# Economics All India Set 1 2015-2016 CBSE (Commerce) Class 12 Question Paper Solution

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

[1] 1

What is the relation between Average Variable Cost and Average Total Cost, if Total Fixed Cost is zero?

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

A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will 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: [0.03] Producer Behaviour and Supply
[1] 3

When does 'change in demand' take place?

Concept: Change in Demand
Chapter: [0.02] Consumer Equilibrium and Demand
[1] 4

Differentiated products is a characteristic of: (Choose the correct alternative):

(a) Monopolistic competition only

(b) Oligopoly only

(c) Both monopolistic competition and oligopoly

(d) Monopoly

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

Demand curve of a firm is perfectly elastic under: (Choose the correct alternative)

(a) Perfect competition

(b) Monopoly

(c) Monopolistic competition

(d) Oligopoly

Concept: Main Market Forms
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 3 and 4 respectively. Prices of X and Y are Rs 4 per unit each. Is consumer in equilibrium? What will be further reaction of the consumer? Give reasons.

Concept: Conditions of Consumer's Equilibrium Using Marginal Utility Analysis
Chapter: [0.02] Consumer Equilibrium and Demand
[3] 7

What will be the effect of 10 percent rise in price of a good on its demand if price elasticity of demand is (a) Zero, (b)-1, (c)-2.

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

What is minimum price ceiling? Explain its implications.

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

If the prevailing market price is above the equilibrium price, explain its chain of effects.

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

Define demand. Name the factors affecting market demand.

Concept: Demand
Chapter: [0.02] Consumer Equilibrium and Demand
[4] 10 | Attempt any ONE
[4] 10.1

Define fixed cost. Give an example.

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

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
[4] 10.2

Define marginal product.

Concept: Marginal Product
Chapter: [0.03] Producer Behaviour and Supply

State the behaviour of marginal product when only one input is increased and other inputs are hold constant.

Concept: Marginal Product
Chapter: [0.03] Producer Behaviour and Supply
[4] 11

When price of a commodity falls from Rs 12 per unit to Rs 9 per unit, the producer supplies 75 percent less output. Calculate price elasticity of supply.

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

Why do central problems of an economy arise?

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

Explain the central problem for whom to produce.

Concept: Central Problems of an Economy
Chapter: [0.01] Introduction
[6] 13

Explain the three properties of the indifference curves.

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

Examine the effect of (a) fall in the own price of good X and (b) rise in tax rate on good X, on the supply curve. Use diagrams.

Concept: Supply Curve and Schedule
Chapter: [0.03] Producer Behaviour and Supply
[6] 15 | Attempt any ONE
[6] 15.1
[3] 15.1.1

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

Large number of sellers

Concept: Main Market Forms
Chapter: [0.04] Forms of Market and Price Determination
[3] 15.1.2

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

Homogeneous products.

Concept: Main Market Forms
Chapter: [0.04] Forms of Market and Price Determination
[6] 15.2
[3] 15.2.1

Explain the implications of the following in an oligopoly market: Barriers to entry of new firms

Concept: Main Market Forms
Chapter: [0.04] Forms of Market and Price Determination
[3] 15.2.2

Explain the implications of the following in an oligopoly market: A few or a few big sellers

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

Define flows.

Concept: Basic Concepts - Stocks and Flows
Chapter: [0.02] National Income and Related Aggregates
[1] 17

National income is the sum of factor incomes accruing to : (Choose the correct alternative)

(a) Nationals

(b) Economic territory

(c) Residents

(d) Both residents and non-residents

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

What are revenue receipts in a government budget?

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

Primary deficit equals : (Choose the correct alternative)

(a) Borrowings

(b) Interest payments

(c) Borrowings less interest payments

(d) Borrowings and interest payments both

Concept: Deficit Budget - Primary Deficit
Chapter: [0.05] Government Budget and the Economy
[1] 20

Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called ______.

Current transactions

Capital transactions

Autonomous transactions

Accommodating transactions

Concept: Concept of Balance of Payments Account
Chapter: [0.06] Balance of Payments
[3] 21

Assuming real income to be Rs 200 crore and price index to be 135, calculate nominal income.

Concept: Real and Nominal GDP
Chapter: [0.02] National Income and Related Aggregates
[3] 22 | Attempt any ONE
[3] 22.1

What is aggregate demand?

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

State components of Aggregate demand ?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.04] Determination of Income and Employment
[3] 22.2

Explain how controlling money supply is helpful in reducing excess demand.

Concept: Cash Reserve Ratio (CRR)
Chapter: [0.03] Money and Banking
[3] 23

An economy is in equilibrium. Calculate Marginal Propensity to Consume :

National income = 1000

Autonomous consumption expenditure = 200

Investment expenditure = 100

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

Sale of petrol and diesel cars is rising particularly in big cities. Analyse its impact on gross domestic product and welfare.

Concept: GDP and Welfare
Chapter: [0.02] National Income and Related Aggregates
[4] 25 | Attempt any ONE
[4] 25.1

Explain the 'medium of exchange' 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] 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: [0.03] Money and Banking
[4] 26

Explain how 'Repo Rate' can be helpful in controlling credit creation.

Concept: Repo Rate and Reverse Repo Rate
Chapter: [0.03] Money and Banking
[6] 27 | Attempt any ONE
[6] 27.1

Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each.

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

Explain how taxes and government expenditure can be used to influence revenue expenditure and capital expenditure?

Concept: Classification of Expenditure
Chapter: [0.05] Government Budget and the Economy
[6] 27.2

What is the difference between direct tax and indirect tax?

Concept: Direct and Indirect Tax
Chapter: [0.05] Government Budget and the Economy

Explain the role of government budget in influencing the allocation of resources.

Concept: Government Budget - Allocation of Resources
Chapter: [0.05] Government Budget and the Economy
[6] 28

Given saving curve, derive consumption curve and state the steps in doing so. Use diagram.

Concept: Supply Curve and Schedule
Chapter: [0.03] Producer Behaviour and Supply
[6] 29

(a) In which sub-account and on which side of the Balance of Payments Account such lending is recorded? Give reasons.

(b) Explain the impact of the lending on market exchange rate.

Concept: Concept of Balance of Payments Account
Chapter: [0.06] Balance of Payments
[6] 30

Find Gross National Product at Market Price and Private Income:

 Rs. in crore 1 Private final consumption expenditure 800 2 Net Current transaction to abroad 20 3 Net factor income to abroad (-)10 4 Government final consumption expenditure 300 5 Net indirect tax 150 6 Net domestic capital formation 200 7 Current transfer to government 40 8 Depreciation 100 9 Net imports 30 10 Income accruing to government 90 11 National debt interest 50
Concept: Aggregates Related to National Income - Gross National Product (GNP)
Chapter: [0.02] National Income and Related Aggregates

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