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Economics Delhi Set 1 2010-2011 CBSE (Arts) Class 12 Question Paper Solution

Economics [Delhi Set 1]
Marks: 100Academic Year: 2010-2011
Date: March 2011

[1]1

What is a market economy? 

Concept: Positive and Normative Economics
Chapter: [0.021] Introduction
[1]2

When is a firm called ‘price-taker’?

Concept: Price Ceiling
Chapter: [0.024] Forms of Market and Price Determination
[1]3

Define budget set.

Concept: Consumer's Budget
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1]4

What is meant by ‘increase’ in supply? 

Concept: Supply Curve and Schedule
Chapter: [0.023] Producer Behaviour and Supply
[1]5

Define supply.

Concept: Difference Between Stock and Supply
Chapter: [0.023] Producer Behaviour and Supply
[3]6

Why is Production Possibilities Curve concave? Explain

Concept: Concept of Production
Chapter: [0.023] Producer Behaviour and Supply
[3]7

8 units of a good are demanded at a price of Rs 7 per unit. Price elasticity of demand is (−) 1. How many units will be demanded if the price rises to Rs 8 per unit? Use expenditure approach of price elasticity of demand to answer this question. 

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3]8

Giving examples, explain the meaning of cost in economics. 

Concept: Meaning of Micro and Macro Economics
Chapter: [0.021] Introduction
[3]9

Draw average revenue and marginal revenue curves in a single diagram of a firm which can sell more units of a good only by lowering the price of that good. Explain. 

Concept: Market Equilibrium
Chapter: [0.024] Forms of Market and Price Determination
[3]10 | Attempt any one of the following
[3]10.1

Explain the implication of ‘freedom of entry and exit to the firms’ under perfect competition. 

Concept: Features of Perfect Competition
Chapter: [0.024] Forms of Market and Price Determination
[3]10.2

Explain the implications of the following : Perfect knowledge in perfect competition.

Concept: Features of Perfect Competition
Chapter: [0.024] Forms of Market and Price Determination
[4]11

“A consumer consumes only two goods X and Y”. State and explain the conditions of consumer’s equilibrium with the help of utility analysis.

 

Concept: Marginal Rate of Substitution (MRS)
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]12

Explain how the demand for a good is affected by the prices of its related goods. Give examples. 

Concept: Change in Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
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[4]13 | Attempt any one of the following
[4]13.1

Define ‘Market-supply’. What is the effect on the supply of a good when Government imposes a tax on the production of that good? Explain. 

Concept: Market Supply
Chapter: [0.023] Producer Behaviour and Supply
[4]13.2

What is a supply schedule? What is the effect on the supply of a good when Government gives a subsidy on the production of that good? Explain.

 

 
Concept: Supply Curve and Schedule
Chapter: [0.023] Producer Behaviour and Supply
[6]14

What is meant by producer’s equilibrium? Explain the conditions of producer’s equilibrium through the ‘total revenue and total cost’ approach. Use diagram. 

Concept: Conditions of Consumer's Equilibrium Using Marginal Utility Analysis
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]15

Explain the three properties of the indifference curves.

Concept: Indifference Curve
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]16

Market for a good is in equilibrium. There is an ‘increase’ in demand for this good. Explain the chain of effects of this change. Use diagram. 

Concept: Market Equilibrium
Chapter: [0.024] Forms of Market and Price Determination
[1]17

What is nominal gross domestic product?

Concept: Aggregates Related to National Income - Domestic Income (NDP)
Chapter: [0.012] National Income and Related Aggregates
[1]18

Define flow variables. 

Concept: Basic Concepts - Stocks and Flows
Chapter: [0.012] National Income and Related Aggregates
[1]19

Define cash reserve ratio.

 

 
Concept: Cash Reserve Ratio (CRR)
Chapter: [0.013999999999999999] Money and Banking
[1]20

Define money supply

Concept: Changes in Government Spending Taxes and Money Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[1]21

Define foreign exchange rate.

