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Economics 58/1/1 2018-2019 CBSE (Arts) Class 12 Question Paper Solution

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Economics [58/1/1]
Marks: 100 Academic Year: 2018-2019
Date: March 2019
Duration: 3h
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  • Question Nos. 1 - 4 and 13 - 16 are very short-answer questions carrying 1 mark each. They are required to be answered in one sentence each.
  • Question Nos. 5 - 6 and 17 - 18 are short-answer questions carrying 3 marks each. Answers to them should normally not exceed 60 words each.
  • Question Nos. 7 - 9 and 19 - 21 are also short-answer questions carrying 4 marks each. Answers to them should normally not exceed 70 words each.
  • Question Nos. 10 - 12 and 22 - 24 are long-answer questions carrying 6 marks each. Answers to them should normally not exceed 100 words each.

[1] 1

Choose the correct alternative from given options:
In the given figure, the movement on the production possibility curve from point A to point B shows _____________.

Growth of all the resources in the economy.

Underutilisation of resources.

Production of more units of Good X and less units of Good Y.

Production of more units of Good Y and less units of Good X.

Concept: Concepts of Production Possibility Frontier
Chapter: [0.021] Introduction
[1] 2
[1] 2.1

Choose the correct alternative from given options:
Average fixed cost curve ____________.

is a straight line parallel to X-axis.

is straight line parallel to Y-axis.

falls, as more units are produced

rises, as more units are produced

Concept: Cost - Average Fixed Cost
Chapter: [0.023] Producer Behaviour and Supply
OR
[1] 2.2
Choose the correct alternative from given options:
Which of the following formula is correct for calculating marginal cost?

MCN = TFCn – TFCN – 1

MCN = ACN – ACN – 1

MCN = AVCN – AVCn – 1

MCN = TCn – TCN – 1

Concept: Cost - Marginal Cost
Chapter: [0.023] Producer Behaviour and Supply
[1] 3

Choose the correct alternative from given options:
The average product curve in the input-output plane, will be ____________.

an 'S' shaped curve

an inverse 'S' shaped curve

a 'U' shaped curve

an inverse 'U' shaped curve

Concept: Shapes of Product Curves
Chapter: [0.023] Producer Behaviour and Supply
[1] 4
[1] 4.1

Fill in the blank.
If the market supply of a commodity X changes due to improvement in technology, the market supply curve will ___________.

Concept: Movements Along and Shifts in Supply Curve
Chapter: [0.023] Producer Behaviour and Supply
OR
[1] 4.2

Fill in the blank.
If the market supply of a commodity X changes due to a rise in the price of factor input, the market supply curve will ____________.

Concept: Movements Along and Shifts in Supply Curve
Chapter: [0.023] Producer Behaviour and Supply
[3] 5

Identify and discuss the nature of the following newspaper reports in terms of positive or normative economic analysis:
(i) "India jumped 23 points in the World Bank's ease of doing business index to 77th place, highest in 2 years." – The Economic Times
(ii) "Government should further liberalise the business rules." – The Economic Times

Concept: Positive and Normative Economics
Chapter: [0.021] Introduction
[3] 6
[3] 6.1

Distinguish between substitute goods and complementary goods, with examples.

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
OR
[3] 6.2

Distinguish between normal goods and inferior goods, with examples

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4] 7
[4] 7.1

Answer the following question.
Discuss briefly, using a hypothetical schedule, the relation between marginal utility and total utility.

Concept: Total Utility and Marginal Utility
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
OR
[4] 7.2

Answer the following question.
Discuss briefly, using a hypothetical schedule the concept of diminishing marginal rate of substitution.

Concept: Marginal Rate of Substitution (MRS)
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4] 8

Complete the following cost schedule :

Quantity (in Units) 0 1 2 3 4
Total cost (in ) 200 ....... ....... ....... .......
Total variable cost (in ) 0 ....... 180 ....... .......
Average variable cost (in ) ....... 100 ....... 80 .......
Concept: Cost - Total Fixed Cost
Chapter: [0.023] Producer Behaviour and Supply
[4] 9
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[4] 9.1

Answer the following question.
In the given diagram, OP is the market-determined price, and OP1 is the price fixed by the government.

(a) Identify if the diagram represents, price ceiling or price flooring.
(b) Discuss the likely behaviour of the market in the given condition.
Concept: Price Floor
Chapter: [0.024] Forms of Market and Price Determination
OR
[4] 9.2

Suppose the demand and supply equations of a commodity X in a perfectly competitive market are given by :
Q= 1700 – 2P
Qs = 1300 + 3P
Calculate the value of equilibrium price and equilibrium quantity of the commodity X.

Concept: Equilibrium Price
Chapter: [0.024] Forms of Market and Price Determination
[6] 10
[3] 10.1

Define price elasticity of demand.

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3] 10.2

Answer the following question.
If the price of a commodity rises by 40% and its quantity demanded falls from150 units to 120 units, calculate the coefficient of price elasticity of demand for the commodity.

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6] 11

Answer the following question.
What is meant by "diminishing returns to a factor"? Discuss any two reasons for the operation of diminishing returns to a factor.

Concept: Diminishing Marginal Utility
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6] 12
[6] 12.1

Answer the following question.
Elaborate three main features of a monopoly form of market.

