrying out one’s duties and responsibilities in fulfilling the
aspirations of His Majesty The king.

b. Non-Economic Activities

Non-economic activities are those that are performed to provide services without
monetary gain. The activities such as household chores, voluntary social works,
praying, helping in times of natural disasters are some examples of non-economic
activities. While these activities do not directly lead to productivity and efficiency,
planned non-economic activity such as recreation and vacation which help mental
growth can lead to increased productivity and growth.

Non-economic activities do not contribute directly to national income, but they

generate a great amount of satisfaction and promote wellbeing among the people.
Therefore, all the developmental activities in Bhutan are guided by the philosophy
of Gross National Happiness (GNH). GNH seeks to bring about a judicious balance
between the spiritual and the material advancement of people and the country
respectively.

ECONOMIC ACTIVITIES NON- ECONOMIC ACTIVITIES

 Earning motive  Social and psychological

motive
 Contribute to GDP
 Promote overall happiness
 Promote material well-
being  Promote spiritual well-being

Figure 4.1 Differences between Economic and Non-economic activities

24 Reprint 2024
 Chapter 4 Economic and Non-economic Activities

Learning Activity 4.1

1. List down the activities that the members of your family carry out and put
them into two categories as follows:

Non-
Family Economic Time spent Time spent
Economic
Members Activities per day per day
Activities

i) For each family member, calculate the total number of hours for both
economic and non-economic activities.
ii) In which activity do your family members spend more time? What
would be the benefit of spending more time on that particular activity?
2. The activities that are considered economic activities for some people are
non-economic activities for others. Explain.
3. One should consider ethical and moral values while carrying out economic
activities. Discuss.

4.3 Factors Affecting Economic Activities

The types of economic activities in any region or locality depend on a combination
of a variety of factors. Some of these factors are discussed below.
a. Availability of raw materials

Raw materials are the primary need for any kind of economic activities. The kind
of economic activities carried out in an area depend on the types of raw materials
available in that area. For instance, a place is likely to have cement factory if there
are gypsum and limestone available nearby.

b. Infrastructural facilities

Infrastructural facilities, such as electricity, communication, transportation networks,

water supply and banking facilities are important for promoting different economic

Reprint 2024 25
 Economics Class IX

activities. For example, farm roads and electrification widen the base of economic
activities in rural areas.

c. Skilled labour and entrepreneurship

Availability of skilled labour force and entrepreneurs have a significant influence

on the growth of economic activities. A person with entrepreneurial skills creates
new activities and expands the scale of the existing activities. Urban centres usually
experience diverse growth of economic activities because of the availability of skilled
labour and entrepreneurs.

d. Access to technology

Technology is another influential factor to determine the growth of economic

activities. The use of technology increases productivity. Technological advancement
results in inventions and innovations which in turn help in the establishment of
different types of economic activities. For example, the growth of hydroelectricity
in Bhutan is a result of technological advancement. The access to information and
communication technology through widespread use of mobile phones and other
mobile-enabled services are starting to change farming practices in Bhutan.

e. Government policy

Government plays a regulatory as well as a supportive role in economic development.

The establishment of any business venture, its scale and location are determined by
government policies. The government uses different ways to promote or restrict any

Availability of
resources

Infrastructural Access to
facilities Factors technology
affecting
economic
Skilled activities
labour and Government policy
entrepreneurship
Figure 4.2 Factors affecting economic activities

26 Reprint 2024
 Chapter 4 Economic and Non-economic Activities

activity through licensing policy, subsidisation and taxation. For example, to promote
the expansion of modern economic activities in rural areas, the government provides
tax holidays, subsidies and access to cheaper financing.

Learning Activity 4.2

1. What additional factors, other than the ones given in the figure 4.2, determine
economic activities?

2. Can you think of any new economic activity that has been established in your
locality because of the innovation? How has it affected your locality?

3. Discuss the prospects of starting any economic activity in your locality and
prepare a short report describing the possible gains, and challenges you may
face.

4.4 Sectors of the Economy

The economic activities of a country can be broadly classified into three sectors:

a. Primary Sector

This sector includes those economic activities that involve extraction of raw materials.
It consists of activities such as agriculture, mining, forestry, fishing, and other related
activities that depend on nature.

b. Secondary Sector

This sector includes economic activities related to manufacturing of goods such as

construction, power generation, gas production and water supply.

c. Tertiary Sector

This sector includes economic activities which provide services. These services include
transport and communication, banking and insurance, trade and commerce, and
professional and administrative services.

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 Economics Class IX

Economic Sectors

Primary Sector Secondary Sector Tertiary Sector

Trade and
Agriculture Manufacturing
Commerce

Banking and
Mining Construction
Insurance

Transportation
Power
Forestry and
Generation
Communication
Figure 4.3 Type of Economic sectors
4.5 Role of Economic Sectors

The importance of each economic sector of an economy is measured by its relative

contribution to Gross Domestic Product (GDP). All economic sectors contribute to
employment and revenue generation promoting trade and economic growth. The
activities in each of these three sectors are interdependent.

Growing apples
(Primary Sector)
Transportation
of apples
(Tertiary Sector) Manufacturing
apple juice
(Secondary Sector)
Sale of apple juice
(Tertiary Sector)
Figure 4.4 Interdependence of Economic sectors

28 Reprint 2024
 Chapter 4 Economic and Non-economic Activities

a. Role of Primary Sector

The primary sector plays an important role in the economy as it is the base of all
activities for other sectors.

i. Source of raw materials

The primary sector is the source of raw materials to the manufacturing sector. Raw
materials like minerals and agricultural products are essential for the development
of the industrial sector.

ii. Provision of food grains

The primary sector, especially agricultural products, is the source of food grains in
the economy. It promotes self-sufficiency and a healthy living.

Primary Sector (Agriculture, Livestock and Forestry)

In 2017, primary sector growth further declined to 3.39 percent, down by
0.52 percentage points from 3.91 percent in 2016. The sector contributed 0.41
percentage points to the GDP growth in 2017. The lower rate of growth was
due to poor performance in the Forestry sector for past two consecutive years.
Agriculture (Crops) sector continued to be the main driver of the primary sector’s
growth in 2017.The sector recorded growth of 6.33 percent and contributed 3.24
percentage points to the sector’s growth. In nominal terms, the GrossValue Added
(GVA) was recorded at Nu. 28,591.14 million in 2017, as against Nu. 24,825.54
million in 2016 and its share of the economy was 17.37 percent.
(Source: National Accounts Statistics, 2018)

b. Role of Secondary Sector

The secondary sector plays an important role in using the outputs of the primary
sector. It adds value to the output of the primary sector.

i. Supply of goods
The secondary sector processes the raw materials into finished goods. Thus, the
secondary sector supplies a wide range of capital and consumer goods in an economy.

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 Economics Class IX

ii. Provision of infrastructure

The secondary sector supplies infrastructures such as transport, power and capital
goods to foster the growth of other sectors. Availability of infrastructural facilities
enhances productivity and efficiency.

iii. Industrialization

The secondary sector brings about industrialisation in the economy and increases the
nation’s production capacity. The growth of industries leads to large scale production
of goods which are available to the consumers at cheaper rates.

Secondary Sector
The industry sector’s growth decelerated to 2.41 percent in 2017, down by 4.53
percentage points from 6.94 percent in 2016. The sector’s contribution to GDP
growth was 1.05 percentage points. Within the sector, the construction sector
was the main driver of growth although the sector grew by only 6.34 percent as
compared to 13.64 percent in 2016. National Accounts Statistics, 2018 . The total
Gross Value Added was estimated at Nu. 66,786.08 million in 2017, the share
of the secondary sector was 40.57 percent in 2017, down by 0.82% points from
41.39% in 2017.
(Source: National Accounts Statistics, 2018)

c. Role of Tertiary Sector

The tertiary sector plays a significant role in the economic development of the nation.
The activities within the tertiary sector and its relative share in GDP grow faster than
the primary and secondary sectors when the level of economic development increases.

i. Improve living standard

The tertiary sector provides services such as health, education, transport,

communication and trade which help in improving the living standard of the people.

ii. Promote economic interaction

The tertiary sector facilitates interactions between people rather than the production
of goods. It connects the different sectors of the economy and facilitates the flow of
information and goods among the units of an economy.

30 Reprint 2024
 Chapter 4 Economic and Non-economic Activities

iii. Develop human resources

The tertiary sector enhances the capacity of human resources through the provision
of better health facilities, education and training services. It is further supplemented
by other facilities including good network of transport and communication system.

iv. Promote international trade

A well-developed tertiary sector helps to expand trade with other countries. For
example, one of the reasons for the development of tourism industry in Bhutan is
due to the development of services such as hotel services, infrastructure and banking
facilities.

Contribution of Tertiary Sector to Bhutanese Economy

The Service Sector with a share of 42.06 percent to GDP recorded GVA of Nu.
69,250.71 million, in 2017. The share of the sector increased by 0.10 percentage
points from 41.97 percent in 2016. The growth of the sector was 7.15 percent in
2017 as compared to 10.32 percent in the previous year, drop by 3.17 percentage
points. The sector contributed 3.17 percentage points to the GDP growth.
Transport and Finance sectors were the main contributors to the sector’s growth.
(Source: National Accounts Statistics, 2018)

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 Economics Class
ClassIX
IX

Review Questions

According to the National Account Statistics 2018, tertiary sector has the highest
share in GDP with 42.06% in 2017 followed by secondary sector with 40.57%
and primary sector at 17.37%. While the tertiary and primary sectors had a
marginal increase in their shares, the secondary sector recorded a decline in its
share in 2017.

