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# Board Paper of Class 12-Science 2016 Economics (SET 3) - Solutions

General Instructions:

(i) All questions in both sections are compulsory. However, there is internal choice in some questions.

(ii) Marks for questions are indicated against each question.

(iii) Question No.1-5 and 16-20 are very short answer questions carrying 1 mark each. They are required to be answered in one sentence.

(iv) Question No.6-8 and 21-23 are short answer questions carrying 3 marks each. Answers to them should not normally exceed 60 words each.

(v) Question No.9-11 and 24-26 are also short answer questions carrying 4 marks each. Answers to them should not normally exceed 70 words each.

(vi) Question No.12-15 and 27-30 are long answer questions carrying 6 marks each. Answers to them should not normally exceed 100 words each.

(vii) Answers should be brief and to the point and the above word limit be adhered to as far as possible.

• Question 1
'A few big sellers' is a characteristics of : (choose the correct alternative)

(a) Perfect competition

(b) Monopolistic competition

(c) Oligopoly

(d) None of the above VIEW SOLUTION

• Question 2
Marginal revenue of a firm is constant throughout under : (choose the correct alternative)

(a) Perfect competition

(b) Monopolistic competition

(c) Oligopoly

(d) All the above VIEW SOLUTION

• Question 3
A producer starts the business in the building owned by him and borrows money for running it. Identify implicit cost. VIEW SOLUTION

• Question 4
A firm is able to sell more quantity of a good only by lowering the price. The firm's marginal revenue, as he goes on selling, would be :

(choose the correct alternative)

(a) Greater than average revenue

(b) Less than average revenue

(c) Equal to average revenue

(d) Zero VIEW SOLUTION

• Question 6
Price elasticity of demand for the two goods X and Y are zero and (–) 1 respectively. Which of the two is more elastic and why? VIEW SOLUTION

• Question 7
Explain the meaning of 'minimum' price ceiling and its implications.

OR

Explain the chain of effects of 'increase' in demand of a good. VIEW SOLUTION

• Question 8
A consumer consumes only two goods X and Y. Marginal rate of substitution is 3 and per unit prices of X and Y are Rs 4 and Rs 2 respectively. Is the consumer in equilibrium? What will be the further reaction of the consumer? Give reasons. VIEW SOLUTION

• Question 9
What type of production function is this in which only one input is increased and others kept constant? State the behaviour of total product in this production function.

OR

Define cost. State the behaviour of (a) Total Fixed Cost and (b) Total Variable Cost as output is increased. VIEW SOLUTION

• Question 10
A producer supplies 100 units of a good at a price of Rs 20 per unit. Price elasticity of supply is 2. At what price will he supply 50 units? Calculate. VIEW SOLUTION

• Question 11
Define  demand. Share the factors affecting market demand. VIEW SOLUTION

• Question 12
A consumer consumes only two goods X and Y. Explain the conditions of consumer's equilibrium using Marginal Utility Analysis. VIEW SOLUTION

• Question 13
Explain the implications of the following :

(a) Product differentiation in monopolistic competition.

(b) Perfect knowledge in perfect competition.

OR

Explain the implications of the following :

(a) Interdependence between firms in oligopoly.

(b) Large number of sellers in perfect competition. VIEW SOLUTION

• Question 14
Explain the concepts of Opportunity Cost and Marginal Rate of Transformation using a production possibility schedule based on the assumption that no resource is equally efficient in production of all goods. VIEW SOLUTION

• Question 15
Explain the difference between "Shift of Supply Curve" and "Movement along Supply Curve". State one factor responsible for each. Use diagrams. VIEW SOLUTION

• Question 16
Disinvestment by government means: (choose the correct alternative)

(a) Selling of its fixed capital assets
(b) Selling of shares of public enterprises held by it.
(c) Selling of its buildings
(d) All the above VIEW SOLUTION

• Question 17
Balance of Payments 'deficit' is the excess of : (choose the correct alternative)

(a) Current account payments over current account receipts.

(b) Capital account payments over capital account receipts.

(c) Autonomous payments over autonomous receipts.

(d) Accommodating payments over a accommodating receipts. VIEW SOLUTION

• Question 19
Unforeseen obsolescence of fixed capital assets during production is:
(choose the correct alternative)

(a) Consumption of fixed capital
(b) Capital loss
(c) Income loss
(d) None of the above VIEW SOLUTION

• Question 21
Distinguish between Average Propensity to Consume and Marginal Propensity to Consume using a numerical example.

Or

Explain how can government spending be helpful in removing deficient demand. VIEW SOLUTION

• Question 22
An economy is in equilibrium. Find autonomous consumption expenditure:
 National Income = 1,600 Investment Expenditure = 300 Marginal Propensity to Consume = 0.8
VIEW SOLUTION

• Question 23
If nominal income is Rs 600 and price index is 100, find real income. VIEW SOLUTION

• Question 24
Explain the 'Unit of Account' function of money. How has it solved the related problem created by barter?

Or

Explain the 'Standard of differed payment' function of money. How has it solved the related problem created by barter? VIEW SOLUTION

• Question 25
Explain 'Bankers Bank' function of central bank. VIEW SOLUTION

• Question 26
Government spends on child immunization programme. Analyse its impact on Gross Domestic Product and welfare of the people. VIEW SOLUTION

• Question 27

(a) In which sub-account and on which side of the Balance of Payments Account will this borrowing be recorded? Give reason.

(b) Explain what is the impact of this borrowing on exchange rate. VIEW SOLUTION

• Question 28
What are revenue receipts? Explain the role of government budget in bringing stability in the economy.

Or

What is government budget? Explain the role of government budget in influencing allocation of resources in the economy. VIEW SOLUTION

• Question 29
Find National Income and Personal Disposable Income:  (Rs crore) (i) Undistributed profits 70 (ii) Gross National Disposable Income 1,000 (iii) Net current transfers to abroad 20 (iv) Consumption of fixed capital 100 (v) Corporation tax 200 (vi ) Indirect tax 250 (vii) Current transfers from government 50 (viii) Subsidies 60 (ix) Private income 800 (x) Personal tax 150
VIEW SOLUTION

• Question 30
Derive the two alternative conditions of expressing national income equilibrium. Show these equilibrium conditions on a single diagram. VIEW SOLUTION
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