# Economics Delhi Set 1 2015-2016 Commerce (English Medium) Class 12 Question Paper Solution

Economics [Delhi Set 1]
Date & Time: 31st March 2016, 11:00 am
Duration: 3h

[1] 1

What is the relation between marginal cost and average variable cost when marginal cost is rising and average variable cost is falling?

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
Chapter: [0.03] Producer Behaviour and Supply
[1] 2

Suppose total revenue is rising at a constant rate as more units of a commodity are sold, marginal revenue would be:

(a) Greater than average revenue

(b) Equal to average revenue

(c) Less than average revenue

(d) Rising

Concept: Total, Average and Marginal Revenue
Chapter: [0.03] Producer Behaviour and Supply
[1] 3

When does ‘increase’ in demand take place?

Concept: Demand Curve and Its Slope
Chapter: [0.02] Consumer Equilibrium and Demand
[1] 4

Homogenous product’ is a characteristic of : (choose the correct alternative)

(a) Perfect competition only

(b) Perfect oligopoly only

(c) Both (a) and (b)

(d) None of the above

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

There is inverse relation between price and demand for the product of a firm under:

(choose the correct alternative)

(a) Monopoly only

(b) Monopolistic competition only

(c) Both under monopoly and monopolistic competition

(d) Perfect competition only

Concept: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination
[3] 6

A Consumer consumes only two goods X and Y. Marginal utilities of X and Y is 4 and 5 respectively. The prices of X and Y are Rs 4 per unit and Rs 5 per unit respectively. Is the consumer in equilibrium? What will be the further reaction of the consumer? Explain.

Concept: Consumer's Equilibrium
Chapter: [0.02] Consumer Equilibrium and Demand
[3] 7

Price elasticity of demand of goods X is -2 and goods Y is -3. Which of the two goods is more price elastic and why?

Concept: Elasticity of Demand
Chapter: [0.02] Consumer Equilibrium and Demand
[3] 8 | Attempt any one
[3] 8.1

What is maximum price ceiling? Explain its implications.

Concept: Price Ceiling
Chapter: [0.04] Forms of Market and Price Determination
[3] 8.2

Explain the chain effects, if the prevailing market price is below the equilibrium price.

Concept: Equilibrium Price
Chapter: [0.04] Forms of Market and Price Determination
[4] 9

Explain the effect of change in prices of the related goods on demand for the given good.

Concept: Demand Curve and Its Slope
Chapter: [0.02] Consumer Equilibrium and Demand
[4] 10 | Attempt any one
[4] 10.1

Define production function.

Concept: Production Function
Chapter: [0.03] Producer Behaviour and Supply

Distinguish between short run and long run production functions

Concept: Production Function
Chapter: [0.03] Producer Behaviour and Supply
[4] 10.2

Define cost.

Concept: Cost - Fixed Cost
Chapter: [0.03] Producer Behaviour and Supply

Distinguish between fixed and variable costs. Give one example of each.

Concept: Basic Concepts of Cost
Chapter: [0.03] Producer Behaviour and Supply
[4] 11

A producer supplies 80 units of a good at a price of Rs 10 per unit. Price elasticity of supply is 4. How much will he supply at Rs 9 per unit?

Concept: Concept of Supply - Supply Schedule and Supply Curve
Chapter: [0.03] Producer Behaviour and Supply
[6] 12

Assuming that no resource is equally efficient in production of all goods, name the curve which shows production potential of the economy. Explain, giving reasons, its properties.

Concept: Concepts of Production Possibility Frontier
Chapter: [0.01] Introduction
[6] 13

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

Concept: Indifference Curve
Chapter: [0.02] Consumer Equilibrium and Demand
[6] 14

Explain the distinction between “change in quantity supplied’ and “change in supply”. Use diagram.

Concept: Supply Curve and Schedule
Chapter: [0.03] Producer Behaviour and Supply
[6] 15 | Attempt any ONE
[6] 15.1

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

Concept: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination

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

Freedom of entry and exit to firms

Concept: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination
[6] 15.2

Explain the implications of the following in an oligopoly market:

Inter- dependence between firms

Concept: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination

Explain the implications of the following in an oligopoly market:

Non-price competition

Concept: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination
[1] 16

Define stocks.