Concept: Concept of Foreign Exchange Rate
Chapter: [0.015] Balance of Payments
[3]22

State the components of capital account of balance of payments. 

Concept: Concept of Balance of Payments Account
Chapter: [0.015] Balance of Payments
[3]23

Explain how ‘distribution of gross domestic product’ is a limitation in taking gross domestic product as an index of welfare. 

Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.012] National Income and Related Aggregates
[3]24

Given that national income is Rs 80 crore and consumption expenditure Rs 64 crore, find out average propensity of save. When income rises to Rs 100 crore and consumption expenditure to Rs 78 crore, what will be the average propensity to consume and the marginal propensity to consume? 

Concept: Basic Concepts - Consumption Goods
Chapter: [0.012] National Income and Related Aggregates
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[3]25

Explain the relationship between investment multiplier and marginal propensity to consume. 

Concept: Investment Multiplier and Its Mechanism
Chapter: [0.011000000000000001] Determination of Income and Employment
[3]26 | Attempt any one of the following
[3]26.1

When price of a foreign currency rises, its demand falls. Explain why. 

Concept: Concept of Foreign Exchange Rate
Chapter: [0.015] Balance of Payments
[3]26.2

When price of a foreign currency rises, its supply also rises. Explain why.

Concept: Concept of Foreign Exchange Rate
Chapter: [0.015] Balance of Payments
[4]27 | Attempt any one of the following
[4]27.1

Explain the ‘allocation of resources’ objective of Government budget. 

Concept: Objectives of Government Budget
Chapter: [0.016] Government Budget and the Economy
[4]27.2

Explain the ‘redistribution of income’ objective of Government budget.

Concept: Objectives of Government Budget
Chapter: [0.016] Government Budget and the Economy
[4]28

From the following data about a Government budget, find out (a) Revenue deficit, (b) Fiscal deficit and (c) Primary deficit: 

 S. No.

                      Items

 (Rs Arab)

(i)

Capital receipts net of borrowings

95

(ii)

Revenue expenditure

100

(iii)

Interest payments

10

(iv)

Revenue receipts

80

(v)

Capital expenditure

110

Concept: Deficit Budget - Primary Deficit
Chapter: [0.016] Government Budget and the Economy
[4]29 | Attempt any one of the following
[4]29.1

Giving reasons classify the following into intermediate products and final products:

(i) Furniture purchased by a school. 

Concept: A Simple Economy
Chapter: [0.021] Introduction
[4]29.2

Giving reasons classify the following into intermediate products and final products 

Chalks, dusters, etc, purchased by a school. 

Concept: A Simple Economy
Chapter: [0.021] Introduction
[6]30 | Any one of the following
[6]30.1

Explain the role of the following in correcting ‘deficient demand’ in an economy:

(i) Open market operations.

(ii) Bank rate. 

Concept: Demand Schedule
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]30.2

Explain the role of the following in correcting ‘excess demand’ in an economy:

(i) Bank rate.

(ii) Open market operations. 

Concept: Demand Schedule
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
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[6]31

Explain the process of money creation by the commercial banks with the help of a numerical example.

Concept: Commercial Banks
Chapter: [0.013999999999999999] Money and Banking
[6]32

Calculate National Income and Gross National Disposable Income from the following: 

S. No.

Items

(Rs crore)

(i)

Net current transfers to the rest of the world

(–) 5

(ii)

Private final consumption expenditure

500

(iii)

Consumption of fixed capital

20

(iv)

Net factor income to abroad

(–) 10

(v)

Government final consumption expenditure

200

(vi)

Net indirect tax

100

(vii)

Net domestic fixed capital formation

120

(viii)

Net imports

30

(ix)

Change in stocks

(–) 20

 

Concept: Aggregates Related to National Income - Personal Disposable Income
Chapter: [0.012] National Income and Related Aggregates
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