# Economics All India Set 2 2015-2016 Commerce (English Medium) Class 12 Question Paper Solution

Economics [All India Set 2]
Marks: 100 CBSE
Commerce (English Medium)
Arts (English Medium)

Date & Time: 31st March 2016, 11:00 am
Duration: 3h

[1]1

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

(a) Perfect competition

(b) Monopoly

(c) Monopolistic competition

(d) Oligopoly

Concept: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination
[1]2

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: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination
[1]3

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]4

When does "change in quantity demanded" take place?

Concept: Change in Quantity Demand
Chapter: [0.02] Consumer Equilibrium and Demand
[1]5

What happens to the difference between Average Total Cost and Average Variable Cost as production is increased?

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
Chapter: [0.03] Producer Behaviour and Supply
[3]6 | Attempt one of the following
[3]6.1

What is minimum price ceiling? Explain its implications.

Concept: Price Ceiling
Chapter: [0.04] Forms of Market and Price Determination
[3]6.2

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
[3]7

A consumer consumes only two goods X and Y. Marginal utilities of X and Y are 4 and 3 respectively. Price of X and price of Y is Rs 3 per unit. 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]8

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
[4]9

When price of a good rises from Rs 10 to Rs 12 per unit the producer supplies 10 percent more. Calculate price elasticity of supply.

Concept: Concept of Supply - Supply Schedule and Supply Curve
Chapter: [0.03] Producer Behaviour and Supply
[4]10

Define utility.

Concept: Meaning of Utility
Chapter: [0.02] Consumer Equilibrium and Demand

Explain the law of diminishing marginal utility.

Concept: Diminishing Marginal Utility
Chapter: [0.02] Consumer Equilibrium and Demand
[4]11 | Attempt of the following
[4]11.1

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]11.2

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
[6]12 | Attempt one of the following
[6]12.1

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

Large number of sellers

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

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

Homogeneous products.

Concept: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination
[6]12.2

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

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

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

Concept: Forms of Market
Chapter: [0.04] Forms of Market and Price Determination
[6]13

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]14

Explain the three properties of the indifference curves.

Concept: Indifference Curve
Chapter: [0.02] Consumer Equilibrium and Demand
[6]15

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
[1]16

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] Open Economy Macroeconomics
[1]17

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]18

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]19

Define fiscal deficit

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

Define flows.

Concept: Basic Concepts - Stocks and Flows
Chapter: [0.02] National Income and Related Aggregates
[3]21

An economy is in equilibrium. Find investment expenditure :

National income =1200

Autonomous consumption expenditure=150

Marginal Propensity to consume =0.8

Concept: Methods of Measurement of National Income - Expenditure Method
Chapter: [0.02] National Income and Related Aggregates
[3]22

If nominal income is Rs 500 and price index is 125, calculate real income.

Concept: Real and Nominal GDP
Chapter: [0.02] National Income and Related Aggregates
[3]23 | Attempt one of the following
[3]23.1

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]23.2

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

Concept: Cash Reserve Ratio (CRR)
Chapter: [0.03] Money and Banking
[4]24

Explain the role of Cash Reserve Ratio in controlling credit creation.

Concept: Cash Reserve Ratio (CRR)
Chapter: [0.03] Money and Banking
[4]25

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]26 | Attemptone of the following
[4]26.1

Explain the 'medium of exchange' function of money. How has it solved the related problem created by barter?

Concept: Functions of Money - Primary Function
Chapter: [0.03] Money and Banking
[4]26.2

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
[6]27

Calculate Net National Product at Market Price and Private Income:

 (Rs in crore) i Net Current transaction to abroad 10 ii Private final consumption expenditure 500 iii Current transfer to government 30 iv Net factor income to abroad 20 v Net exports (-20) vi Net indirect tax 120 vii National debt interest 70 viii Net domestic capital formation 80 ix Income accruing to government 60 x Government final consumption expenditure 100
Concept: Aggregates Related to National Income - Net National Product (NNP)
Chapter: [0.02] National Income and Related Aggregates
[6]28

(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] Open Economy Macroeconomics
[6]29

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]30 | Attempt one of the following
[6]30.1

What is the difference between revenue expenditure and capital expenditure? Explain how taxes and government expenditure can be used to influence.

Concept: Classification of Expenditure
Chapter: [0.05] Government Budget and the Economy
[6]30.2

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

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