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Economics 58/2/1 2018-2019 CBSE (Arts) Class 12 Question Paper Solution

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Economics [58/2/1]
Marks: 80 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 answer from given options
The Total Revenue earned by selling 20 units is ₹ 700. Marginal  Revenue earned by selling the 21st unit is ₹ 70. The value of Total Revenue earned by selling total 21 units will be ______________.

₹ 721

₹ 630

₹ 770

₹ 720

Concept: Total, Average and Marginal Revenue
Chapter: [0.023] Producer Behaviour and Supply
[1] 2

Choose the correct answer from given options

In the given figure X1Y1 and X2Yare Production Possibility Curves in two different periods T1 and T2 respectively for Good X and Good Y. A1 and A2 represent actual outputs and P1 and Prepresent potential outputs respectively in the two times periods.

The change in actual output of Goods X and Y over the two periods would be represented by a movement from __________. 

A2 to P2

A1 to P2

P1 to A2

A1 to A2

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1] 3
[1] 3.1

Fill in the blank.
Under imperfect competition, Average Revenue (AR) remains ___________ Marginal Revenue (MR).

Concept: Total, Average and Marginal Revenue
Chapter: [0.023] Producer Behaviour and Supply
OR
[1] 3.2

Fill in the blank.
"For a firm to be in equilibrium, Marginal Revenue (MR) and Marginal Cost (MC) must be __________ and beyond that level of output Marginal Cost must be ____________."

Concept: Concept of Producer's Equilibrium
Chapter: [0.023] Producer Behaviour and Supply
[1] 4

Choose the correct answer from given options
If the supply curve is a straight line parallel to the vertical axis (Y-axis), supply of the good is called as _________.

Unitary Elastic Supply

Perfectly Elastic Supply

Perfectly Inelastic Supply

Perfectly Elastic Demand

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

Distinguish between positive economics and normative economics, with suitable examples.

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

Answer the following question:
Explain the law of diminishing marginal utility using a hypothetical schedule.

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

Answer the following question:
Elaborate the law of demand, with the help of a hypothetical schedule.

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

Answer the following question:
The market for a good is in equilibrium. How would an increase in an input price affect the equilibrium price and equilibrium quantity, keeping other factors constant? Explain using a diagram.

Concept: Equilibrium Price
Chapter: [0.024] Forms of Market and Price Determination
[4] 8
[2] 8.1

The coefficient of price elasticity of demand for Good X is (−) 0.2. If there is a 5% increase in the price of the good, by what percentage  will the quantity demanded for the good fall?

Concept: Factors Affecting Price Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[2] 8.2

Arrange the following coefficients of price elasticity of demand in ascending order:
(−) 3.1, (−) 0.2, (−) 1.1

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
OR
[4] 8.3

Answer the following question:
How would the demand for a commodity be affected by a change in the "tastes and preferences" of the consumers in favour of the commodity? Explain using a diagram.

Concept: Preferences of the Consumer
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[4] 9
[1] 9.1

Explain whether the statement is true or false with reasons.

Average cost curve cuts Average variable cost curve, at the minimum level.

True

False

Concept: Cost - Average Cost
Chapter: [0.023] Producer Behaviour and Supply
[1] 9.2

Explain whether the statement is true or false with reasons.

 Average product curve and Marginal product curves are 'U-shaped' curves.

True

False

Concept: Shapes of Product Curves
Chapter: [0.023] Producer Behaviour and Supply
[1] 9.3

Explain whether the statement is true or false with reasons.

Under all market conditions, Average revenue and marginal revenue are equal to each other.

True

False

Concept: Total, Average and Marginal Revenue
Chapter: [0.023] Producer Behaviour and Supply
[1] 9.4

Explain whether the statement is true or false with reasons.

Total cost curve and Total variable cost curve are parallel to each other.

True

False

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
Chapter: [0.023] Producer Behaviour and Supply
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[6] 10

Explain the meaning of the following features of the Oligopoly Market :
(a) Non-Price Competition
(b) Few Sellers

Concept: Features of Oligopoly
Chapter: [0.024] Forms of Market and Price Determination
[6] 11
[3] 11.1

Answer the following question:
What is meant by increasing returns to a variable factor?

Concept: Returns to a Factor
Chapter: [0.023] Producer Behaviour and Supply
[3] 11.2

Answer the following question:
Discuss briefly, any two reasons for the decreasing returns to a variables factor.

Concept: Returns to a Factor
Chapter: [0.023] Producer Behaviour and Supply
[6] 12
[3] 12.1

Explain the following condition:
Movement along the same indifference curve.

Concept: Movement Along and Shifts in the Demand Curve
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3] 12.2

Explain the following condition:
Shift from a lower to a higher indifference curve.

Concept: Preferences of the Consumer
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
OR
[6] 12.3

Explain the Law of Equi-Marginal Utility

Concept: Total Utility and Marginal Utility
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1] 13

Choose the correct answer from given options

Primary deficit in a government budget will be zero when ________ 

Revenue deficit in zero

Net interest payments are zero

Fiscal deficit is zero

Fiscal deficit is equal to interest payment

Concept: Deficit Budget - Primary Deficit
Chapter: [0.016] Government Budget and the Economy
[1] 14

Choose the correct answer from given options

In order to encourage investment in the economy, the Central Bank may __________.

