Board Paper of Class 12-Commerce 2011 Economics (SET 1) - Solutions
(i) All questions in both the sections are compulsory.
(ii) Marks for questions are indicated against each.
(iii) Questions Nos. 1-5 and 17-21 are very short-answer questions carrying 1 mark each. They are required to be answered in one sentence each
(iv) Questions Nos. 6-10 and 22-26 are short-answer questions carrying 3 marks each. Answers to them should normally not exceed 60 words each.
(v) Questions Nos. 11-13 and 27-29 are also short-answer questions carrying 4 marks each. Answers to them should normally not exceed 70 words each.
(vi) Questions Nos. 14-16 and 30-32 are long-answer questions carrying 6 marks each. Answers to them should normally not exceed 100 words each.
(vii) Answers should be brief and to the point and the above word limits should be adhered to as far as possible.
- Question 1
What is a market economy?VIEW SOLUTION
- Question 2
When is a firm called ‘price-taker’?VIEW SOLUTION
- Question 3
Define budget set.VIEW SOLUTION
- Question 4
What is meant by ‘increase’ in supply?VIEW SOLUTION
- Question 5
Define supply.VIEW SOLUTION
- Question 6
Why is a production possibilities curve concave? Explain.VIEW SOLUTION
- Question 7
8 units of a good are demanded at a price of Rs 7 per unit. Price elasticity of demand is (−) 1. How many units will be demanded if the price rises to Rs 8 per unit? Use expenditure approach of price elasticity of demand to answer this question.VIEW SOLUTION
- Question 8
Giving examples, explain the meaning of cost in economics.VIEW SOLUTION
- Question 9
Draw average revenue and marginal revenue curves in a single diagram of a firm which can sell more units of a good only by lowering the price of that good. Explain.VIEW SOLUTION
- Question 10
Explain the implication of ‘freedom of entry and exit to the firms’ under perfect competition.
Explain the implication of ‘perfect knowledge about market’ under perfect competition.VIEW SOLUTION
- Question 11
“A consumer consumes only two goods X and Y”. State and explain the conditions of consumer’s equilibrium with the help of utility analysis.
- Question 12
Explain how the demand for a good is affected by the prices of its related goods. Give examples.VIEW SOLUTION
- Question 13
Define ‘Market-supply’. What is the effect on the supply of a good when Government imposes a tax on the production of that good? Explain.
What is a supply schedule? What is the effect on the supply of a good when Government gives a subsidy on the production of that good? Explain.VIEW SOLUTION
- Question 14
What is meant by producer’s equilibrium? Explain the conditions of producer’s equilibrium through the ‘total revenue and total cost’ approach. Use diagram.VIEW SOLUTION
- Question 15
Explain the three properties of indifference curves.VIEW SOLUTION
- Question 16
Market for a good is in equilibrium. There is an ‘increase’ in demand for this good. Explain the chain of effects of this change. Use diagram.VIEW SOLUTION
- Question 17
What is nominal gross domestic product?VIEW SOLUTION
- Question 18
Define flow variables.VIEW SOLUTION
- Question 19
Define cash reserve ratio.VIEW SOLUTION
- Question 20
Define money supply.VIEW SOLUTION
- Question 21
Define foreign exchange rate.VIEW SOLUTION
- Question 22
State the components of capital account of balance of payments.VIEW SOLUTION
- Question 23
Explain how ‘distribution of gross domestic product’ is a limitation in taking gross domestic product as an index of welfare.VIEW SOLUTION
- Question 24
Given that national income is Rs 80 crore and consumption expenditure Rs 64 crore, find out average propensity of save. When income rises to Rs 100 crore and consumption expenditure to Rs 78 crore, what will be the average propensity to consume and the marginal propensity to consume?VIEW SOLUTION
- Question 25
Explain the relationship between investment multiplier and marginal propensity to consume.VIEW SOLUTION
- Question 26
When price of a foreign currency rises, its demand falls. Explain why.
When price of a foreign currency rises, its supply also rises. Explain why.VIEW SOLUTION
- Question 27
Explain the ‘allocation of resources’ objective of Government budget.
Explain the ‘redistribution of income’ objective of Government budget.VIEW SOLUTION
- Question 28
From the following data about a Government budget, find out (a) Revenue deficit, (b) Fiscal deficit and (c) Primary deficit:
Capital receipts net of borrowings
- Question 29
Giving reasons classify the following into intermediate products and final products:
(i) Furniture purchased by a school.
(ii) Chalks, dusters, etc, purchased by a school.VIEW SOLUTION
- Question 30
Explain the role of the following in correcting ‘deficient demand’ in an economy:
(i) Open market operations.
(ii) Bank rate.
Explain the role of the following in correcting ‘excess demand’ in an economy:
(i) Bank rate.
(ii) Open market operations.VIEW SOLUTION
- Question 31
Explain the process of money creation by the commercial banks with the help of a numerical example.VIEW SOLUTION
- Question 32
Calculate National Income and Gross National Disposable Income from the following:
Net current transfers to the rest of the world
Private final consumption expenditure
Consumption of fixed capital
Net factor income to abroad
Government final consumption expenditure
Net indirect tax
Net domestic fixed capital formation
Change in stocks