Table 4.1 Percentage share of economic sector to GDP

Year 2013 2014 2015 2016 2017
Primary 16.10 16.69 16.71 16.64 17.37
Secondary 42.35 40.85 41.33 41.39 40.57
Tertiary 41.55 42.46 41.96 41.97 42.06
GDP 100 100 100 100 100
(Source: National Accounts Statistics, 2018)

1. In Table 4.1, it is evident that the percentage share of secondary and tertiary
sectors is more than the primary sector. Why do you think so?

2. Use the information given in Table 4.1 and draw a bar graph to represent
percentage of contribution to GDP of each sector.

3. Identify some of the challenges faced by each of the economic sectors in the
Bhutanese economy and suggest remedial measures for each.

4. What are some of the adverse impacts of economic activities on the

environment? Suggest three measures to address those issues.

32 Reprint 2024
 CHAPTER Demand
and
5 Law of Demand

Learning Objectives

• Discuss the meaning of price

• Discuss factors affecting price
• Define demand and state the law of demand
• Explain factors affecting demand for goods and services
• Construct demand curve based on schedule
• Differentiate between individual and market demand
• Explain the movement along the demand curve
• Explain the shift of demand curve
• Explain price elasticity of demand

5.0 Introduction

The terms desire, wants, and demand are generally confused with one another, but
in economics, all these have different meanings. Demand is a fundamental factor
that drives economic activities and it is one of the most important concepts in the
study of economics.

5.1 Price

Price in general is the amount of money that the consumers pay for purchasing goods
and services. It is expressed in terms of units of exchange. Prices are either determined
by the market forces or regulated by the government.

5.2 Demand

In economics, demand is a desire backed by the willingness and the ability to pay
for a particular commodity. Desire means a wish to have something or to enjoy

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 Economics Class IX

services, without actually acquiring it. Demand for a commodity is the quantity of
a commodity that a consumer is willing and able to purchase at a particular price in
a given period of time.

a. Factors Affecting Demand

i. Price of goods and services

There is an inverse relationship between the price of the commodity and the quantity
demanded. With decrease in price, demand for goods and services will rise and if
the price increases, demand will fall.

ii. Consumers’ tastes and preferences

Consumers’ tastes and preferences for goods and services often change resulting in
change in demand. If consumers’ tastes and preferences are in favour of a commodity,
demand for that commodity will increase and vice versa.

iii. Income of the consumers

Generally, there is a positive relationship between income and demand for a

commodity. As the income of the consumers increases, the demand increases. A
decrease in consumer’s income leads to decrease in demand. This situation applies
only to normal goods.

In case of inferior goods, there is an inverse relationship between income and demand
for a commodity. As the income of the consumer increases, the demand for inferior
goods decreases and vice versa.

iv. Changes in price of related goods

Price of related goods influences demand in two ways depending on the nature of
the commodity. When the price of a particular good decreases, the demand for its
substitute goods falls. Conversely, when the price of particular good increases, the
demand for its substitute goods rises.

In case of complementary goods, when the price of a particular good decreases, the
demand for its compliment goods rises. Conversely, when the price of a particular
good increases, the demand for its compliment goods falls.

34 Reprint 2024
 Chapter 5 Demand and Law of Demand

v. Future price expectation

If consumers expect the price of a particular commodity to increase in the future,

demand for that commodity would rise. On the contrary, if consumers expect the price
of the commodity to decrease in the future, demand for that commodity would fall.

Learning Activity 5.1

Nu.40 for Nu. 60 for

strawberry ice anstrawberry
cream ice cream!

I eat 10 I think I
strawberry should opt
ice cream in a for chocolate
month. icecream!

Figure 5.1 (a) Figure 5.1 (b)

1. Study pictures in Figure 5.1 (a) and (b) and answer the questions:

i) Explain the relationship between price and quantity demanded.

ii) How are strawberry ice cream and chocolate ice-cream related to
each other?
2. Many people consume bread and jam together. As the price of bread rises,
what would happen to the demand for jam? Why?

3. Explore examples of normal and inferior goods for each of the goods
mentioned below.
i) Pen
ii) Gho
iii) Car
iv) Mobile phone
v) Shoes
vi) Laptops

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 Economics Class IX

b. Law of Demand
Law of demand explains the relationship between price of the commodity and
the quantity demanded for the same commodity. The law states that other things
remaining same, demand for a particular commodity increases with the decrease in
price and vice versa. There is an inverse relationship between the price and quantity
demanded. The law can be illustrated with the help of demand schedule and curve.
y D

P
P1
Price

D
x
O Q1
Q
Demand
Figure 5.2 Law of demand
c. Demand Schedule
The tabular representation of the relationship between price and quantity demanded
is called demand schedule.
Table 5.1 Individual Demand Schedule
Price per kg ( Nu.) Quantity Demanded (kg per week)
50 20
100 18
150 16
Table 5.2 Market Demand Schedule
Quantity demanded Quantity demanded
Price per Total market Demand
by Consumer A (kg by consumer B (kg
kg ( Nu) (A+B) (kg per week)
per week) per week)
50 20 16 36
100 18 12 30
150 16 8 24

36 Reprint 2024
 Chapter 5 Demand and Law of Demand

Learning Activity 5.2

‘Individual demand is the quantity of a commodity that a consumer or a

household is willing and able to purchase at a given price during a given
period of time. Whereas market demand is the quantity of a commodity
that all the consumers are willing and able to purchase at a given price
during a given period of time.’

With the help of above statement and Table 5.1 and 5.2, construct the meaning
of individual and market demand schedule.
d. Demand Curve

Demand curve is a graphical representation of the relationship between price of the

commodity and the quantity demanded. A demand curve is derived from a demand
schedule by plotting different points on a graph corresponding to the quantity
demanded and the price on X and Y axis respectively.
y D Demand curve

P
Price

D
x
O Q
Demand
Figure 5.3 Demand curve

Learning Activity 5.3

1. Use Table 5.1 and 5.2 to derive the individual demand curve and the market
demand curve respectively.
2. Study the graph and state the properties of demand curve

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 Economics Class IX

e. Movement along the Demand Curve

Movement along the demand curve is caused by change in price, other factors
remaining constant. In figure 5.4, X-axis represents quantity demanded and Y-axis
represents price of a commodity.
Initially, when the price is OP, the quantity demanded is OQ. When the price falls
from OP to OP2, the quantity demanded increases from OQ to OQ2. This is called
extension of demand.
On the other hand, when the price increases from OP to OP1, the quantity demanded
decreases from OQ to OQ1. This is called contraction of demand.
The movements from point ‘B’ to ‘A’ and ‘B’ to ‘C’ represent the movement along the
demand curve.
y D

Contraction of
A
P1 demand

P B Extension of
Price per unit

demand

P2 C
D
O x
Q1 Q Q2
Quantity demanded
Figure 5.4 Movements along the demand curve

f. Shift in Demand Curve

When demand changes due to change in factors other than price, it is called shift in
demand curve. Rightward shift of demand curve indicates increase in demand and
leftward shift of demand curve indicates decrease in demand.

Shift in demand curve is caused by changes in other factors, such as income of the
consumer, change in population, tastes and preferences of consumers.

38 Reprint 2024
 Chapter 5 Demand and Law of Demand

Initially, when the price is OP the quantity demanded is OQ. Price remaining the
same at OP, the quantity demanded increases from OQ to OQ2. This is called increase
in demand. Similarly, at the same price OP, the quantity demanded decreases from
OQ to OQ1. This is called decrease in demand.

Rightward shift in demand curve from DD to D2D2 is called increase in demand

and leftward shift in demand curve from DD to D1D1 is called decrease in demand.

y D D2
D1

Decrease Increase
P
Price per unit

D1 D D2
O x
Q1 Q Q2
Quantity demanded
Figure 5.5 Shift in demand curve

5.3 Elasticity of Demand

Elasticity of demand shows how quantity demanded changes as a result of change

in its price.

a. Price elasticity of demand

Price elasticity of demand is the degree of responsiveness of quantity demanded of

a commodity to a change in its price.

Price Elasticity qf Demand ^eph =

% change in quantity demanded
% change in its price

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 Economics Class IX

b. Types of Price Elasticity of Demand

i. Elastic Demand
Demand is said to be price elastic when percentage change in quantity demanded is
greater than percentage change in its price.
y D

P
10%
P1

20%
D
Price

O x
Q Q1
Quantity demanded
Figure 5.6 Elastic demand
ii. Inelastic Demand
Demand is said to be price inelastic when percentage change in quantity demanded
is less than percentage change in its price.
y D

20%

P1
Price

10%
O D x
Q Q1
Quantity demanded
Figure 5.7 Inelastic demand
40 Reprint 2024
 Chapter 5 Demand and Law of Demand

iii. Unitary Elastic Demand

Demand is said to be unitary elastic when the percentage change in quantity demanded
is equal to the percentage change in price.
y D

P
10%
P1
Price

10%
D
O x
Q Q1
Quantity demanded
Figure 5.8 Unitary elastic demand
iv. Perfectly Elastic Demand

Demand is said to be perfectly elastic when small or no change in price leads to

infinite change in quantity demanded.
y

P D
Price

O x
Quantity demanded
Figure 5.9 Perfectly elastic demand

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 Economics Class IX

v. Perfectly Inelastic Demand

Demand is said to be perfectly inelastic when there is no change in the quantity

demanded with the change in its price.
y
D
Price

O x
Q
Quantity demanded
Figure 5.10 Perfectly inelastic demand

Learning Activity 5.4

Study the pictures in Figure 5.11 and answer the questions that follow.

