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# Question Paper Solutions - Economics 2012 - 2013 CBSE (Science) Class 12

SubjectEconomics
Year2012 - 2013 (March)

Marks: 100
[1]1

Give two examples of fixed costs.

Chapter: [1.03] Producer Behaviour and Supply
Concept: Cost - Fixed Cost
[1]2

Define marginal cost.

Chapter: [1.03] Producer Behaviour and Supply
Concept: Cost - Marginal Cost
[1]3

When is the demand for a good said to be inelastic?

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Change in Demand
[1]4

Given the meaning of market demand.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Market Demand
[1]5

Under which market form a firm's marginal revenue is always equal to price?

Chapter: [1.03] Producer Behaviour and Supply
Concept: Total, Average and Marginal Revenue
[3]6

Explain the difference between an inferior good and a normal good.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Change in Quantity Demand
[3]7 | Attempt any ONE
[3]7.1

Explain the law of diminishing marginal utility with the help of a total utility schedule.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Diminishing Marginal Utility
[3]7.2

Explain the condition of consumer's equilibrium with the help of utility analysis.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Conditions of Consumer's Equilibrium Using Marginal Utility Analysis
[3]8

When the price of a good rises from Rs 20 per unit to Rs 30 per unit, the revenue of the firm producing this good rises from Rs 100 to Rs 300. Calculate the price elasticity of supply.

Chapter: [1.03] Producer Behaviour and Supply
Concept: Concept of Supply
[3]9

Complete the following table:

 Units of Labour Average Product (Units) Marginal Product (Units) 1 8 ............. 2 10 ............ 3 ............ 10 4 9 ........... 5 ............. 4 6 7 ............
Chapter: [1.03] Producer Behaviour and Supply
Concept: Relation Between Total, Average and Marginal Product
[3]10

Explain ‘large number of buyers and sellers' features of a perfectly competitive market.

Chapter: [1.04] Forms of Market and Price Determination
Concept: Features of Perfect Competition
[4]11

Production in an economy is below its potential due to unemployment. Government starts employment generation schemes. Explain its effect using production possibilities curve.

Chapter: [1.01] Introduction
Concept: Concepts of Production Possibility Frontier
[4]12

Explain the conditions of producer’s equilibrium with the help of a numerical example.

Chapter: [1.03] Producer Behaviour and Supply
Concept: Concept of Producer's Equilibrium
[4]13 | Attempt any ONE
[4]13.1

The price elasticity of demand for a good is - 0.4. If its price increases by 5 percent, by what percentage will its demand fall? Calculate.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Elasticity of Demand
[4]13.2

Explain any two factors that affect the price elasticity of demand. Give suitable examples.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Factors Affecting Price Elasticity of Demand
[6]14 | Giving reasons, state whether the following statements are true or false.
[3]14.1

A Monopolist can sell any quantity he likes at a price.

Chapter: [1.04] Forms of Market and Price Determination
Concept: Main Market Forms
[3]14.2

When equilibrium price of a good is less than its market price, there will be competition among the sellers.

Chapter: [1.04] Forms of Market and Price Determination
Concept: Equilibrium Price
[6]15

State the behaviour of marginal product in the law of variable proportions. Explain the causes of this behaviour

Chapter: [1.03] Producer Behaviour and Supply
Concept: Law of Variable Proportions
[6]16 | Attempt any ONE
[6]16.1

Explain the conditions of consumer’s equilibrium using indifference curve analysis.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Indifference Curve
[6]16.2 | Explain the relationship between
[3]16.2.1

Prices of other goods and demand for the given good.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Demand Curve and Its Slope
[3]16.2.2

Income of the buyers and demand for a good.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Change in Demand
[1]17

How can increase in foreign direct investment affect the price of foreign exchange?

Chapter: [2.05] Balance of Payments
Concept: Concept of Foreign Exchange Rate
[1]18

What are demand deposits?

Chapter: [2.02] Money and Banking
Concept: Currency Held by the Public and Net Demand Deposits Held by Commercial Banks
[1]19

Define externalities. Give an example of negative externality. What is its impact on welfare?