Reduce Cash Reserve ratio

Increase Cash Reserve Ratio

Sell Government securities in open market

Increase Bank Rate

Concept: Definition - Central Bank
Chapter: [0.013999999999999999] Money and Banking
[1] 15
[1] 15.1

What do you mean by a direct tax?

Concept: Direct and Indirect Tax
Chapter: [0.016] Government Budget and the Economy
OR
[1] 15.2

What do you mean by an indirect tax?

Concept: Direct and Indirect Tax
Chapter: [0.016] Government Budget and the Economy
[1] 16

Define 'money multiplier'.

Concept: Money Creation by Banking System - Limits to Credit Creation and Money Multiplier
Chapter: [0.013999999999999999] Money and Banking
[3] 17

Calculate the change in final income, if Marginal Propensity to Consume (MPC) is 0.8 and change in initial investment is ₹ 1,000 crores.

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
[3] 18
[3] 18.1

State the impact of "Excess Demand" under the Keynesian theory on employment, in an economy.

Concept: Problems of Excess Demand and Deficient Demand
Chapter: [0.011000000000000001] Determination of Income and Employment
OR
[3] 18.2
[1] 18.2.1

State the meaning of the following:
Ex-Ante Savings

Concept: Aggregate Demand and Its Components - Investment
Chapter: [0.011000000000000001] Determination of Income and Employment
[1] 18.2.2

State the meaning of the following:
Full Employment

Concept: Meaning of Full Employment
Chapter: [0.011000000000000001] Determination of Income and Employment
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[1] 18.2.3

State the meaning of the following:
Autonomous Consumption

Concept: Aggregate Demand and Its Components - Consumption
Chapter: [0.011000000000000001] Determination of Income and Employment
[4] 19
[1] 19.1

Classify the following statement as a revenue receipt or capital receipt. Give valid reasons in support of your answer.
Financial help from a multinational corporation for victims in a flood-affected area.

Concept: Classification of Receipts
Chapter: [0.016] Government Budget and the Economy
[1] 19.2

Classify the following statement as a revenue receipt or capital receipt. Give valid reasons in support of your answer.
Sale of shares of a Public Sector Undertaking (PSU) to a private company, Y Ltd.

Concept: Classification of Receipts
Chapter: [0.016] Government Budget and the Economy
[1] 19.3

Classify the following statement as a revenue receipt or capital receipt. Give valid reasons in support of your answer.
Dividends paid to the Government by the State Bank of India.

Concept: Classification of Receipts
Chapter: [0.016] Government Budget and the Economy
[1] 19.4

Classify the following statement as a revenue receipt or capital receipt. Give valid reasons in support of your answer.
Borrowings from the International Monetary Fund (IMF).

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

Do you agree with the given statement? Give valid reasons in support of your answer.

"Higher Gross Domestic Product (GDP) means greater per capita availability of goods in the economy."

Concept: GDP and Welfare
Chapter: [0.012] National Income and Related Aggregates
OR
[4] 20.2

Answer the following question:
Explain the meaning of Real Gross Domestic Product and Nominal Gross Domestic Product, using a numerical example.

Concept: Real and Nominal GDP
Chapter: [0.012] National Income and Related Aggregates
[4] 21

Distinguish between 'Qualitative and Quantitative tools' of credit control as may be used by a Central Bank.

Concept: Central Bank Function - Controller of Credit
Chapter: [0.013999999999999999] Money and Banking
[6] 22
[3] 22.1

Define "Trade surplus" and "Trade Deficit".

Concept: Types of Budget
Chapter: [0.016] Government Budget and the Economy
[3] 22.2

Discuss briefly the concept of managed floating system of foreign exchange rate determination.

Concept: Concept of Foreign Exchange Rate
Chapter: [0.015] Balance of Payments
[6] 23
[3] 23.1

Discuss the adjustment mechanism in the following situation :
Aggregate demand is lesser than Aggregate Supply.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[3] 23.2

Discuss the adjustment mechanism in the following situation :
Ex-Ante Investments are greater than Ex-Ante Savings.

Concept: Aggregate Demand and Its Components - Investment
Chapter: [0.011000000000000001] Determination of Income and Employment
[6] 24
[2] 24.1

Define the following: Value Addition

Concept: Methods of Calculating National Income - Value Added Or Product Method
Chapter: [0.012] National Income and Related Aggregates
[2] 24.2

Define the following: Gross Domestic Product

Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.012] National Income and Related Aggregates
[1] 24.3

Define the following: Flow Variables

Concept: Basic Concepts - Stocks and Flows
Chapter: [0.012] National Income and Related Aggregates
[1] 24.4

Define the following:
Income from property and entrepreneurship

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
OR
[6] 24.5

Given the following data, find the values of "Gross Domestic Capital Formation" and "Operating Surplus".

S. No. Particulars

Amount

(₹ in crores)

(i) National Income 22,100
(ii) Wages and Salaries 12,000
(iii) Private Final Consumption Expenditure 7,200
(iv) Net Indirect Taxes 700
(v) Gross Domestic Capital Formation ?
(vi) Depreciation 500
(vii) Government Final Consumption Expenditure 6,100
(viii) Mixed Income of Self-Employed 4,800
(ix) Operating Surplus ?
(x) Net Exports 3,400
(xi) Rent 1,200
(xii)   (-)
  Net Factor Income From Abroad 150
Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.012] National Income and Related Aggregates
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