ELASTIC DEMAND
Juice
Juice Apple /-
Apple - 0
Nu 50
/ Nu 10 ET
GOOD FORG
PRICE
! IT!

A B

42 Reprint 2024
 Chapter 5 Demand and Law of Demand

INELASTIC DEMAND
MILK
Nu 50/- I STILL
NEEDIT MILK
Nu 100/-

C D
Figure 5.11
1. Which types of the goods have elastic demand:

i) Non-essential or essential goods?

ii) More substitutes or less substitutes?
2. With reference to the above example, find out some more examples of goods
with elastic and inelastic demand.

Goods Goods with

Sl. No with elastic Justification inelastic Justification
demand demand
1.
2.
3.
4.
5.

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 Economics Class IX

Review Questions

1. Explain some of the factors that affect the price.

2. Explain individual and market demand schedules.

3. With the help of suitable examples, explain the factors that influence the
demand for goods and services..

4. According to Population and Housing Census of Bhutan (PHCB) Report 2017,

there is an increase in population and income of consumers. What would be
the impact of this situation on demand? Explain with the help of a diagram.

5. Why is it necessary for the government to regulate prices for some goods and
services?

44 Reprint 2024
 CHAPTER Supply
and
6 Law of Supply

Learning Objectives

• Define supply
• Explain factors affecting supply of goods and services
• State the law of supply
• Differentiate between individual supply and market supply
• Construct a supply curve based on the supply schedule
• Explain price elasticity of supply
• Illustrate and explain determination of equilibrium price of goods and services

6.0 Introduction
Demand and supply are the most important concepts in economics. The interactions
between demand and supply determine the equilibrium market prices. The study of
supply is complementary to the meaningful study of demand.

6.1 Supply
Supply refers to the total quantity of a commodity that a seller is willing to offer
for sale at different prices during particular period. The total quantity of goods and
services that the suppliers are willing to sell at given price is known as quantity
supplied.
a. Factors Affecting Supply
Supply of commodity is determined by various factors. Some of them are discussed below.
i. Price of commodity
Changes in the price of commodity influence producers' decision in production of
commodities. If the price of a commodity increases, producers will produce and

Reprint 2024 45
 Economics Class IX

supply more quantity of commodities, and will supply less if the price decreases.
ii. Change in technology
With the advancement in technology, the cost of producing goods and services will
decrease. Therefore, at the same market price, the producers will produce more and
supply will increase.
iii. Price of inputs
Price of inputs directly influences the supply of goods and services. For instance, if
the price of inputs increases, producers will supply less.

iv. Agreement among producers

Sometimes, supply of commodities is influenced by the agreement among producers
by controlling the supply of commodities to earn more profit.

v. Future price expectations

If producers expect the price of a commodity to rise in future, then they will postpone
the decision of selling at the current price and the supply will fall.

b. Law of Supply

Law of supply explains the relationship between price of the commodity and quantity
supplied. It states that other things remaining same, supply for a particular commodity
increases with the increase in price and vice versa. There is direct relationship between
the price and quantity supplied. This law can be illustrated with the help of supply
schedule and supply curve.
y
S

P
Price

S
O x
Q
Quantity supplied
Figure 6.1 Law of Supply

46 Reprint 2024
 Chapter 6 Supply and Law of Supply

c. Supply Schedule

The tabular representation of the relationship between price and supply is called
supply schedule.

Table 6.1 Individual supply schedule

Price of apple per kg (Nu) Quantity supplied per day (kg)
80 12
120 18
160 24

Table 6.2 Market supply schedule

Quantity Quantity Quantity
Total market
Price per kg supplied supplied supplied
supplied
(Nu) by Firm A by Firm B by Firm C
(kg per week)
(kg per week) (kg per week) (kg per week)
80 50 48 28 126
100 60 58 38 156
120 70 68 48 186

d. Supply Curve

Supply curve is a graphical representation of supply schedule. It is upward sloping

showing the direct relationship between price and quantity supplied.
y S

P1

P
Price

P2

S
O x
Q2 Q Q1
Quantity supplied
Figure 6.2 Supply curve

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 Economics Class IX

X axis represents the quantity supplied and Y-axis shows the price of the commodity.
SS is the supply curve which shows the direct relationship between the price and the
quantity supplied.

Initially, when the price of commodities is at OP, the quantity supplied is OQ. As
the price increases from OP to OP1, the quantity supplied also increases from OQ
to OQ1. When price of commodity decreases from OP to OP2, the quantity supplied
also decrease from OQ to OQ2.

Learning Activity 6.1

Refer Table 6.2 Market supply schedule and answer the following questions.

1. Draw individual supply curve for firm A

2. Derive market supply curve.
3. Explain the meaning of individual supply schedule and market supply
schedule.
4. Study the graph you have drawn and state the properties of supply curve.

e. Movement along the Supply Curve

Movement along the supply curve is caused by change in supply due to change in
price, other factors remaining constant. In Figure 6.3, Y axis represents price and X
axis represents supply.
y S
Extension of
supply
P1
A

P
B
C
Price

P2
Contraction of
supply
S
O x
Q2 Q Q1
Quantity supplied
Figure 6.3 Movements along the supply curve

48 Reprint 2024
 Chapter 6 Supply and Law of Supply

Initially when the price is OP, the quantity supplied is OQ. When the price increases
from OP to OP1, the quantity supplied increases from OQ to OQ1. This is called
extension of supply.

On the other hand, when the price falls from OP to OP2, the quantity supplied
decreases from OQ to OQ2. This is called contraction of supply. These movements
from points A to B, and A to C represent movements along the supply curve.

f. Shifts in Supply Curve

When supply changes due to change in other factors, such as input prices, technology,
and agreement among the producers, it will cause the supply curve to shift. Rightward
shift of supply curve indicates increase in supply and leftward shift of supply curve
indicates decrease in supply.
y S2 S S1

Decrease Increase

P
Price

S1

S2 S
O x
Q2 Q Q1
Quantity supplied
Figure 6.4 Shift in supply curve

As shown in Figure 6.4, when the price is OP, the quantity supplied is OQ. Price
remaining same at OP, the quantity supplied increases from OQ to OQ1. This is called
increase in supply. Similarly, at the same price OP the quantity supplied decreases
from OQ to OQ2. This is called decrease in supply. Rightward or leftward shift of the
supply curve, SS to S1S1 and SS to S2S2, represents shift of the supply curve.

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 Economics Class IX

6.2 Elasticity of Supply

Elasticity of supply shows how the quantity supplied changes in response to the
change in its price.

a. Price elasticity of supply

Price elasticity of supply is the degree of responsiveness of quantity supplied of a

commodity to a change in its price.

Price Elasticity qf Supply ^ESh =

% change in quantity supplied
% change in its price
b. Types of price elasticity of supply

i. Elastic Supply

Supply is said to be elastic when a percentage change in the quantity supplied is greater
than the percentage change in its price.
y

P1
10%
P
Price

S 30%

O x
Q Q1
Quantity Supplied

Figure 6.5 Elastic supply

ii. Inelastic Supply

Supply is said to be inelastic when a percentage change in the quantity supplied is

less than the percentage change in its price.

50 Reprint 2024
 Chapter 6 Supply and Law of Supply

y S

P1

50%

P
Price

S 20%
O x
Q1 Q
Quantity supplied
Figure 6.6 Inelastic supply

iii. Unitary Elastic Supply

Supply is said to be unitarily elastic when percentage change in the quantity supplied
is equal to the percentage change in price.
y
S

P1

10%
P
Price

S 10%
O x
Q Q1
Quantity supplied
Figure 6.7 Unitary elastic supply

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 Economics Class IX

iv. Perfectly Elastic Supply

Supply is perfectly elastic when change in supply is infinite with small or no change
in price.
y

P S
Price

O x

Quantity supplied
Figure 6.8 Perfectly elastic supply

v. Perfectly Inelastic Supply

Supply is perfectly inelastic when there is no change in supply with the change in
its price. y
S
Price

O x
Q
Quantity supplied
Figure 6.9 Perfectly inelastic supply

52 Reprint 2024
 Chapter 6 Supply and Law of Supply

6.3 Determination of Equilibrium Price

The price of the goods and services is determined by the interplay of demand and
supply. The market is said to be in equilibrium when quantity demanded is equal to
quantity supplied. The price at which the quantity demanded is equal to quantity
supplied is called the equilibrium price. Sometimes in the market, quantity supplied
is more than the quantity demanded which leads to excess supply and vice versa.
y D S
Excess supply

P1

P Equilibrium
Price

P2

Excess demand
S D
O x
Q3 Q2 Q Q4 Q1
Quantity
Figure 6.10 Determination of equilibrium price

Learning Activity 6.2

Use Table 6.3 to answer the questions that follow.

