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Economics Foreign Set 3 2016-2017 CBSE (Arts) Class 12 Question Paper Solution

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Economics [Foreign Set 3]
Marks: 100 Academic Year: 2016-2017
Date & Time: 16th April 2017, 12:30 pm
Duration: 3h
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  • Question No.1-5 and 16-20 are very short answer questions carrying 1 mark each.
  • Question No.6-8 and 21-23 are short answer questions carrying 3 marks each.
  • Question No.9-11 and 24-26 are also short answer questions carrying 4 marks each.
  • Question No.12-15 and 27-30 are long answer questions carrying 6 marks each.

SECTION - A
[1] 1

Choose the correct answer from given options

A firm is not a price maker under

oligopoly

monopolistic competition

monopoly

perfect competition

Concept: Features of Perfect Competition
Chapter: [0.024] Forms of Market and Price Determination
[1] 2

Choose the correct answer from given options

The expenditure on a good would change in the opposite direction as the price changes only when demand is

elastic

inelastic

perfectly inelastic

unitary elastic

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1] 3

Choose the correct answer from given options

There are only a few sellers under

Perfect competition

Monopolistic competition

Monopoly

Oligopoly

Concept: Features of Oligopoly
Chapter: [0.024] Forms of Market and Price Determination
[1] 4

Answer the following question.
State and explain the law of demand.

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1] 5

Choose the correct answer from given options

When marginal utility is zero, total utility is

zero

minimum

maximum

negative

Concept: Total Utility and Marginal Utility
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3] 6
[3] 6.1

Answer the following question.
Why is a Production Possibility Curve concave to the origin? Explain.

Concept: Concepts of Production Possibility Frontier
Chapter: [0.021] Introduction
OR
[3] 6.2

Answer the following question.
Why does an economic problem arise? Explain.

Concept: Central Problems of an Economy
Chapter: [0.021] Introduction
[3] 7

Answer the following question.
Give any three factors that can cause a rightward shift of the demand curve.

Concept: Movement Along and Shifts in the Demand Curve
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3] 8

Answer the following question.
Explain the meaning of opportunity cost with the help of a production possibility schedule.

Concept: Concepts of Production Possibility Frontier
Chapter: [0.021] Introduction
[4] 9
[4] 9.1

Answer the following question.
Explain the meaning of the marginal rate of substitution. Why does it diminish as one good is substituted for the other? Explain.

Concept: Marginal Rate of Substitution (MRS)
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
OR
[4] 9.2

Explain the meaning of  Budget line.

Concept: Consumer's Budget
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand

Answer the following question.
What can cause a change in the budget line? Explain.

Concept: Consumer's Budget
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4] 10

Answer the following question.
State the relation between marginal product and average product. Show this relation in a diagram.

Concept: Relation Between Total, Average and Marginal Product
Chapter: [0.023] Producer Behaviour and Supply
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[4] 11

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
[6] 12

Answer the following question.
When the price of X doubles, its quantity demanded falls by 60 percent. Calculate its price elasticity of demand. What should be the percentage change in price so that its quantity demanded doubles?

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6] 13

Complete the following table : 

Output
Units
Marginal
Cost Rs
Average Variable Cost Rs Total
Cost Rs
Average
Fixed Cost Rs
1 60 ...... 120 ......
2 ...... ...... 174 ......
3 ...... 54 ...... ......
4 54 ...... ...... 15
5 ...... 57 345 ......
Concept: Cost - Average Fixed Cost
Chapter: [0.023] Producer Behaviour and Supply
[6] 14
[6] 14.1

Answer the following question.
Explain the meaning and implications of the maximum price ceiling and minimum price ceiling.

Concept: Price Ceiling
Chapter: [0.024] Forms of Market and Price Determination
OR
[6] 14.2

State whether the following statement is true or false. Give reasons for your answer :
When the equilibrium price is greater than the market price there will be excess supply in the market.

True

False

Concept: Equilibrium Price
Chapter: [0.024] Forms of Market and Price Determination

State whether the following statement is true or false. Give reasons for your answer :
X and Y are complementary goods. A fall in the price of Y will result in a rise in the price of X.

True

False

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6] 15

Answer the following question.
Explain the conditions of the producer's equilibrium with the help of a numerical example. Use marginal cost and marginal revenue approach.