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
OR
[6] 12.2

Distinguish between perfect competition and monopolistic competition on the basis of the following:
(a) Number of sellers
(b) Nature of product
(c) Selling cost

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[1] 13

Answer the following question.
Give any two examples of the flow concept.

Concept: Circular Flow of Income (Two Sector Model)
Chapter: [0.012] National Income and Related Aggregates
[1] 14

Define the term 'tax'.

Concept: Direct and Indirect Tax
Chapter: [0.016] Government Budget and the Economy
[1] 15

Choose the correct alternative from given options:
Suppose in a hypothetical economy, the income rises from  5,000 crores to  6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be __________.

0.8

0.4

0.2

0.6

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
[1] 16
[1] 16.1

What is primary deficit?

Concept: Deficit Budget - Primary Deficit
Chapter: [0.016] Government Budget and the Economy
OR
[1] 16.2

Define fiscal deficit

Concept: Measures of Government Deficit Or Surpluses
Chapter: [0.016] Government Budget and the Economy
[3] 17
[3] 17.1

Answer the following question.
Define the problem of double counting in the computation of national income. State any two approaches to correct the problem of double counting.

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
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OR
[3] 17.2

Answer the following question.
Gross Domestic Product (GDP) Does Not Give Us a Clear Indication of Economic Welfare of a Country. "Defend Or Refute the Given Statement with Valid Reason.

Concept: GDP and Welfare
Chapter: [0.012] National Income and Related Aggregates
[3] 18

If in an economy :
Change in initial Investments (∆I) = ₹ 500 crores
Marginal Propensity to Save (MPS) = 0.2

Find the values of the following:
(a) Investment multiplier (k),
(b) Change in final income (∆Y)
Concept: Investment Multiplier and Its Mechanism
Chapter: [0.011000000000000001] Determination of Income and Employment
[4] 19

Answer the following question.
How are capital receipts different from revenue receipts? Discuss briefly.

Concept: Classification of Receipts
Chapter: [0.016] Government Budget and the Economy
[4] 20
[4] 20.1

Answer the following question.
State and discuss the components of Aggregate Demand in a two-sector economy.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
OR
[4] 20.2

Answer the following question.
In the given figure, what does the gap 'KT' represent? State any two fiscal measures to correct the situation.

Concept: Measures of Government Deficit Or Surpluses
Chapter: [0.016] Government Budget and the Economy
[4] 21
[4] 21.1

Discuss the working of the adjustment mechanism in the following situations:
Aggregate demand is greater than the aggregate supply.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
OR
[4] 21.2

Discuss the working of the adjustment mechanism in the following situation:
Ex Ante Investments are lesser than Ex Ante Savings.

Concept: Aggregate Demand and Its Components - Investment
Chapter: [0.011000000000000001] Determination of Income and Employment
[6] 22
[3] 22.1

Answer the following question.
Define "Trade surplus". How is it different from "Current account surplus"?

Concept: Balance of Payments - Balance of Payments Surplus and Deficit
Chapter: [0.015] Balance of Payments
[3] 22.2

Answer the following question.
"Indian Rupee (₹) plunged to an all-time low of ₹ 74.48 against the US Dollar ($)".
− The Economic Times
In light of the above report, discuss the impact of the situation on Indian Imports.

Concept: Determination of Equilibrium Income in the Short Run - Effect of an Autonomous Change in Aggregate Demand on Income and Output
Chapter: [0.011000000000000001] Determination of Income and Employment
[6] 23
[3] 23.1

Answer the following question.
State any two components of the M1 measure of the money supply.

Concept: Meaning of Supply of Money
Chapter: [0.013999999999999999] Money and Banking
[3] 23.2

Answer the following question.
Elaborate any two instruments of Credit Control, as exercised by the Reserve Bank of India.

Concept: Central Bank Function - Controller of Credit
Chapter: [0.013999999999999999] Money and Banking
OR
[6] 23.3

Define Credit Multiplier.

Concept: Money Creation Or Credit Creation by the Commercial Banking System
Chapter: [0.013999999999999999] Money and Banking

Answer the following question.
What role does it play in determining the credit creation power of the banking system? Use a numerical illustration to explain.

Concept: Money Creation Or Credit Creation by the Commercial Banking System
Chapter: [0.013999999999999999] Money and Banking
[6] 24

Given the following data, find the missing value of 'Government Final Consumption Expenditure' and 'Mixed Income of Self Employed'.

S.No. Particulars Amount
(In ₹ crores)
(i) National Income 71,000
(ii) Gross Domestic Capital  Formation 10,000
(iii) Government Final Consumption Expenditure ?
(iv) Mixed Income of Self Employed ?
(v) Net Factor Income from Abroad 1,000
(vi) Net Indirect Taxes 2,000
(vii) Profits 1,200
(viii) Wages & Salaries 15,000
(ix) Net Exports 5,000
(x) Private Final Consumption Expenditure 40,000
(xi) Consumption of Fixed Capital 3,000
(xii) Operating Surplus 30,000
Concept: Aggregate Demand and Its Components - Consumption
Chapter: [0.011000000000000001] Determination of Income and Employment
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CBSE previous year question papers Class 12 Economics with solutions 2018 - 2019

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