# Economics Delhi Set 3 2013-2014 Commerce (English Medium) Class 12 Question Paper Solution

Economics [Delhi Set 3]
Marks: 100 Academic Year: 2013-2014
Date: March 2014

[1] 1

Define marginal revenue.

Concept: Total, Average and Marginal Revenue
Chapter: [0.03] Producer Behaviour and Supply
[1] 2

Unemployment is reduced due to the measures were taken by the government. State its economic value in the context of production possibilities frontier.

Concept: Unemployment
Chapter: [0.04] Determination of Income and Employment [0.07] Employment: Growth, Informalisation and Other Issues
[1] 3

Give the meaning of returns to a factor.

Concept: Returns to a Factor
Chapter: [0.03] Producer Behaviour and Supply
[1] 4

What is perfect oligopoly?

Concept: Market Forms - Perfect Oligopoly
Chapter: [0.04] Forms of Market and Price Determination
[1] 5

Define indifference map.

Concept: Indifference Curve
Chapter: [0.02] Consumer Equilibrium and Demand
[3] 6

What is the behaviour of average fixed cost as output is increased? Why is it so?

Concept: Cost - Average Fixed Cost
Chapter: [0.03] Producer Behaviour and Supply
[3] 7 | Attempt Any One
[3] 7.1

State the relation between marginal revenue and average revenue.

Concept: Total, Average and Marginal Revenue
Chapter: [0.03] Producer Behaviour and Supply
[3] 7.2

State the relation between total cost and marginal cost.

Concept: Total, Average and Marginal Cost
Chapter: [0.03] Producer Behaviour and Supply
[3] 8

Answer the following question.
Why are the firms said to be interdependent in an oligopoly market? Explain.

Concept: Features of Oligopoly
Chapter: [0.04] Forms of Market and Price Determination
[3] 9

Answer the following question.
Explain the central problem for whom to produce.

Concept: Central Problems of an Economy
Chapter: [0.01] Introduction
[3] 10

A consumer buys 30 units of a good at a price of the Rs10per unit. The price elasticity of demand for the good is (-) 1. How many units will the consumer buy at a price of Rs 9 per unit? Calculate.

Concept: Elasticity of Demand
Chapter: [0.02] Consumer Equilibrium and Demand
[4] 11

Given the meaning of market demand.

Concept: Market Demand
Chapter: [0.02] Consumer Equilibrium and Demand

Name the factors determining market demand

Concept: Market Demand
Chapter: [0.02] Consumer Equilibrium and Demand
[4] 12

State the behaviour of marginal product in the law of variable proportions. Explain the causes of this behaviour

Concept: Law of Variable Proportions
Chapter: [0.03] Producer Behaviour and Supply
[4] 13 | Attempt Any One
[4] 13.1

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: [0.02] Consumer Equilibrium and Demand
[4] 13.2

A consumer consumes only two goods A and B and is in equilibrium. Show that when price of good B falls, demand for B rises. Answer this question with the help of utility analysis

Concept: Consumer's Equilibrium
Chapter: [0.02] Consumer Equilibrium and Demand
[6] 14

From the following information about a firm, find the firms equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also find profit at this output

 Output (units) Total Revenue (Rs) Total Cost (Rs) 1 7 8 2 14 15 3 21 21 4 28 28 5 35 36

Concept: Concept of Producer's Equilibrium
Chapter: [0.03] Producer Behaviour and Supply
[6] 15

Market of a commodity is in equilibrium. Demand for the commodity "increases." Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram.

Concept: Demand Curve and Its Slope
Chapter: [0.02] Consumer Equilibrium and Demand
[6] 16 | Attempt Any One
[6] 16.1

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

Concept: Indifference Curve
Chapter: [0.02] Consumer Equilibrium and Demand
[6] 16.2

Explain the three properties of the indifference curves.

Concept: Indifference Curve
Chapter: [0.02] Consumer Equilibrium and Demand
[1] 17

Define aggregate supply?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.04] Determination of Income and Employment
[1] 18

What is government budget?

Concept: Meaning of Government Budget
Chapter: [0.05] Government Budget and the Economy
[1] 19

What is 'devaluation'?

