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Economics 58/4/2 2018-2019 CBSE (Commerce) Class 12 Question Paper Solution

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Economics [58/4/2]
Marks: 80Academic Year: 2018-2019
Date: March 2019
Duration: 3h
  • 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:
The coefficient of price elasticity of supply of a good is 3. It is known as ___________.

Unitary Elastic Supply

Perfectly Inelastic Supply

Elastic Supply

Inelastic Supply

Concept: Concept of Supply
Chapter: [0.023] Producer Behaviour and Supply
[1]2
[1]2.1

Choose the correct alternative from given options:
Shift from Point A on Production Possibility Curve X1Y1 to point B on X2Yin the given figure indicates: 

Decrease in resources

Increase in resources

Full and efficient utilisation of resources

Wastage of resources

Concept: Concepts of Production Possibility Frontier
Chapter: [0.021] Introduction
OR
[1]2.2

Fill up the blank.
A Production Possibility Curve (PPC) would be convex to the origin if the Marginal Rate of Transformation (MRT) is ___________.

Concept: Concepts of Production Possibility Frontier
Chapter: [0.021] Introduction
[1]3

Fill up the blank.
The shape of the average revenue curve under perfect competition would be ____________.

Concept: Effects of Shifts in Demand and Supply
Chapter: [0.024] Forms of Market and Price Determination
[1]4
[1]4.1

Answer the following question.
Mention any two examples of the implicit costs incurred by a firm.

Concept: Basic Concepts of Cost
Chapter: [0.023] Producer Behaviour and Supply
OR
[1]4.2

Define variable cost.

Concept: Cost -variable Cost
Chapter: [0.023] Producer Behaviour and Supply
[3]5
[3]5.1

Answer the following question.
Explain the central problem for whom to produce.

Concept: Central Problems of an Economy
Chapter: [0.021] Introduction
OR
[3]5.2
[2]5.2.1

Classify the following statement into positive economic or normative economic, with suitable reason:
Government should try to control the rising fiscal deficit.

Concept: Measures of Government Deficit Or Surpluses
Chapter: [0.016] Government Budget and the Economy
[1]5.2.2

Classify the following statement into positive economic or normative economic, with suitable reason:
Real Gross Domestic Product (GDP) is calculated on the basis of 'base year price'.

Concept: Real and Nominal GDP
Chapter: [0.012] National Income and Related Aggregates
[3]6

Answer the following question.
Explain the relationship between Total utility and Marginal utility.

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

Answer the following question.
Discuss briefly the meaning of "Price discrimination" and "Product differentiation" with the help of suitable examples.

Concept: Meaning and Features of Market
Chapter: [0.024] Forms of Market and Price Determination
OR
[4]7.2

Answer the following question.
Is a firm under perfect competition a price taker, or a price maker? Justify your answer.

Concept: Features of Perfect Competition
Chapter: [0.024] Forms of Market and Price Determination
[4]8
[4]8.1

The price of a commodity increase from ₹ 10 to ₹ 14. Calculate percentage fall in quantity demanded of the commodity if the coefficient of price elasticity of demand is (−) 1.25.

Concept: Measurement of Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
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OR
[4]8.2
[2]8.2.1

State whether the following statement is true or false. Give valid reasons in support of your answer.
The coefficient of price elasticity of demand for the commodity is inversely related to the number of alternative uses of the commodity.

True

False

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[2]8.2.2

State whether the following statement is true or false. Give valid reasons in support of your answer.
Luxury goods often have lower price elasticity of demand.

True

False

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4]9

With the help of the given schedule, determine the firm's equilibrium using marginal revenue − marginal cost approach. Give valid reasons in support of your answer.

Output
(in units)
Total revenue (TR) (in ₹) Total  Cost (TC)
( in ₹)
1 20 20
2 40 30
3 60 36
4 80 40
5 100 60
6 120 90
Concept: Concept of Producer's Equilibrium
Chapter: [0.023] Producer Behaviour and Supply
[6]10
[3]10.1

Identify the market form and explain the corresponding feature, as given in the following statement:
"The commodity in this market has attributes which are identical for sellers and buyers."

Concept: Features of Perfect Competition
Chapter: [0.024] Forms of Market and Price Determination
[3]10.2

Answer the following question.
Define Price Floor. State the likely consequence of this type of intervention by the government.

Concept: Price Floor
Chapter: [0.024] Forms of Market and Price Determination
[6]11
[6]11.1

Suppose a consumer whose budget is ₹ 500, wants to consume only two goods, Good X and Good Y. The goods are respectively priced at ₹ 50 and ₹ 25.

Answer the following questions on the basis of the given information:
(a) State the budget equation of the consumer.
(b) What is the slope of the budget line?
(c) How many units can she purchase if she spends the entire ₹ 500 on Good X?
(d) How many units can she purchase if she spends the entire ₹ 500 on Good Y, given that the price of good Y has doubled?

