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Economics All India Set 1 2017-2018 CBSE (Commerce) Class 12 Question Paper Solution

Economics [All India Set 1]
Date: March 2018

[1]1

State one example of positive economics.

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

Define fixed cost. Give an example.

Concept: Cost - Fixed Cost
Chapter: [0.023] Producer Behaviour and Supply
[1]3

When the Average Product (AP) is maximum, the Marginal Product (MP) is: (Choose the correct alternative)

(a) Equal to AP

(b) Less than AP

(c) More than AP

(d) Can be any one of the above

Concept: Average and Marginal Physical Products
Chapter: [0.023] Producer Behaviour and Supply
[1]4

When the total fixed cost of producing 100 units is Rs 30and the average variable cost Rs 3, total cost is : (Choose the correct alternative)

(a) Rs 3

(b) Rs 30

(c) Rs 270

(d) Rs 330

Concept: Basic Concepts of Cost
Chapter: [0.023] Producer Behaviour and Supply
[3]5 | Attempt one of the following
[3]5.1

Explain the central problem for whom to produce.

Concept: Central Problems of an Economy
Chapter: [0.021] Introduction
[3]5.2

Explain the central problem of "choice of technique".

Concept: Concept of Production
Chapter: [0.023] Producer Behaviour and Supply
[3]6

What is meant by inelastic demand?

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand

Compare inelastic demand with perfectly inelastic demand.

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]7 | Attempt one of the following
[4]7.1

Given the price of a good, how does a consumer decide as to how much of the good to buy?

Concept: Consumer'S Equilibrium
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]7.2

Define an indifference curve.

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

Explain the three properties of the indifference curves.

Concept: Indifference Curve
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]8

When the price of a commodity changes from Rs 4 per unit to Rs 5 per unit, its market supply rises from 100 units to 120 units. Calculate the price elasticity of supply. Is supply elastic? Given reason

Concept: Concept of Supply
Chapter: [0.023] Producer Behaviour and Supply
[4]9

What is meant by price ceiling? Explain its implications.

Concept: Price Ceiling
Chapter: [0.024] Forms of Market and Price Determination
[6]10

Explain the conditions of consumer’s equilibrium using indifference curve analysis.

Concept: Indifference Curve
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]11

Explain the conditions of a producer's equilibrium in terms of marginal cost and marginal revenue. Use diagram.

Concept: Concept of Producer's Equilibrium
Chapter: [0.023] Producer Behaviour and Supply
[6]12 | Attempt one of the following
[6]12.1

Features of Monopolistic Competition.

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination

Which of the characteristics separates it from perfect competition and why?

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[6]12.2 | Explain the implications of the following :
[3]12.2.1

Explain the implications of the following in a perfectly competitive market:

Freedom of entry and exit to firms

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[3]12.2.2

Explain the implications of the following in an oligopoly market:

Non-price competition

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[1]13

Which of the following affects national income? (Choose the correct alternative)

(a) Goods and Service tax

(b) Corporation tax

(c) Subsidies

(d) None of the above

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
[1]14

Define money supply

Concept: Changes in Government Spending Taxes and Money Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[1]15

The central bank can increase availability of credit by: (Choose the correct alternative)

(a) Raising repo rate

(b) Raising reverse repo rate

(d) Selling government securities

Concept: Definition - Central Bank
Chapter: [0.013999999999999999] Money and Banking
[1]16

Why does consumption curve not start from the origin?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[3]17 | Attempt one of the following
[3]17.1

Which among the following are final goods and which are intermediate goods? Give reasons.

1) Milk purchased by a tea stall

2) Bus purchased by a school

3) Juice purchased by a student from the school canteen

Concept: Basic Concepts - Final Goods
Chapter: [0.012] National Income and Related Aggregates
[3]17.2

Given normal income, how can we find real income? Explain.

Concept: Methods of Calculating National Income - Income Method
Chapter: [0.012] National Income and Related Aggregates
[3]18

Define multiplier

Concept: Investment Multiplier and Its Mechanism
Chapter: [0.011000000000000001] Determination of Income and Employment

What is the relation between marginal propensity to consume and multiplier?

Concept: Investment Multiplier and Its Mechanism
Chapter: [0.011000000000000001] Determination of Income and Employment

Calculate the marginal propensity to consume if the value of multiplier.

Concept: Investment Multiplier and Its Mechanism
Chapter: [0.011000000000000001] Determination of Income and Employment
[4]19

Explain the role of the Reserve Bank of India as the “lender of last resort”.

Concept: Definition - Central Bank
Chapter: [0.013999999999999999] Money and Banking
[4]20 | Attempt one of the following
[4]20.1

What is meant by inflationary gap?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment

State three measures to reduce inflationary gap.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[4]20.2

What is aggregate demand?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment

State components of Aggregate demand ?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[4]21

The value of marginal propensity to consume is 0.6 and initial income in the economy is Rs 100 crores. Prepare a schedule showing Income, Consumption and Saving. Also show the equilibrium level of income by assuming autonomous investment of Rs 80 crores.

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
[6]22 | Attempt one of the following
[6]22.1 | Explain the meaning of the following
[2]22.1.1

Explain 'Revenue Deficit in a Government budget? What does it indicate?

Concept: Measures of Government Deficit Or Surpluses
Chapter: [0.016] Government Budget and the Economy
[2]22.1.2

Define fiscal deficit

Concept: Measures of Government Deficit Or Surpluses
Chapter: [0.016] Government Budget and the Economy
[2]22.1.3

What is primary deficit?

Concept: Deficit Budget - Primary Deficit
Chapter: [0.016] Government Budget and the Economy
[6]22.2 | Explain the following objectives of government budget:
[3]22.2.1

Explain the role of Government budget in allocation of resources.

Concept: Government Budget - Allocation of Resources
Chapter: [0.016] Government Budget and the Economy
[3]22.2.2

Explain the following objective of government budget:

Reducing income inequalities

Concept: Changes in Government Spending Taxes and Money Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[6]23

Explain the impact of rise in exchange rate on national income.

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates

Explain the concept of 'deficit' in balance of payments.

Concept: Concept of Balance of Payments Account
Chapter: [0.015] Balance of Payments
[6]24

Calculation (a) Net National Product at market price, and (b) Gross Domestic Product at factor cost:

 (Rs in crores) 1 Rent and Interest 6000 2 Wages and Salaries 1800 3 Undistributed Profit 400 4 Net indirect taxes 100 5 Subsidies 20 6 Corporation tax 120 7 Net factor income to abroad 70 8 Dividends 80 9 Consumption of fixed capital 50 10 Social security contribution by employers 200 11 Mixed income 1000

Concept: Aggregates Related to National Income - Net National Product (NNP)
Chapter: [0.012] National Income and Related Aggregates

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