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Economics Foreign Set 1 2015-2016 CBSE (Arts) Class 12 Question Paper Solution

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Economics [Foreign Set 1]
Marks: 100Academic Year: 2015-2016
Date & Time: 31st March 2016, 11:00 am
Duration: 3h

[1]1

A producer borrows money to run a business but manages the business himself. Identify implicit cost.

Concept: Basic Concepts of Cost
Chapter: [0.023] Producer Behaviour and Supply
[1]2

A firm is able to sell more quantity of a good only by lowering the price. The firm’s marginal revenue, as he goes on selling, would be :(Choose the correct alternative)

a. Greater than average revenue

b. Less than average revenue

c. Equal to average revenue

d. Zero

Concept: Total, Average and Marginal Revenue
Chapter: [0.023] Producer Behaviour and Supply
[1]3

When does ‘decrease’ in demand take place?

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

‘A few big sellers’ is a characteristics of : (choose the correct alternative)

a. Perfect competition

b. Monopolistic competition

c. Oligopoly

d. None of the above

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[1]5

Marginal revenue of a firm is constant throughout under : (choose the correct alternative)

a. Perfect competition

b. Monopolistic competition

c. Oligopoly

d. All the above

Concept: Total, Average and Marginal Revenue
Chapter: [0.023] Producer Behaviour and Supply
[3]6

consumer consumes only two goods X and Y. The Marginal Rate of Substitution is 1. Prices of X and Y are Rs 3 and Rs 4 per unit respectively. Is the consumer in equilibrium? What will be further reaction of the consumer? Give reason.

Concept: Marginal Rate of Substitution (MRS)
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3]7

Price elasticity of demand for the two goods X and Y are zero and (–) 1 respectively. Which of the two is more elastic and why?

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3]8 | Attempt any ONE
[3]8.1

What is minimum price ceiling? Explain its implications.

Concept: Price Ceiling
Chapter: [0.024] Forms of Market and Price Determination
[3]8.2

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: [0.022000000000000002] Consumer Equilibrium and Demand
[4]9

What happens to the demand of a good when consumer's income changes? Explain

Concept: Determinants of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]10 | Attempt any ONE
[4]10.1

What type of production function is this in which only one input is increased and others kept constant? State the behaviour of total product in this production function.

Concept: Production Function - Short-run
Chapter: [0.023] Producer Behaviour and Supply
[4]10.2

Define cost. State the behaviour of (a) Total Fixed Cost and (b) Total Variable Cost as output is increased.

Concept: Basic Concepts of Cost
Chapter: [0.023] Producer Behaviour and Supply
[4]11

What is perfectly elastic supply?

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

When price falls by Rs 2 per unit, supply falls from 100 units to 80 units. Price elasticity of supply is 2. What was the price per unit before change?Calculate.

Concept: Concept of Supply
Chapter: [0.023] Producer Behaviour and Supply
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[6]12

Explain the concepts of Opportunity Cost and Marginal Rate of Transformation using a production possibility schedule based on the assumption that no resource is equally efficient in production of all goods.

Concept: Concept of Opportunity Cost
Chapter: [0.021] Introduction [0.023] Producer Behaviour and Supply
[6]13

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
[6]14

Explain the difference between “Shift of Supply Curve” and “Movement along Supply Curve”. State one factor responsible for each. Use diagrams.

Concept: Movements Along and Shifts in Supply Curve
Chapter: [0.023] Producer Behaviour and Supply
[6]15 | Attempt any ONE
[6]15.1
[3]15.1.1

Explain the implications of the following : Product differentiation in monopolistic competition.

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[3]15.1.2

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
[6]15.2
[3]15.2.1

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

Concept: Features of Oligopoly
Chapter: [0.024] Forms of Market and Price Determination
[3]15.2.2

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

Large number of sellers

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[1]16

Define Gross Investment.

Concept: Basic Concepts - Gross Investment
Chapter: [0.012] National Income and Related Aggregates
[1]17

Unforseen obsolescence of fixed capital assets during production is: (Choose the correct alternative)

a. Consumption of fixed capital

b. Capital loss

c. Income loss

d. None of the above

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
[1]18

What is primary deficit?

Concept: Deficit Budget - Primary Deficit
Chapter: [0.016] Government Budget and the Economy
[1]19

Disinvestment by government means: (choose the correct alternative)

a. Selling of its fixed capital assets

b. Selling of shares of public enterprises held by it.

c. Selling of its buildings

d. All the above

Concept: Meaning of Disinvestment
Chapter: [0.016] Government Budget and the Economy
[1]20

Balance of Payments ‘deficit’ is the excess of: (choose the correct alternative)

a. Current account payments over current account receipts.

b. Capital account payments over capital account receipts.

c. Autonomous payments over autonomous receipts.

d. Accommodating payments over a accommodating receipts.

Concept: Balance of Payments Deficit Meaning
Chapter: [0.015] Balance of Payments
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[3]21

Given real income to be 400 and price index be 100, calculate nominal income.

Concept: Real and Nominal GDP
Chapter: [0.012] 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: [0.011000000000000001] Determination of Income and Employment
[3]22.2

Explain how government spending can be helpful in removing deficient demand.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[3]23

Find equilibrium national income:

Autonomous consumption expenditure = 120

Marginal propensity to consume = 0.9

Investment expenditure = 1100

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
[4]24

Government spends on child immunization programme. Analyse its impact on Gross Domestic Product and welfare of the people.

Concept: GDP and Welfare
Chapter: [0.012] National Income and Related Aggregates
[4]25 | Attempt any ONE
[4]25.1

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: [0.013999999999999999] Money and Banking
[4]25.2

Explain the 'standard of deferred payment' function of money. How has it solved the related problem created by barter?

Concept: Standard of Deferred Payment
Chapter: [0.013999999999999999] Money and Banking
[4]26

Explain the ‘bank of issue’ function of central bank.

Concept: Function of Central bank - Bank of Issue
Chapter: [0.013999999999999999] Money and Banking
[6]27 | Attempt any ONE
[6]27.1

What are revenue receipts in a government budget?

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

Explain the role of government budget in bringing stability in the economy.

Concept: Objectives of Government Budget
Chapter: [0.016] Government Budget and the Economy
[6]27.2

What is government budget?

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

Explain the role of Government budget in allocation of resources.

Concept: Government Budget - Allocation of Resources
Chapter: [0.016] Government Budget and the Economy
[6]28

Derive the two alternative conditions of expressing national income equilibrium. Show these equilibrium conditions on a single diagram.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[6]29

Indian investors borrow from abroad. Answer the following:

a. In which sub-account and on which side of the Balance of Payments Account will this borrowing be recorded? Give reason.

b. Explain what is the impact of this borrowing on exchange rate.

Concept: Concept of Balance of Payments Account
Chapter: [0.015] Balance of Payments
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[6]30

Calculate Net Domestic Product at Factor Cost and Private Income:

    Rs crore
1 Gross National Disposable Income 600
2 Net current transfers to abroad (-)20
3 Consumption of fixed capital 60
4 Current transfers from government 30
5 Indirect tax 100
6 Income accruing to government 80
7 Subsidies 10
8 Net factor income to abroad (-)10
9 National debt interest 40
10 Personal tax 150
Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.012] National Income and Related Aggregates
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