Concept: Concept of Foreign Exchange Rate
Chapter: [0.06] Balance of Payments
[1] 20

What are demand deposits?

Concept: Currency Held by the Public and Net Demand Deposits Held by Commercial Banks
Chapter: [0.03] Money and Banking
[1] 21

Define marginal propensity to consume

Concept: Consumption Function and Propensity to Save
Chapter: [0.04] Determination of Income and Employment
[3] 22

Is the following revenue expenditure or capital expenditure in the context of government budget? Give reason.

Expenditure on a collection of taxes.

Concept: Classification of Expenditure
Chapter: [0.05] Government Budget and the Economy

Is the following revenue expenditure or capital expenditure in the context of government budget? Give reason.

Expenditure on purchasing computers

Concept: Classification of Expenditure
Chapter: [0.05] Government Budget and the Economy
[3] 23

How does giving incentives for the exports influence foreign exchange rate? Explain

Concept: Concept of Foreign Exchange Rate
Chapter: [0.06] Balance of Payments
[3] 24

Define externalities. Give an example of negative externality. What is its impact on welfare?

Concept: GDP and Welfare
Chapter: [0.02] National Income and Related Aggregates
[3] 25 | Attempt Any One
[3] 25.1

Explain the ‘store of value’ function of money. How has solved the related problem created by barter?

Concept: Money - Store of Value
Chapter: [0.03] Money and Banking
[3] 25.2

Explain the significance of 'medium of exchange' function of money

Concept: Function of Money - Primary Function
Chapter: [0.03] Money and Banking
[3] 26

Explain the meaning of balance of payments deficit.

Concept: Balance of Payments Deficit Meaning
Chapter: [0.06] Balance of Payments
[4] 27

Calculate investment expenditure from the following data about an economy which is in equilibrium:
National income = 1500
Autonomous consumption expenditure = 300
Investment expenditure = 300

Concept: Concept of National Income
Chapter: [0.02] National Income and Related Aggregates
[4] 28

Government raises its expenditure on producing public goods. Which economic value does it reflect? Explain.

Concept: Objectives of Government Budget
Chapter: [0.05] Government Budget and the Economy
[4] 29 | Attempt Any One
[4] 29.1

Define money supply

Concept: Changes in Government Spending Taxes and Money Supply
Chapter: [0.04] Determination of Income and Employment

Explain money supply components.

Concept: Changes in Government Spending Taxes and Money Supply
Chapter: [0.04] Determination of Income and Employment
[4] 29.2

Answer the following question.
Explain the 'lender of last resort' function of central bank.

Concept: Central Bank Function - Banker's Bank
Chapter: [0.03] Money and Banking
[6] 30

Giving reason explain how should the following be treated in estimating gross domestic product at market price?

Fees to a mechanic paid by a firm.

Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.02] National Income and Related Aggregates

Giving reason explain how should the following be treated in estimating gross domestic product at market price?

Interest paid by an individual on a car loan taken from a bank.

Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.02] National Income and Related Aggregates

Giving reason explain how should the following be treated in estimating gross domestic product at market price?

Expenditure on purchasing a car for use by a firm.

Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.02] National Income and Related Aggregates
[6] 31 | Attempt Any One
[6] 31.1

Explain national income equilibrium through aggregate demand and aggregate supply. Use diagram. Also explain the changes that take place in an economy when the economy is not in equilibrium

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.04] Determination of Income and Employment
[6] 31.2

Given consumption curve, derive saving curve and state the steps taken in the process of derivation. Use Diagram.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.04] Determination of Income and Employment
[6] 32

Calculate national income and gross national disposable income from the following:

 (Rs Arab) 1 Net current transfers to abroad 5 2 Government final consumption expenditure 100 3 Net indirect tax 80 4 Private final consumption expenditure 300 5 Consumption of fixed capital 20 6 Gross domestic fixed capital formation 50 7 Net imports (-)10 8 Closing stock 25 9 Opening stock 25 10 Net factor income to abroad 10
Concept: Concept of National Income
Chapter: [0.02] National Income and Related Aggregates

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