Concept: Basic Concepts - Stocks and Flows
Chapter: [0.02] National Income and Related Aggregates
[1] 17 | chose the correct alternative

Depreciation of fixed capital assets refers to :

(a) Normal wear and tear

(b) Foreseen obsolescence

(c) Normal wear and tear and foreseen obsolescence

(d) Unforeseen obsolescence.

Concept: Depreciation
Chapter: [0.02] National Income and Related Aggregates
[1] 18

What is revenue expenditure?

Concept: Classification of Expenditure
Chapter: [0.05] Government Budget and the Economy
[1] 19 | choose the correct alternative

Fiscal deficit equals :

(a) Interest payments

(b) Borrowings

(c) Interest payments less borrowing

(d) Borrowing less interest payments

Concept: Measures of Government Deficit Or Surpluses
Chapter: [0.05] Government Budget and the Economy
[1] 20 | choose the correct alternative

Foreign exchange transactions dependent on other foreign exchange transactions are called ______.

Current account transactions

Capital account transactions

Autonomous transactions

Accommodating transactions

Concept: Concept of Foreign Exchange Rate
Chapter: [0.06] Balance of Payments
[3] 21

Find net value added at factor cost:

(Rs lakh)

(i) Durable use producer goods with a life span of 10 years       10

(ii) Single use producer goods                                                  5

iii) Sale                                                                                 20

(iv) Unsold output produced during the year                              2

(v) Taxes on production                                                           1

Concept: Methods of Calculating National Income - Value Added Or Product Method
Chapter: [0.02] National Income and Related Aggregates
[3] 22 | Attempt any ONE
[3] 22.1

Distinguish between marginal propensity to consume and average propensity to consume. Give a numerical example.

Concept: Consumption Function and Propensity to Save
Chapter: [0.04] Determination of Income and Employment
[3] 22.2

Explain the role of taxation in reducing excess demand.

Concept: Problems of Excess Demand and Deficient Demand
Chapter: [0.04] Determination of Income and Employment
[3] 23

In an economy investment is increased by Rs. 300 crore. If marginal propensity to consume is 2/3, calculate increase in national income.

Concept: Consumption Function and Propensity to Save
Chapter: [0.04] Determination of Income and Employment
[4] 24

Government insure expenditure to popularize yoga among the masses. Analyses its impact on gross domestic product and welfare of the people.

Concept: Methods of Measurement of National Income - Expenditure Method
Chapter: [0.02] National Income and Related Aggregates
[4] 25 | Attempt any ONE
[4] 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
[4] 25.2

Explain the ‘unit of accounts’ function of money. How has it solved the related problem created by barter?

Concept: Function of Money - Primary Function
Chapter: [0.03] Money and Banking
[4] 26

Explain how open market operations are helpful in controlling credit creation.

Concept: Central Bank Function - Controller of Credit
Chapter: [0.03] Money and Banking
[6] 27 | Attempt any ONE
[6] 27.1

What is government budget?

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

Explain how taxes and subsides can be used to influence allocation of resources.

Concept: Government Budget - Allocation of Resources
Chapter: [0.05] Government Budget and the Economy
[6] 27.2

Explain how government budget can used to bring in price stability in the economy.

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

What are revenue receipts in a government budget?

Concept: Classification of Receipts
Chapter: [0.05] Government Budget and the Economy
[6] 28

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] 29

(a) In which sub-account and on which side of balance of payments account will foreign investments in India be recorded? Given reasons.

(b)What will be the effect of foreign investments in India on exchange rate? Explain.

Concept: Concept of Foreign Exchange Rate
Chapter: [0.06] Balance of Payments
[6] 30

Find national income and private income:

(Rs crore)

(i) Wages and salaries                                                                               1,000

(ii) Net current transfer to abroad                                                                   20

(iii) Net factor income paid to abroad                                                              10

(iv) Profit                                                                                                    400

(v) National debt interest                                                                              120

(vi) Social security contributions by employers                                               100

(vii) Current transfers from government                                                         60

(viii) National income accruing to government                                                150

(ix) Rent                                                                                                     200

(x) Interest                                                                                                 300

(xi) Royalty                                                                                                  50

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

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