Table 6.3
Price (Nu) Quantity Demanded Quantity Supplied
10 60 20
20 50 30
30 40 40
40 30 50
50 20 60
1. Find the equilibrium price and the equilibrium quantity.
2. Discuss the market situations when the price of commodity increases from
Nu 30 to Nu 40, and decreases from Nu 30 to Nu 20.

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Review Questions
1. How would a decrease in input price of a particular commodity influence
the supply of that commodity in a market? Explain with the help of suitable
diagram.

2. Explore some examples of goods in your locality that are price elastic supply
and price inelastic supply. Share your findings to the class.

3. If you were a business person, how would you apply the idea of elasticity
of supply?

4. With the help of a diagram, explain how the equilibrium price is determined.

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Economic
7 System

Learning Objectives
• Define the term economy
• Define economic system
• Identify different economic systems
• Explain the features of each economic system
• Explain the merits and demerits of each economic system

7.0 Introduction

Every economy must answer the three basic questions of what, how and for whom
to produce. Countries solve these basic questions differently based on the economic
system they follow. The study of economic system is about how economic decisions
are made and how interactions take place among different units of the economy.

7.1 What is an economy?

All the economic activities that are carried out in a particular area is referred to
as the economy of that area. Thus, an economy is a system prevailing in an area in
which people produce goods and services. The economy of a particular country is
governed by its culture, laws, history and geography. Economy can be classified into
various categories such as national and global, traditional and modern, closed and
open, developed and developing, capitalist and socialist economy.

The concept of green economy is also gaining its popularity across the globe as
countries prioritise sustainable economic growth. This system operates with the end
goal of cutting carbon emissions, restoring biodiversity, relying on alternative energy
sources and generally preserving the environment.

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7.2 Economic System

An economic system is a set of established mechanism and procedures by which a

society solves its economic problems. It deals with the organizations and methods
used to determine production, consumption, distribution, and exchange of goods
and services in a particular society.

Different economic systems use different methods to solve their basic economic
problems. While some countries follow a socialistic or capitalistic system, others
follow mixed economic system.

7.3 Types of Economic System

There are three main types of economic system.

a. Capitalist Economic System

In capitalist economy, the productive resources are owned by private individuals

who use these resources to earn profits. There is minimum interference from the
government. This system relies on producers and consumers to make decisions about
what, how and for whom to produce. A capitalist economic system is also known as
a free market economy or laissez-faire economy.

Features of Capitalist Economic System

i. Private property
In a capitalist economy, all the factors of production are owned by private individuals.
Every individual can acquire any amount of property and use them as they wish.
Individuals can inherit the property from their forefathers and can also pass it on
to their subsequent heirs.

ii. Profit motive

Profit maximization is the primary motive of a capitalist economy. All the producers
allocate resources to produce goods from which they are able to earn more profit.

iii. Limited role of the government

Government does not interfere in the economic activities and daily functioning of the
economy. However, it can regulate the producers in fulfilling certain social objectives.

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iv. Freedom of choice

In capitalism, every individual is free to make economic choices without any

intervention from the government to both the consumers and the producers.
Producers are free to produce any goods or services and the consumers are free to
buy whatever they desire.

v. Price mechanism

Price mechanism operates based on unobservable market forces which Adam Smith
referred to as ‘invisible hand’ control the functioning of the capitalist economy. The
forces of supply and demand will determine the equilibrium market price and the
level of productions in the economy.

b. Socialist Economic System

Socialist economic system is defined as an economic system in which the means of

production are owned by the entire society and operated by the public authority to
ensure welfare and equal opportunity to the people and society. The government
controls and regulates the entire economic activities.

Features of Socialist Economic System

i. Collective ownership of resources

Government owns all the means of production in the interest of society as a whole.
Therefore, the government aims at efficient utilisation of the country’s resources.

ii. Economic planning

The central planning authority allocates all productive resources according to the
social and economic goals set by it. All the important decisions are taken by the state
in the interest of the entire society.

iii. Social welfare

The motive of carrying out any economic activity is to maximise the interest and
welfare of the entire society. The government emphasises on the need of the people
while formulating plans.

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iv. Economic equalities

A socialist economy aims at equitable distribution of national income. It aims in

providing equal opportunities to all. However, it recognises that some income
differences are essential in view of differences in skill, talent and efficiency of
individuals.

v. Elimination of competition

Competitions among different firms do not exist in the socialist economy. The
government takes the monopoly of producing all the goods and services. Therefore,
a spirit of cooperation and goodwill prevails.

c. Mixed Economic System

Mixed economic system is a system having the features of both capitalist and socialist
economy. This means that individuals, firms and government participate in the
production process and decision making. Capitalism and Socialism are extreme
forms of economic systems that hardly exist. Therefore, a mixed economic system
prevails with different degrees of inclination towards capitalism or socialism.

Features of Mixed Economic System

i. Coexistence of public and private sectors

The public sector makes investments in those fields which are in the interest of the
entire society. The private sector on the other hand, operates with the objective of
earning profits. Public services such as defense, education, health and other basic
amenities are provided by the public sector whereas, production of consumer goods
are undertaken by the private sector.

ii. Economic planning

Economic planning is essential to promote economic development, ensure smooth

functioning of the economy, and coordinate and regulate the operation of economic
sectors.

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iii. Price mechanism and controlled price

In a mixed economic system, both price mechanism and controlled price prevails.
Prices of some commodities are determined by the market forces while prices of
certain essential commodities are controlled by the government.

iv. Regulation of private sectors

Government regulates and controls the operation of private sectors through policies
such as taxation, subsidies and licensing policy.

Capitalistic Socialistic
Economy Economy
Mixed
• Right of inheritance
Economy • Collective ownership
• Coexistence of of resources
• Limited role of the
government public and private
sectors • Economic planning
• Private ownership • Coexistence of price
of resources mechanism and • Social welfare
• Freedom of enterprise controlled price
• Economic equalities
• Economic planning
• Price mechanism • Regulation
and control of • Elimination of
private sectors competition
• Profit motive

Figure 7.1 Comparison among economic systems

Learning Activity 7.1

1. Which economic system would you prefer if you were:

i) an entrepreneur?
ii) a policy maker?
iii) a consumer?
Give reasons for your choice.

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2. Which economic system is appropriate for Bhutan? Why?

3. Discuss the merits and demerits of the three economic systems and present
it to the class.
4. Write the most appropriate answer.

i) A planned economic system promotes ………………….

ii) Price mechanism and ……………..... both prevail in a mixed economy.
iii) One limitation of free market economy is ………………………
iv) The main goal of…………………economy is to promote individual rights.
v) The economic decision in a capitalist economy is taken by …………..

Review Questions

1. Differentiate between capitalist economic system and socialist economic system.

2. Which, according to you, is the best economic system? Give reasons.

3. What are some of the features of the Bhutanese economic system?

4. Capitalist economy creates ‘haves’ and ‘haves not’. Discuss.

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Money
8
Learning Objectives
• Define money
• Explain the historical development of money
• Explain the history of monetary system in Bhutan
• Examine the characteristics of good money
• Explain the functions of money

8.0 Introduction

In the early human civilisation, human wants were limited to those goods and services
that were necessary to sustain life. With the economic growth and development,
human wants increased and thus, led to increasing interdependence on each other. No
one can produce everything that one needs. Therefore, people have to exchange goods
and services among themselves to satisfy their wants. Thus, money was invented to
serve as a medium of exchange.

8.1 Definition of Money

Money, in some forms, has been part of human history for at least 3,000 years. In
ancient times the barter system prevailed. The difficulties of barter system made it
necessary for people to devise some means to overcome the limitations. This led to
the invention and use of money. Since then money has been playing a significant role
in an economy. As a result, money evolved through a number of stages and its nature
has been changing from time to time and from region to region.

According to Geoffrey Crowther, money is anything that is generally accepted as

medium of exchange, and a measure and a store of value.

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8.2 Historical Development of Money

Money in the present form came into existence through a long process of evolution
from commodity money to fiat money and today, in virtual form. The origin of money
carries a long history of social evolution.

Commodity Digital money

money Coins

Currency
notes

STAGE VII
STAGE V
STAGE I STAGE III

STAGE II STAGE IV STAGE VI

Metallic
money

Plastic money
Paper money

Figure 8.1 Evolution of money

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a. Commodity Money

Commodities were the earliest form of

money. Commodities like rice, wheat, shells
and beads were used as money because
many people were willing to accept those in
exchange for their produce. Such exchange
of goods for goods was known as ‘barter
system’. Figure 8.2 Ancient beads

b. Metallic Money

In the earlier times precious metals like

gold, silver and bronze were used as money.
These metals were more durable, divisible,
scarce and valuable than commodity money.
However, the use of precious metals did
not solve the problems of exchange. It was
difficult to measure the value with those
pieces of metals besides the problems of
Figure 8.3 Gold nuggets
bulkiness and storage.

c. Coins

The problems associated with precious metals

were solved through the development of
coins. Precious metals in predetermined
weights were minted as coins. Each of these
coins were stamped by the government often
with the face of a king or queen on one side,
and its value on the other. The popular use of
coins continued till the end of 17th century.