Concept: Concept of Producer's Equilibrium
Chapter: [0.023] Producer Behaviour and Supply
[1] 16

Answer the following question.
Give the meaning of under-employment equilibrium.

Concept: Equilibrium Output
Chapter: [0.011000000000000001] Determination of Income and Employment
[1] 17

Answer the following question.
What is meant by a trade deficit?

Concept: Balance of Payments Deficit Meaning
Chapter: [0.015] Balance of Payments
[1] 18

Answer the following question.
What are capital receipts? 

Concept: Classification of Receipts
Chapter: [0.016] Government Budget and the Economy
[1] 19

Choose the correct from given options
When aggregate demand is greater than aggregate supply, inventories

fall

rise

do not change

first fall, then rise

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[1] 20

Choose the correct from given options
Repo rate is the rate at which

commercial banks purchase government securities from the central bank

commercial banks can take loans from the central bank

commercial banks can keep their deposits with the central bank

short-term loans are given by commercial banks

Concept: Repo Rate and Reverse Repo Rate
Chapter: [0.013999999999999999] Money and Banking
[3] 21
[3] 21.1

Answer the following question.
Explain the secondary functions of money.

Concept: Function of Money - Secondary Functions
Chapter: [0.013999999999999999] Money and Banking
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OR
[3] 21.2

Answer the following question.
Define money. Lists its components.

Concept: Meaning of Money
Chapter: [0.013999999999999999] Money and Banking
[3] 22

Answer the following question.
Explain 'mixed-income of self-employed' and give an example.

Concept: Meaning of Full Employment
Chapter: [0.011000000000000001] Determination of Income and Employment
[3] 23

Giving reasons, classify the following into revenue receipts and capital receipts :
Recovery of loans

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

Giving reasons, classify the following into revenue receipts and capital receipts :
Profits of public sector undertakings

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

Giving reasons, classify the following into revenue receipts and capital receipts :
Borrowings

Concept: Classification of Receipts
Chapter: [0.016] Government Budget and the Economy
[4] 24

Answer the following question.
Explain the role of government budget in influencing the allocation of resources.

Concept: Government Budget - Allocation of Resources
Chapter: [0.016] Government Budget and the Economy
[4] 25

An economy is in equilibrium. From the following data calculate investment expenditure :

(i) Marginal propensity to consume = 0·9
(ii) Autonomous consumption = 200
(iii) Level of income = 10000

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
[4] 26
[4] 26.1

Answer the following question.
Explain the money creation function of commercial banks.

Concept: Commercial Banks
Chapter: [0.013999999999999999] Money and Banking
OR
[4] 26.2

Answer the following question.
Explain the "varying reserve requirements" method of credit control by the central bank. 

Concept: Central Bank Function - Controller of Credit
Chapter: [0.013999999999999999] Money and Banking
[6] 27
[6] 27.1

Answer the following question.
Explain the distinction between the flexible exchange rate and the managed floating exchange rate.

Concept: Foreign Exchange Market - Managed Floating
Chapter: [0.015] Balance of Payments
OR
[6] 27.2

Answer the following question.
Explain by giving examples, the distinction between depreciation and devaluation of the domestic currency.

Concept: Devaluation of a Currency
Chapter: [0.015] Balance of Payments
[6] 28

Answer the following question.
What precautions should be taken while estimating national income by value-added method? Explain. 

Concept: Methods of Calculating National Income - Value Added Or Product Method
Chapter: [0.012] National Income and Related Aggregates
[6] 29

Answer the following question.
In an economy, investment increased by 1,100 and as a result of it income increased by 5,500. Had the marginal propensity to save been 25 percent, what would have been the increase in income? 

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
[6] 30

Calculate (a) national income, and (b) net national disposable income: 

    (Rs in crores)
(i) Compensation of employees 2,000
(ii) Profit 800
(iii) Rent 300
(iv) Interest 250
(v) Mixed-income of self-employed 7,000
(vi) Net current transfers to abroad 200
(vii) Net exports (-) 100
(viii) Net indirect taxes 1,500
(ix) Net factor income to abroad 60
(x) Consumption of fixed capital 120
Concept: Aggregates Related to National Income - Net National Product (NNP)
Chapter: [0.012] National Income and Related Aggregates
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