Concept: Consumer's Budget
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
OR
[6]11.2

"For a consumer to be in the equilibrium position, a marginal rate of substitution between the two goods must be equal to the ratio of prices of the two goods." Do you agree with the given statement? Justify your answer.

Concept: Conditions of Consumer's Equilibrium Using Marginal Utility Analysis
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]12
[3]12.1

Answer the following question.
Why is the Total Fixed Cost curve parallel to the horizontal axis (x-axis)?

Concept: Cost - Total Fixed Cost
Chapter: [0.023] Producer Behaviour and Supply
[3]12.2

Answer the following question.
Explain the relation between the Average Variable Cost (AVC) curve and the Marginal Cost (MC) curve. Use diagram

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
Chapter: [0.023] Producer Behaviour and Supply
[1]13
[1]13.1

Answer the following question.
Explain the 'lender of last resort' function of central bank.

Concept: Central Bank Function - Banker's Bank
Chapter: [0.013999999999999999] Money and Banking
OR
[1]13.2

Choose the correct alternative from given options:
Dividends received from Public Sector Undertakings (PSUs) are a part of the government's __________.

Non-tax Revenue Receipts

Tax Receipts

Capital Receipts

Capital Expenditure

Concept: Classification of Receipts
Chapter: [0.016] Government Budget and the Economy
[1]14

Suppose you are a member of the "Advisory Committee to the Finance Minister of India". The Finance Minister is concerned about the rising Revenue Deficit in the budget.
Suggest anyone measure to control the rising Revenue Deficit of the government.

Concept: Measures of Government Deficit Or Surpluses
Chapter: [0.016] Government Budget and the Economy
[1]15

What are demand deposits?

Concept: Currency Held by the Public and Net Demand Deposits Held by Commercial Banks
Chapter: [0.013999999999999999] Money and Banking
[1]16

Answer the following question.
Explain the 'lender of last resort' function of central bank.

Concept: Central Bank Function - Banker's Bank
Chapter: [0.013999999999999999] Money and Banking
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[3]17
[3]17.1

The consumption function of an economy is : C = 40 + 0.8 Y (amount in ₹ crores). Determine that level of income where the average propensity to consume will be one.

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
OR
[3]17.2

Answer the following question.
Which of the two, average propensity to consume or average propensity to save, can be negative, and why?

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
[3]18

Answer the following question.
Describe the adjustments that may take place in an economy when ex-ante Aggregate Demand is greater than ex-ante Aggregate Supply.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[4]19

Answer the following question.
Explain, using a numerical example, how a reduction in reserve deposit ratio, affects the credit creation power of the banking system.

Concept: Money Creation Or Credit Creation by the Commercial Banking System
Chapter: [0.013999999999999999] Money and Banking
[4]20
[4]20.1

Answer the following question.
Explain how the government can use the budgetary policy in reducing inequalities in incomes.

Concept: Objectives of Government Budget
Chapter: [0.016] Government Budget and the Economy
OR
[4]20.2

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]21

Answer the following question.
How is Real Gross Domestic Product (GDP) different from Nominal Gross Domestic Product (GDP)? Explain using a numerical example.

Concept: Real and Nominal GDP
Chapter: [0.012] National Income and Related Aggregates
[6]22
[3]22.1

Answer the following question.
State any two factors responsible for the inflow of foreign currency.

Concept: Concept of Foreign Exchange Rate
Chapter: [0.015] Balance of Payments
[3]22.2

State on which side of capital account/current account will the following transactions be recorded and why:
(i) Interest on loan received from Nepal
(ii) Import of mobile phones from China

Concept: Balance of Payments - Capital Account
Chapter: [0.015] Balance of Payments
OR
[6]22.3
[3]22.3.1

Distinguish between Autonomous and Accommodating transactions of Balance of Payments account.

Concept: Concept of Balance of Payments Account
Chapter: [0.015] Balance of Payments
[3]22.3.2

Differentiate between devaluation and depreciation.

Concept: Devaluation of a Currency
Chapter: [0.015] Balance of Payments
[6]23
[3]23.1

Answer the following question.
Define net exports. How is it different from the net factor income from abroad?

Concept: Methods of Calculating National Income - Expenditure Method
Chapter: [0.012] National Income and Related Aggregates
[3]23.2

Calculate value of "Interest" from the following data:

S. No. Particulars

Amount

(₹ in crores)

(i) Indirect tax 1,500
(ii) Subsidies 700
(iii) Profits 1,100
(iv) Consumption of fixed capital 700
(v) Gross domestic product at market price 17,500
(vi) Compensation of employees 9,300
(vii) Interest ?
(viii) Mixed income of self-employed 3,500
(ix) Rent 800
Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.012] National Income and Related Aggregates
[6]24

Answer the following question.
What is meant by the "Effective Demand Principle" in the Keynesian theory of employment? Discuss using a schedule or a diagram.

Concept: Concept of Aggregate Demand and Aggregate Supply
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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