However, the factors such as debasement of

coin with other metals of lower grade, clipping
of coin edge, and especially the intrinsic value
exceeding its face value undermined the role
of coin in an economy. Figure 8.4 Coins

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d. Paper Money

Paper money was discovered by goldsmiths

who were acting as money lenders. These
goldsmiths used to keep the valuables of the
people in the safe rooms and issued receipts
as a proof of the goods stored. These receipts
became convenient credit instruments and
were freely used for borrowing, lending and
making payments. However, the owners of
the paper receipts soon realised that they were
holding worthless papers. This resulted in the
collapse of goldsmith bankers.
Figure 8.5 Paper money
e. Currency Notes

With the collapse of goldsmith banks due to over issuance of paper receipts beyond
their worth, the government took over the role of goldsmiths and started issuing
currency notes. The invention of currency notes greatly facilitated trade and commerce
resulting in economic growth and development. Today the central bank of a country
reserves the sole authority to issue paper notes.

Figure 8.6 Currency notes

f. Plastic Money

Plastic money gained popularity in the form of Credit and Debit cards. With the
invention of such money, it has become more convenient for the people to carry out
economic transactions. Moreover, it has reduced the risk of carrying cash in bulk.

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Figure 8.7 Plastic money

g. Digital Money

The invention of computer and its application has changed the way in which business
is carried out. The concept of e-commerce is gaining popularity. The mode of payment
is being changed from cash to electronic transaction. This form of electronic payment
is referred to as Digital money. Transaction of such money uses technologies such as
smart phone, credit cards and online crypto currency exchanges. In some cases, the
digital money can be transformed into physical cash, for example, by withdrawing
cash from an Automated Teller Machine (ATM).

The evolution of money is never ending process. As economies of the world are
changing their forms and features, money is also changing accordingly to meet the
needs of the changing economies. Globalization and expansion of e-commerce has
given new dimension to modes of payment and has shaped the nature and features
of money.

Figure 8.8 Digital Money

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8.3 Historical Development of Monetary System in Bhutan

Historically, Bhutan started the use of currency notes late. Since time immemorial, the
Bhutanese had used commodities to facilitate exchange. However, due to a broadening
size of market as a result of accessibility and socio-economic development, Bhutan
experienced a series of changes in terms of monetary system.
Barter system prevailed in the country before trade was monetised. In the 18th
century, the first silver coins were introduced mainly for trade with India and Tibet.
Later came alloyed silver, copper and brass coins. Silver coin production continued
even during the reign of the First Druk Gyalpo Ugyen Wangchuck in the 20th century.
Later, in 1928, during the reign of the Second King Druk Gyalpo Jigme Wangchuck,
fine machine-struck silver and copper coins were introduced, marking the beginning
of modern coinage in the country.
In the mid 1950s, during the reign of Third King Druk Gyalpo Jigme Dorji Wangchuck,
trade began to be monetized gradually. In 1968, the Bank of Bhutan was established,
thereby fully monetising the economy.
Coinciding with the coronation of His Majesty the Fourth Druk Gyalpo Jigme Singye
Wangchuck, the monetary reform started in 1974. The Ministry of Finance issued
the first Bhutanese currency note, Ngultrum.
In 1982, the Royal Monetary Authority (RMA) was established to act as the central
bank of the country. Since then, financial and monetary system has been regulated
by the RMA. With the advent of modernisation, the use of plastic money such as
debit and credit cards has become popular. Further, with the increasing popularity of
e-commerce, financial institutions in Bhutan facilitate trade by making it accessible
to consumers through improved communication and internet facilities. Thus the
concept of digital money has been introduced.

(Source: History of currency in Bhutan, Kuensel excerpt, January 28, 2015; Newsletter; Thinley Zangmo)

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Learning Activity 8.1

1. How significant was coinage in ancient Bhutan?

2. State the conveniences and limitations of plastic money.
3. With e-commerce gaining popularity, the digital system is vulnerable to the
risk of online scams. Suggest some ways to protect from such threats.

8.4 Characteristics of Good Money

For money to perform its functions effectively and efficiently, it must possess certain
qualities. The money that possesses these qualities or characteristics is termed as good
money. These characteristics are discussed below.

a. Acceptability:

Money must be acceptable by all as a means of exchange. Anything can be used as

money as long as it is generally acceptable as medium of exchange.

b. Durability:

Good money must be strong and durable. It should withstand a number of exchanges.

c. Portability:

Good money must be easy to carry from one place to another even in bulk. Money
has become portable with the invention of paper and plastic money.

d. Divisibility:

Good money should be divisible. It should be convenient enough for people to give
or receive the exact amount of change after the purchase of good and services.

e. Scarcity:

Scarcity is one of the characteristics of good money. Only if it is scarce, people will
value the money as a commodity that can be used in exchange.

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8.5 Functions of Money

Money has become so important that the modern economy is described as money
economy. Money performs many functions in the modern economy. The most
important functions are given in the form of statement: “Money is a matter of
functions four – a medium, a measure, a standard, a store.”

a. Medium of exchange:

One of the most important functions of money is that it acts as a medium of exchange.
Money is accepted freely in exchange for all goods and services.

b. Measure of value:

Money acts as a common measure of value. It is a unit of account and a standard of

measurement. Whenever we buy a good in the market, we pay a price for it in the
form of money. Price is a value expressed in terms of money. So, the value of a good
is measured by the amount of money paid for it.

c. Store of value:

Money acts as a store of value. A person who wants to store his or her wealth in
some convenient form will find money suitable for that purpose. Suppose one has a
thousand cows, their value can be preserved in the form of money by selling them.

d. Standard of deferred payments:

Money is used as a standard for future payments. Business in modern times is based
on credit to a large extent. Therefore, money acts as the basis for credit transactions
without losing its value.

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Learning Activity 8.2

(c)

(a) (d)
(b)

(f)
(e)
Figure 8.9
1. Which type of money is convenient for regular exchange of goods and
services? Justify.
2. Examine if the Bhutanese currency notes (Ngultrum) possess the characteristics
of good money.
3. Define money in your own words.

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Review Questions

Choose the correct term to fill in each of the blanks.

Globalization, Currency, Debit card, Geoffrey Crowther, Credit card, Cheque

1. ___________ is a document, normally supplied in printed form by a bank,

ordering the bank to transfer funds from the drawer’s current account to a
named payee.

2. ___________ defines money on the basis of its functions such as, medium
of exchange, and measure and as a store of value.

3. ___________ is strictly, that component of a country’s money stock that

literally circulates from hand to hand i.e. coins and bank notes. But the term
is also used in the broader sense of a country’s money.

4. ___________ is the process by which businesses or other organizations

develop international influence or start operating on an international scale.

5. ___________ is a card that allows the holder to transfer money electronically

from his/her bank account when making a purchase.

6. ___________ is a card issued by a bank, building society, etc., allowing the

holder to purchase goods and services on credit.

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Market
9
Learning Objectives
• Explain market
• Distinguish types of market based on geographical boundary and degree of
competition
• Explain features of perfect competition, monopolistic competition, monopoly
and oligopoly markets

9.0 Introduction

Traditionally, a place where purchase and sale of commodities occur is termed as

market. With the advent of technology and growth in economic activities, the nature
and scope of market have changed. Market now has a wider concept and is categorised
into different forms. Thus, this chapter discusses each forms of market and evaluates
which market is the best for an economy.

9.1 Market

Market is a place where goods and services are bought and sold. However, in
economics, market has a much wider concept than just a place. It is a situation in
which buyers and sellers interact to carry out exchange of goods and services. For
anything to be called a market, there should be interactions among buyers and sellers
to make a deal on commodities to be exchanged.

9.2 Types of Market

As discussed above, market has a very wide scope. Market can be classified based on
the geographical location and degree of competition.

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Market

Geographical Degree of
Location Competition

Monopoly
Local Market

National Market Oligopoly

International Market Monopolistic

competition

Perfect competition
Figure 9.1 Types of market
a. Market Based on Geographical Location

On the basis of geographical location, market can be classified into three types:

i. Local Market

It is a situation or a place where exchange of goods and services takes place within
a locality. Fresh and perishable products are mostly sold in local markets. Some of
the examples of commodities available in the local market are cheese, butter, milk,
vegetables and fruits.

ii. National Market

National market is a situation where exchange of goods and services takes place
within the geographical boundary of a country. The sale of bamboo products from
the Kheng region across the country is an example of national market.

iii. International Market

A situation in which exchange of goods and services that takes place between
two or more countries is called international market. For example, commodities

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like electricity, apples and oranges are produced and sold by Bhutan to India and
Bangladesh. Therefore, India and Bangladesh are Bhutan’s international market for
these commodities.

Local Market

Geographical
Location
National International
Market Market

Figure 9.2 Market Category based on Geographical Location

Learning Activity 9.1

1. List down the similarities and differences among local, national and
international markets.
2. Choose the correct response from the following:

i) Bhutan Power Corporation Limited (BPCL) supplying electricity to

India is an example of
A. local market B. national market C. international market

ii) All of the following goods are exchanged in the national market, EXCEPT
A. Hyundai car B. kishuthara C. Cement

iii) Dophu from Pakshikha selling chilli in the Chukha vegetable market
is an example of
A. local market B. national market C. international market

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b. Market based on Degree of Competition

Market can also be classified into different forms based on the degree of competition.
Degree of competition depends on the number of buyers and sellers, nature of
products and capacity of sellers to influence the market demand.

