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# Economics Delhi Set 2 2017-2018 CBSE (Arts) Class 12 Question Paper Solution

Economics [Delhi Set 2]
Date: March 2018

[1]1

Which of the following measures of price elasticity shows elastic supply?(Choose the correct alternative)

0

0.5

1.0

1.5

Concept: Measurement of Price Elasticity of Supply - Geometric Method
Chapter: [0.023] Producer Behaviour and Supply
[1]2

Define opportunity cost.

Concept: Concept of Opportunity Cost
Chapter: [0.021] Introduction [0.023] Producer Behaviour and Supply
[1]3

At what level of production is total cost equal to total fixed cost?

Concept: Cost - Total Fixed Cost
Chapter: [0.023] Producer Behaviour and Supply
[1]4

Which of the following does not cause shift of supply curve of a good?
(Choose the correct alternative)
(a) Price of input
(b) Price of the good
(c) Goods and services tax
(d) Subsidy

Concept: Movements Along and Shifts in Supply Curve
Chapter: [0.023] Producer Behaviour and Supply
[3]5

A consumer buys 200 units of a good at a price of Rs 20 per unit. Price elasticity of deamnd is (–) 2. At what price will he be willing to purchase 300 units? Calculate.

Concept: Consumer's Budget
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3]6 | Attempt one of the following
[3]6.1

Explain the central problem of "What is produced and in what quantities.".

Concept: Concept of Production
Chapter: [0.023] Producer Behaviour and Supply
[3]6.2

In what circumstances may the production possibility frontier shift away from the origin? Explain.

Concept: Concept of Production
Chapter: [0.023] Producer Behaviour and Supply
[4]7

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
[4]8 | Attempt one of the following
[4]8.1

Write a budget line equation of a consumer if the two goods purchased by the consumer, Good X and Good Y are priced at Rs 10 and Rs 5 respectively and the consumer's income is Rs 100.

Concept: Consumer's Budget
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]8.2

Define marginal rate of substitution. Explain its behaviour along an indifference curve.

Concept: Marginal Rate of Substitution (MRS)
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]9

Explain the conditions of producer's equilibrium under perfect competition.

Concept: Concept of Producer's Equilibrium
Chapter: [0.023] Producer Behaviour and Supply
[6]10

Draw Average Variable Cost, Average Total Cost ad Marginal Cost curves in a single diagram.

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
Chapter: [0.023] Producer Behaviour and Supply

State the relation between MC curve and AVC and ATC curves.

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
Chapter: [0.023] Producer Behaviour and Supply
[6]11 | Attempt one of the following
[6]11.1

Define price floor. Explain the implications of price floor.

Concept: Price Floor
Chapter: [0.024] Forms of Market and Price Determination
[6]11.2

Market of a good is in equilibrium. If the demand for the good 'decreases'. Explain the chain of effects of this change.

Concept: Market Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]12

A consumer consumes only two goods. Explain consumer's equilibrium with the help of utility analysis.

Concept: Conditions of Consumer's Equilibrium Using Marginal Utility Analysis
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1]13

Define aggregate supply?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[1]14

State the two components of M1 measure of Money Supply.

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

Credit creation by commercial banks is determined by (Choose the correct alternative)

Cash Reserve Ratio (CRR)

Statutory Liquidity Ratio (SLR)

Initial Deposits

All the above

Concept: Money Creation Or Credit Creation by the Commercial Banking System
Chapter: [0.013999999999999999] Money and Banking
[1]16

Give one example of negative externalities.

Concept: A Simple Economy
Chapter: [0.021] Introduction
[3]17

Define investment multiplier.

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

How is investment multiplier related to marginal propensity to consume?

Concept: Investment Multiplier and Its Mechanism
Chapter: [0.011000000000000001] Determination of Income and Employment
[3]18 | Attempt one of the following
[3]18.1

Distinguish between stock and flow variables with suitable examples.

Concept: Basic Concepts - Stocks and Flows
Chapter: [0.012] National Income and Related Aggregates
[3]18.2

What are capital goods?

Concept: Basic Concepts - Capital Goods
Chapter: [0.012] National Income and Related Aggregates

How are capital goods different from consumption goods?

Concept: Basic Concepts - Consumption Goods
Chapter: [0.012] National Income and Related Aggregates
[4]19

What is ex-Ante consumption?

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

Distinguish between autonomous consumption and induced consumption.

Concept: Basic Concepts - Consumption Goods
Chapter: [0.012] National Income and Related Aggregates
[4]20

What is monetary policy?

Concept: Monetary Payments
Chapter: [0.013999999999999999] Money and Banking

State any three instruments of monetary policy.

Concept: Monetary Payments
Chapter: [0.013999999999999999] Money and Banking
[4]21 | Attempt one of the following
[4]21.1

Define full employment in an economy.

Concept: Meaning of Full Employment
Chapter: [0.011000000000000001] Determination of Income and Employment

Discuss the situation when aggregate demand is more than aggregate supply at full employment income level.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[4]21.2

What are two alternative ways of determining equilibrium level of income? How are these related?

Concept: Determination of Market Equilibrium
Chapter: [0.024] Forms of Market and Price Determination
[6]22

Discuss briefly the meaning of Fixed Exchange Rate.

Concept: Systems of Exchange Rates
Chapter: [0.015] Balance of Payments

Discuss briefly the meaning of Flexible Exchange Rate.

Concept: Systems of Exchange Rates
Chapter: [0.015] Balance of Payments

Discuss briefly the meaning of Managed Floating Exchange Rate.

Concept: Systems of Exchange Rates
Chapter: [0.015] Balance of Payments
[6]23 | Attempt one of the following
[6]23.1

What is government budget?

Concept: Meaning of Government Budget
Chapter: [0.016] Government Budget and the Economy

Explain the major components of government budget.

Concept: Types of Budget
Chapter: [0.016] Government Budget and the Economy
[6]23.2

Explain the role of Government budget in allocation of resources.

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

Explain the economic stability as objectives of government budget.

Concept: Objectives of Government Budget
Chapter: [0.016] Government Budget and the Economy
[6]24

Calculate (a) Operating Surplus, and (b) Domestic Income :

 (Rs in crores) (i) Compensation of employees 2,000 (ii) Rent and interest 800 (iii) Indirect taxes 120 (iv) Corporation tax 460 (v) Consumption of fixed capital 100 (vi) Subsidies 20 (vii) Dividend 940 (viii) Undistributed profits 300 (ix) Net factor income to abroad 150 (x) Mixed income 200
Concept: Aggregates Related to National Income - Domestic Income (NDP)
Chapter: [0.012] National Income and Related Aggregates

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