Chapter: [2.01] National Income and Related Aggregates
Concept: GDP and Welfare
[1]20

Give two examples of indirect taxes.

Chapter: [2.04] Government Budget and the Economy
Concept: Direct and Indirect Tax
[1]21

What is government budget?

Chapter: [2.04] Government Budget and the Economy
Concept: Meaning of Government Budget
[3]22
[3]23 | Attempt any ONE
[3]23.1

Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each.

Chapter: [2.04] Government Budget and the Economy
Concept: Classification of Expenditure
[3]23.2

Distinguish between revenue deficit and fiscal deficit.

Chapter: [2.04] Government Budget and the Economy
Concept: Measures of Government Deficit Or Surpluses
[3]24

Explain any one objective of Government Budget.

Chapter: [2.04] Government Budget and the Economy
Concept: Objectives of Government Budget
[3]25

Explain the effect of appreciation of domestic currency on imports.

Chapter: [2.05] Balance of Payments
Concept: Concept of Foreign Exchange Rate
[3]26

Distinguish between balance of trade and balance on current account?

Chapter: [2.05] Balance of Payments
[4]27

Calculate 'sales' from the following data:-

 S. No. Particulars (Rs in laths) (i) Net value added at factor cost 560 (ii) Depreciation 60 (iii) Change in stock (-)30 (iv) Intermediate cost 1000 (v) Exports 200 (vi) Indirect taxes 60
Chapter: [2.01] National Income and Related Aggregates
Concept: Gross and Net Domestic Product (GDP and NDP)
[4]28 | Attempt any ONE
[4]28.1

Giving reasons categories the following into stock and flow:-

(i) Capital

(ii) Saving

(iii) Gross domestic product

(iv) Wealth

Chapter: [2.01] National Income and Related Aggregates
Concept: Basic Concepts - Stocks and Flows
[4]28.2

Explain the circular flow of income.

Chapter: [2.01] National Income and Related Aggregates
Concept: Circular Flow of Income (Two Sector Model)
[4]29

Explain "Banker to the Government" function of the Central Bank.

Chapter: [2.02] Money and Banking
Concept: Central bank Function - Goverment Bank
[6]30

C = 100 + 0.4 Y is the Consumption Function of an economy where C is Consumption Expenditure and Y is National Income. Investment expenditure is 1.100. Calculate

(i) Equilibrium level of National Income.

(ii) Consumption expenditure at equilibrium level of national income.

Chapter: [2.01] National Income and Related Aggregates
Concept: Concept of National Income
[6]31

Complete the following table:-

 Income (Rs) Consumption expenditure (Rs) Marginal propensity to save Average propensity to save 0 80 100 140 0.4 ....... 200 ........ ...... 0 ....... 240 ........ 0.20 ......... 260 0.8 0.35
Chapter: [2.03] Determination of Income and Employment
Concept: Consumption Function and Propensity to Save
[6]32
[6]32.1

Calculate National Income from the following data:

 S.No. Particulars Rs.in crores (i) Private final consumption expenditure 900 (ii) Profit 100 (iii) Government final consumption expenditure 400 (iv) Net indirect taxes 100 (v) Gross domestic capital formation 250 (vi) Change in stock 50 (vii) Net factor income from abroad (-)40 (viii) Consumption of fixed capital 20 (ix) Net imports 30
Chapter: [2.01] National Income and Related Aggregates
Concept: Concept of National Income
[6]32.2

Calculate net national disposable income from the following data:-

 S.No. Particulars Rs. in crores (i) Gross domestic product at market price 2000 (ii) Net current transfers to rest of the world (-)200 (iii) Net indirect taxes 150 (iv) Net factor income to abroad 60 (v) National debt interest 70 (vi) Consumption of fixed capital 200 (vii) Current transfers from Government 150
Chapter: [2.01] National Income and Related Aggregates
Concept: National Disposable Income (Gross and Net)
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