Monopolistic Perfect
Monopoly Oligopoly
competition competition

Figure 9.3 Market based on the Degree of Competition

i. Monopoly

Monopoly market structure is characterized by a single seller, selling unique product

with no close substitutes to large group of buyers. There are barriers for the new firms
to enter the market. Monopolists are called ‘price makers’ as they have the power to
influence the price of the products. As a result, monopoly firms can earn abnormal
or super normal profits.

ii. Oligopoly

Oligopoly is a market structure which is dominated by a few large firms selling either
homogeneous or differentiated products. Intense competition and interdependence
amongst firms prevail in this market. Firms are interdependent on one another since
no single seller can afford to ignore actions and reactions of other firms while making
decisions. They also compete with each other by manipulating both price and volume
of production.

iii. Monopolistic Competition

Monopolistic competition is a market structure where many firms sell differentiated

products which are close substitutes of one another. Goods and services of different
firms are differentiated from one another through various marketing strategies. The
number of buyers and sellers are lesser than the perfect competition but more than
monopoly market. The firms have the freedom to enter and exit the market.

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iv. Perfect Competition

Perfect competition is a market structure where there are large number of buyers and
sellers dealing with homogeneous products. No single buyer or seller can influence
the price of a commodity in such a market. They are therefore, considered as price
takers’. Further, firms have the freedom to enter and exit the market.

Learning Activity 9.2

1. Fill in the table.

Perfect Monopolistic
Features Monopoly Oligopoly
competition competition
Number of sellers
Nature of product
Entry and exit

2. Bhutan Power Corporation Limited (BPCL) charges a higher electricity tariff

for industries and low for domestic consumption in rural areas. Identify the
market structure under which BPCL operates and discuss the possible reasons.
3. Sort out the scrambled words in column A and match with column B.

Column A Column B
POLONOMY ……………….. Differentiated product
YOGILLOPO ………………… Homogeneous product
TOPICOMETIN CREPFET Interaction between buyers and
……………. sellers
NOMOCLOPSITI ……………….. Few sellers
KARMET …………….. Abnormal profit

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Review Questions

1. Differentiate between

i) Perfect competition and monopoly.

ii) Monopolistic competition and oligopoly.

2. Which are the market structures that deal with differentiated products? Explain
how product differentiation is created in the market.

3. Give few examples of differentiated products.

4. Which market structure is most prevalent in reality? Explain.

5. Market has been classified based on the degree of competition. Which market
do you think is more prevalent in Bhutan? Explain which market is better for
the Bhutanese economy.

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Trade
10
Learning Objectives
• Define basic concepts of domestic and international trade
• Give examples of domestic and international trade
• Explain the reasons for trade
• Explain the impact of external and internal trade on the countries
• Discuss the concept of absolute and comparative cost theories
• Mention major trading partners of Bhutan and commodities traded
• Examine e-commerce

10.0 Introduction
All countries across the world are endowed with different resources. However, no
nation has enough resources to meet all its needs, and this has resulted in the exchange
of goods and services with other nations. This chapter explains the need for trade
and its associated impacts. Further, the role of information-technology on trade is
also discussed.

10.1 Meaning of Trade

The term ‘trade’ refers to exchange of goods and services in a market. Trade can be
among individuals, within the country and among different countries.

10.2 Types of Trade

a. Domestic Trade
Domestic trade, also known as internal trade, is the exchange of goods and services
within a country. It can be at local, regional or national levels. Trading of cement
within Bhutan is an example of a domestic trade.

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b. International Trade

International trade or external trade, is the exchange of goods and services between
two or among more countries. Trade between two countries is called bilateral trade,
while trade involving more than two countries is called multilateral trade.

International trade consists of export and import. Import is the flow of goods and
services into a country while export is the flow of goods and services out of a country.
Export of electricity by Bhutan to India and import of petroleum products from India
to Bhutan are examples of international trade.

Learning Activity 10.1

Singapore India South Korea

Nepal

Bangladesh

Germany

Japan
Thailand China
Figure 10.1 Some trading Partners of Bhutan
1. Figure 10.1 shows some of the trading partners of Bhutan in the year 2017.
Find out whether Bhutan still trades with these countries and list down the
major trading partners in the current year.
2. List down some major import and export items of Bhutan.

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Know More

Bhutan’s Trade Journey

In early days, Bhutan followed the policy of self-imposed isolation, but engaged
in active trading with immediate neighbouring states of India and Tibet. With
the initiation of First Five Year Plan in 1961, trade was emphasised as the engine
of economic growth. Thereon, Bhutan began to open its doors for trade to the
rest of the world. In 1972, Bhutan signed first formal bilateral trade agreement
with India, with an objective to establish a free-trade system between the two
countries. Bhutan signed a free trade agreement with India in 1974 and a
Preferential Trading Arrangement with Bangladesh in 1980. Efforts are being
made for greater liberalization and regional trade initiatives within South
Asian Preferential Trade Agreement (SAPTA), SAARC Free Trade Agreement
(SAFTA), and Bay of Bengal Initiative for Multi-sectoral Technical and
Economic Cooperation (BIMSTEC). Bhutan has been constantly negotiating
with the international organisations like World Trade Organisation (WTO),
European Union and Association of Southeast Asian Nations (ASEAN) to
create an enabling environment for trade.

10.3 Impact of Trade

Trade is the driving force of economic development. Some of the positive impacts of
external and internal trade are as follows.

a. Positive Impact of Internal Trade

i. Promote Domestic Industries

Internal trade expands market for domestic goods and services. It encourages
establishment of new domestic industries and expansion of the existing ones to cater
to the increased demand.

ii. Varieties of Domestic Commodities

Internal trade facilitates consumers to consume varieties of commodities produced

domestically in different regions of a country.

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iii. Creates Employment Opportunities

Different regions of a country specialise in the production of different commodities

on a larger scale. Large scale production requires huge resources including human
resources. This leads to creation of employment opportunities in the country.
b. Positive Impact of International Trade
i. Variety of Commodities
International trade enables a country to consume a large variety of commodities.
Without international trade, countries will not be able to get the commodities which
are not produced within their own countries.

ii. Specialisation and Efficiency

Foreign trade allows a country to specialise in the production of those commodities for
which it has more advantages. For instance, Bhutan can specialise in the production
of hydroelectricity because of the availability of the fast-flowing rivers. Specialisation
enables productive use of the available resources which enhances efficiency.

iii. Economic Development

International trade facilitates countries to import resources such as raw materials,
technologies and knowledge which are required for their economic development.
Trading countries can also earn revenue from the export of goods and services.

iv. International Cooperation

International trade promotes mutual cooperation among different countries. It creates
an atmosphere of goodwill, friendship and mutual understanding among the trading
countries.

Learning Activity 10.2

In teams, design posters on the topic ‘Disadvantages of international trade in

Bhutan’. Display your posters for a gallery walk. Observe the posters on display
and answer the following questions.

i) List the disadvantages of international trade you observed from the posters.
ii) Suggest measures to minimise the disadvantages of international trade.

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10.4 Basis of Trade

Individuals, regions or countries generally specialise in producing those goods and

services in which the cost of production is lower and exchange them with goods and
services in which cost of production is higher. It is on the basis of difference in cost
that trade takes place. There are various theories of international trade of which two
are discussed.

a. Theory of Absolute Cost Advantage

Adam Smith propounded the theory of absolute cost advantage. He states that the
fundamental basis of international trade is the difference in cost. According to the
theory, countries should produce and export those goods in which it has absolute
cost advantage and import those goods that a country has absolute cost disadvantage.

Table 10.1 Absolute Cost Advantage

Per unit cost of production (Nu)

Product
Bhutan India

Rice 10 5

Apples 5 10

Assuming that both Bhutan and India allocate same amount of resources to produce
the two products, apples and rice, Bhutan has absolute cost advantage in the production
of apples. In other words, Bhutan can produce apples at a lower cost than India.
Hence, Bhutan should specialise in the production of apples and export it to India,
and import rice from India. On the contrary, India has absolute cost advantage in
the production of rice. Therefore, India should specialise in the production of rice
and export it to Bhutan and import apples from Bhutan.

Although the absolute cost advantage theory is considered as one of the popular trade
theories, critics have pointed out some inherent weaknesses in explaining the two
countries – two commodities trade models. This theory, for instance, fails to explain
the trade situation between the two countries when one has absolute cost advantage
in producing both the commodities. Against this backdrop, comparative cost theory
was developed by David Ricardo.

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 Economics Class IX

b. Theory of Comparative Cost Advantage

Theory of comparative cost advantage was propounded by David Ricardo. The theory
states that a country will specialise in the production of that commodity in which
it has greater comparative cost advantage over another. Ricardo believes that two
countries would trade even if one country has absolute cost advantage in production
of all the commodities and the other country has absolute cost disadvantage.

Table 10.2 Comparative Cost Advantage

Per unit cost of production (Nu)
Product
Bhutan India
Rice 10 18
Apples 2 20

Table 10.2 shows that Bhutan is more efficient in the production of both rice and
apples than India. However, trade can still take place between Bhutan and India.
Bhutan would specialise in production of apples because of the greater comparative
cost advantage. On the other hand, India will specialise in production of rice given
its comparative cost advantage over the production of apples. Thus, Bhutan will
export apples and import rice from India, and India will export rice and import
apples from Bhutan.

Learning Activity 10.3

1. Identify three main commodities that are traded between the region you come
from with another region. How is this trade beneficial to both the regions?

2. List a few goods that Bhutan can produce as import substitutes. Why each of
these goods should be produced in Bhutan.

10.5 E-commerce

E-commerce refers to the exchange of goods and services through electronic means
such as the internet or mobile phone applications. It is a faster, cheaper and convenient
method of exchange than conventional method of business.

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Figure 10.2 E-commerce

Features of E-commerce
i. Faster global reach

E-commerce is primarily carried out with the use of internet which seamlessly stretch
across traditional, cultural and national boundaries and enables world-wide access.
It is much faster than the conventional mode of business.

ii. Rich product information

The information regarding a product such as price, quality, quantity and availability
are accessible in the form of video, audio, pictures, text and links.

iii. Interactivity

The use of technology in business increase interactions among the producers and
consumers. E-commerce replaces the traditional face-to-face interactions.

iv. Cheap and convenient

Customers do not have to travel long distances to reach their desired stores as
e-commerce allows them to visit e-store online anytime anywhere. This makes
business transactions cheaper and convenient for both the customers as well as
producers.

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 Economics Class IX

Learning Activity 10.4

Buyers benefit from more

sellers

Buyers
Sellers

Sellers benefit from more

buyers

Figure 10.3
1. How is the market in Figure 10.3 different from the traditional market?

2. What benefits you would derive, if you use different media to exchange goods
and services?

3. What are the benefits of e-commerce?

4. With the operation of different e-commerce companies, online shopping is

becoming popular across the world. However, it has negative consequences as
well. Discuss some of the negative consequences of e-commerce and suggest
remedial measures.

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 Chapter 10 Trade

Explore yourself

1T D 2 D T 4

3 M P

6T E S

7 B A E

A 8F N N T

D
E

ACROSS DOWN
1. The amount by which the value of a country’s import 2. Sale of products or services abroad.
of goods exceeds their export of goods. 4. The trade theory propounded by
3. Buying or acquiring products or services from abroad. David Ricardo.
6. The amount by which the value of a country’s exports 5. The exchange of goods and
of goods exceeds the country’s imports of goods. services beyond a country’s
7. The trade theory propounded by Adam smith boundary
8. The rate at which one currency will be exchanged for
another.

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 Economics Class IX

Review Questions

1. Discuss why Bhutan imports more rice from India despite having suitable
climatic conditions for paddy cultivation..

2. Examine the impacts of domestic and international trade.

3. What would be the consequences if Bhutan depends too much on

international trade?

4. Should Bhutan explore more trading partners to gain from international trade.
Justify your answer.

5. How will e-commerce benefit you? Explain.

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 CHAPTER
Financial
11 Institutions

Learning Objectives
• Define financial institution
• Differentiate the types of financial institutions
• Discuss the functions of central bank
• Explain the functions of commercial banks
• Explain inflation and its types based on degree of rise in price

11.0 Introduction

The evolution of money and its increasing use in daily business transactions have
given rise to a need for financial institutions. Various banking and non-banking
financial institutions were established over the period for financial regulations, and
financial products and services. This chapter discusses the role of central bank and
financial institutions in Bhutan. In addition, the effects of change in the general price
level in an economy is discussed briefly.

11.1 Financial Institution

A financial institution is an establishment that provides different financial products

and services to its clients. It serves as a link between savers and borrowers by accepting
deposits and providing loans. Financial institutions also perform other financial
activities such as investments, exchange of currencies and transfer of money.

11.2 Types of Financial Institutions in Bhutan

There are two types of financial institutions namely, Banking and Non-Banking
Financial Institutions. Banking financial institutions are those that accept deposits,

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 Economics Class IX

provide loans, manage withdrawals and provide general utility services to its clients.
On the other hand, Non-banking financial institutions are those financial institutions
that do not accept deposits repayable on demand but provide all other forms of
financial services to its clients. Based on these functions, non-banking financial
institutions are considered as both supplementary and competitors to the banking
institutions.

The financial institutions operate under the guidance and regulation of the Central
Bank. The central bank of Bhutan is the Royal Monetary Authority of Bhutan (RMA).

Royal Monetary Authority of Bhutan

(RMA)

Banking Financial Institutions Non- Banking Financial Institutions

1. Accept deposits
1. Risk pooling
2. Provide loans
2. Pension and provident fund
3. Transfer of funds

4. Purchase and sale of

foreign currencies
Figure 11.1 Financial institutions and their functions

a. Commercial Banks

Commercial banks are financial institutions which undertake banking business with
the aim to earn profit. They perform a number of functions and provide numerous
products and services to the government and various sections of the society. Some
of the primary functions of commercial banks are:

i. Accept Deposits

Commercial banks accept deposits from the general public. Deposits are accepted in
various forms at different rates of interest.

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ii. Provide Loans

Providing loans is another primary function of the commercial banks. Banks mobilise
funds of the savers and provide loans to the clients. Loans can be defined as the
amount of money granted to clients at specific rate of interest for a fixed period of
time. In most cases, the borrower must mortgage their assets to avail the loan.

Agriculture Loans Transport Loans

Education Loans Vehicle Loans

Industrial Loans Housing Loans

Figure 11.2 Types of Loans in Bhutan
iii. Transfer of Funds

Banks also facilitate the transfer of funds by means of draft, telephonic and electronic
transfers. Fund transfers can be from place to place, person to person, and institution
to institution.

iv. Purchase and Sale of Foreign Currencies

On authorisation by the central bank, commercial banks deal with foreign exchange.
Commercial banks buy and sell foreign currencies in the country.

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 Economics Class IX

Learning Activity 11.1

1. Visit a nearest bank or any extension banking unit or find information about
the banks to answer the following questions.

i) List names of banking institutions in Bhutan.

ii) What are the products and services provided by these bank?
iii) Explain the different deposit schemes offered by the banks.

2. Generally, people spend heavily on improving their living standards by

purchasing items such as electrical appliances, houses and cars. This leads
to low rate of saving.

i) Is it a good practice? Why?

ii) What are some of the skills required to manage money efficiently?
iii) As an economics student, how would you encourage saving habits of
the people in your locality?

b. Non-Banking Financial Institutions

Non-Banking Financial Institutions (NBFI) are those banks that offer various financial
services to the clients but do not accept demand deposits. NBFIs are considered
supplementary as well as competitors to the commercial banks. Financial services
offered by NBFIs include loans and credit facilities, insurance, pension and money
transfer.
Some distinct functions of NBFIs are mentioned below.
i. Risk Pooling

NBFIs such as insurance companies facilitate economic activities by underwriting

risks associated with death, illness, damage or loss of property. Such risks are
transferred from the clients to insurance companies.

ii. Pension and provident fund

NBFIs like National Pension and Provident Fund (NPPF) provides social securities

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 Chapter 11 Financial Institutions

such as pension and provident fund to its members on retirement, disability and
illness. The benefit is also provided to the nominee(s) in case of death of the member.

Learning Activity 11.2

1. Observe Figure 11.3 and answer the questions that follow:

Motor Insurance Aviation Insurance Pension & Fire Insurance

Provident Fund

Private provident Fund & Workmen Compensation

Gratuity Fund Marine Insurance
Figure 11.3 Insurance and Pension Schemes
i) What are the various insurance schemes provided by the insurance
companies in Bhutan?
ii) Which insurance scheme is most applicable to employees? Why?

2. Tshomo runs a small shop in Bajo town. As the number of consumers increases,
she sees the scope of expanding the business. However, she is confused due
to limited financial resources, inadequate knowledge and the risks involved.

i) Will Tshomo be able to pursue her dreams of expanding her business?

Give reasons.
ii) If you were Tshomo, what would you do to expand the business?
iii) How would people like Tshomo reduce the risk involved in business?
3. Ask your parents or relatives, if they have any insurance policy with insurance
companies. If they have, what are the reasons for insuring? If not, what would
be the implications?

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 Economics Class IX

11.3 The Central Bank of Bhutan

The Royal Monetary Authority of Bhutan (RMA) is the central bank of Bhutan. It was
set up in 1982 under the Royal Monetary Authority Act passed by the 56th session
of the National Assembly of Bhutan. The RMA primarily issues currency, controls
and regulates banking and financial structure of the country.

Figure 11.4 RMA

Functions of RMA
i. Issue of Currency
The RMA has complete control over the issue of banknotes and coins in the country.
While issuing the currency, RMA ensures that inflation in the economy is kept
under control and at the same time, there is sufficient circulation of money within
the country.

ii. Regulation of Financial Institutions

The RMA formulates various financial rules and regulations for the prudent conduct
of all the financial institutions in the country. It fixes maximum and minimum
rates of interest on deposits and loans, determines cash reserve ratio, issues licenses
financial institutions and supervises daily banking activities.

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 Chapter 11 Financial Institutions

iii. Banker to the Government and Commercial Banks

The RMA accepts deposits and provides loans to the government and the commercial
banks at agreed interest rates. It provides ultimate financial help to the government
and the commercial banks during emergencies. For this reason, the RMA is also
called ‘the lender of last resort’.

iv. Promotion of Financial Sector Development

The RMA takes responsibility to establish an effective financial system in the

country. It supports financial transactions necessary for the smooth functioning of
the economy.

11.4 Digital Financial Services

The RMA also provides digital financial services (DFS). DFS provides a range of
affordable, convenient and secure banking services to people in emerging economies.
Digital financial inclusion promotes efficient interconnection among participants in
economic activities.

Categories of Digital Financial Service

Self-Service Self-Assisted

Payments and transfers made Financial transactions availed

through use of own mobile using agent networks especially
phone are called self-service for cash-in and cash-out services
are considered assisted

Figure 11.5 Digital financial services

Digital finance is services delivered through mobile phones, personal computers,

internet or cards linked to a reliable digital payment system that connect individuals

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 Economics Class IX

and businesses to a digitized national payments infrastructure, enabling seamless

transactions across all parties.

Digital finance (fintech) has advantages in financial inclusion in light of its

characteristics such as sharing, convenience, low cost and easy access. Digital financial
inclusion aims at harnessing digital technologies to improve financial inclusion and
has drawn increasing attention of many countries. It enables the unbanked masses
to convert their physical cash into digital or electronic money.

Learning Activity 11.3

1. Explore and write down the different digital financial services available
in Bhutan.

2. “Digital Financial Services aims at harnessing digital technologies to improve

financial inclusion that enables seamless transactions across all parties”. List
some of the advantages and disadvantages of using the services.

11.5 Inflation
Inflation refers to a sustained increase in the general price level of goods and services
over a period of time in an economy. It decreases the purchasing power of money
and increases the cost of living. The excessive demand for goods and services and the
increase in the cost of production are the two main causes of inflation. Additionally,
increase in the volume of money in circulation also leads to inflation.

Types of Inflation

Inflation is categorised into different types based on the degree of increase in price,
time of occurrence and its causes. Depending on the degree of rise in the price,
inflation can be categorized into four types.

i. Creeping Inflation

When the general price in an economy rises at a very slow rate, say between 1 to 3
percent per annum, it is termed as creeping inflation. It is also known as mild inflation
or low inflation.

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 Chapter 11 Financial Institutions

ii. Walking Inflation

If prices rise at a faster rate than creeping, say more than 3 percent but less than 10
percent per annum, it is termed as walking inflation.

iii. Running Inflation

When prices increase between 10 to 20 percent per annum. It is known as running

inflation.

iv. Galloping Inflation or Hyperinflation

A situation when prices rise at an exceptionally high rate, say above 20 percent per
annum, it is called galloping inflation.

Learning Activity 11.4

Find out the current inflation rate of Bhutan and answer the following questions.

1. Which category does Bhutan fall?

2. Discuss the impact of the inflation on

i) consumers
ii) producers
iii) economy

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 Economics Class IX

Review Questions

1. Differentiate between banking and non- banking financial institutions.

2. State the main functions of the following institutions:

i) Bank of Bhutan Ltd.

ii) Royal Insurance Corporation of Bhutan Ltd.
iii) National Pension and Provident Fund

3. RMA is also called as ‘the lender of last resort’. Why?

4. What are the causes of inflation in Bhutan?

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Assessments

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98
Economics

Assessment Matrix

Broad assessment based on Knowledge, Skills and Values and Attitudes (KSA)
Class IX

Assessment Summative
Formative assessment Continuous Summative Assessment
type Assessment

Economic Economic Values & KSA KSA

Domains Knowledge Values & Attitude Knowledge
Skills Skills Attitude Term I Term II

Techniques
Debate, Quiz group work, field trip, Field trip
Field trip, case
Question answer case analysis, peer Class Test and Siminar Observation
analysis Exams Exams
sessions interactions presentation

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Rating scale Pa-
Assessment Checklist & Checklist & anecdotal Paper-pencil Rubrics and Rating scale & Paper-pencil
& anecdotal per-pencil
tools Rating scale notes test check list rubrics test
notes test
Maintain
Maintain Check-
Rating scale Maintain Checklist &
list & anecdotal Chapter-end One Project
& anecdotal anecdotal records for One seminar in Once in a Once in a
Frequency records for class- test for every –assessed at
records for classroom assess- each term term term
room assess- chapter every stages
classroom ment
ment
assessment

T1 = 2.5 T1 = 5 T1 = 2.5
Weighting T1 = 30 T2= 50
T 2= 2.5 T 2= 5 T 2= 2.5
 Assessments

Weighting and period allocation

Weighting Time Period

Chapters
(%) Allocation (min)

Chapter 1- Introduction to Economics 4 144

Chapter 2- Scarcity and Choice 8 288

Chapter 3- Economic Resources and Production 8 288

Chapter 4- Economic and Non-economic Activities 11 396

Chapter 5- Demand and Law of Demand 13 468

Chapter 6- Supply and Law of Supply 15 540

Chapter 7- Economic System 7 252

Chapter 8- Money 7 252

Chapter 9- Market 7 252

Chapter 10- Trade 10 360

Chapter 11- Financial Institutions 10 360

100% 3600

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100
ü
û
•
•
•
•

Key:

Sonam
Sonam

Class:
Class:
Economics

Name
Name

No
Yes

Tshering
Tshering

Criteria
Criteria
All arguments were clearly tied to an

Grading scale:
idea (premise) and organized in a tight,
Class IX

dressed in a way to stay logical fashion

Average = C
comfortable during the entire

Admirable= B
The presenter clearly understood

Inadequate = D
field trip

Outstanding =A
the topic in depth and presented the
demonstrated expected information forcefully and convincingly
behavior during the field trip All information presented in the
without a reminder. debate was clear, accurate and
listened to all of the lesson and thorough
helped to create a good learning Every major point was well supported
environment with several relevant facts, statistics
and/or examples

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Sample rating scale for assessment of debate

respected the time and

expertise of the presenter All counter-arguments were accurate,
relevant and strong
listened attentively and wrote
all the points. Used graphics that explained and

Sample observation check list for assessment of field trip

reinforced text and presentation
asked relevant questions and
listened to the responses.
Presentation finished within allotted
followed all the safety directions time and was well-paced throughout
without needing a reminder.
All statements, body language, and
Teacher’s Comments responses were respectful and were in
appropriate language

Teacher’s Comments
 Assessments

Sample rubric for assessment of project work

Name:........................... Roll no:..................... Class/sec:.......................
Score Total
Criteria
4 3 2 1 Score(28)

Problem and Problem is new, Problem is not new Problem is stated Problem is
meaningful and well but meaningful. but not new and not stated and
hypothesis researched. Hypothesis is clearly so meaningful. Hypothesis is
stated. Hypothesis is not unclear.
Hypothesis is clearly clearly stated.
stated
Background Research is thorough Research is thorough Research is not Research not thor-
research on and specific. but not specific. Most thorough and not ough and ideas are
ideas are explained. not explained.
the hypothesis All the ideas are specific. Few ideas
clearly explained. are explained.
Methodology Procedure and plans Procedure and plans Procedure and A few steps of
are detailed and are detailed but not plans not detailed procedure are listed
sequential. sequential. Most and not sequential. and no concrete
materials are listed. Few materials are plans evident. No
All materials are Ethical issues have listed. Few ethical materials are listed.
listed. Ethical been addressed. issues have been Ethical issues were
issues have been addressed. not addressed.
addressed.
Investigation/ Variables have Variables have been Variables have Missing two or more
Data collection been identified and identified but not somewhat of the variables.
explained. Sample explained. Sample been identified. Sample size is not
size is appropriate size is appropriate. Sample size is not considered. Data
and explained. Data collected from appropriate. Data collected from
Data collected from appropriate number collected from limited number of
appropriate number of sources. reasonable number sources.
of sources. of sources.
Analysis Conclusion is Conclusions are Conclusions are Conclusions are
supported by the supported by the not supported not supported by
data. Explanation data. Not enough by enough data. data. Not enough
is made for how or explanation is Not enough explanation is made
why the hypothesis made for how or explanation for the hypothesis
was supported or why the hypothesis is made for Reflection is not
rejected. Reflection was supported or hypothesis stated.
of what was learned rejected. Reflection Reflection is not
and how it could be of what was learned clear.
made better is made. and how it could be
made better is made.
Format and Correct format Only one aspect of Only two aspects Three or more
editing followed throughout. format is incorrectly of format are aspects of format
Report is free of done. Report incorrectly done. are missing or
errors in grammar, contains a few errors Report contains incorrect. Report
spelling or in grammar, spelling, some errors in contains many
punctuation. and punctuation. grammar, spelling, errors in grammar,
punctuation spelling, and
punctuation.
Bibliography Five or more Three or four One or two No references
references are references are references made.
cited in APA format cited in APA format are cited and
and referenced and referenced referenced
throughout the paper throughout the paper throughout
and presentation. and presentation. the paper and
presentation.

(Name & signature of Subject Teacher)

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 Economics Class IX

Sample anecdotal notes for assessment of group work

Date: Class: Lesson Topic:
Name of student: Observation/comments

1 Contribution
2 Skill input
3 Responsibility
4 Respect for other
5 Cooperation and
collaboration

Question pattern for term examinations

1. Objective type and restricted response items: (50 Marks-compul-

sory questions)
i. MCQ :20 Marks
ii. True-False :5 Marks
iii. Matching :5 Marks
iv. Completion :5 Marks

v. Restricted response : 15 Marks

2. Extended response items : (50 Marks-Answer any five questions)

Extended response : 50 Marks

Total Marks :100 Marks

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