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# Board Paper of Class 12-Commerce 2019 Economics All India(Set 1) - Solutions

General Instructions :

(i) All questions in both the sections are compulsory.

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

(iii) 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.

(iv) 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.

(v) 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.

(vi) 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.

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

• Question 1
The Total Revenue earned by selling 20 units is ₹ 700. Marginal  Revenue earned by selling 21st unit is ₹ 70. The value of Total Revenue earned by selling total 21 units will be ______________. Choose the correct alternative)
(a) ₹ 721
(b) ₹ 630
(c) ₹ 770
(d) ₹ 720 VIEW SOLUTION

• Question 2
In the given figure X1Y1 and X2Y2 are 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 P2 represent 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 movement from __________. (Fill up the blank)
(a) A2 to P2
(b) A1 to P2
(c) P1 to A2
(d) A1 to A2 VIEW SOLUTION

• Question 3
Under imperfect competition, Average Revenue (AR) remains ___________ Marginal Revenue (MR). (Fill up the blank)
OR
"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 _________." (Fill up the blank) VIEW SOLUTION

• Question 4
If the supply curve is a straight line parallel to the vertical axis (Y-axis), supply of the good is called as _________. (Fill up the blank)

(a) Unitary Elastic Supply
(b) Perfectly Elastic Supply
(c) Perfectly Inelastic Supply
(d) Perfectly Elastic Demand VIEW SOLUTION

• Question 5
Distinguish between positive economics and normative economics, with suitable examples. VIEW SOLUTION

• Question 6
Explain the law of diminishing marginal utility, with the help of a hypothetical schedule.
OR
Elaborate the law of demand, with the help of a hypothetical schedule. VIEW SOLUTION

• Question 7
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. VIEW SOLUTION

• Question 8
(a) 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?

(b) Arrange the following coefficients of price elasticity of demand in ascending order:
(−) 3.1, (−) 0.2, (−) 1.1
OR
How would the demand for a commodity be affected by a change in "tastes and preferences" of the consumers in favour of the commodity? Explain using a diagram. VIEW SOLUTION

• Question 9
Which of the following statements are true or false ? Give valid reasons in support of your answer.

(a) Average cost curve cuts Average variable cost curve, at the minimum level
(b) Average product curve and Marginal product curves are 'U-shaped' curves.
(c) Under all market conditions, Average revenue and Marginal revenue are equal to each other.
(d) Total cost curve and Total variable cost curve are parallel to each other VIEW SOLUTION

• Question 10
Explain the meaning of the following features of the Oligopoly Market :

(a) Non-Price Competition
(b) Few Sellers VIEW SOLUTION

• Question 11
(a) What is meant by increasing returns to a variable factor?

(b) Discuss briefly, any two reasons for the decreasing returns to a variables factor. VIEW SOLUTION

• Question 12
Explain the following conditions :

(a) Movement along the same indifference curve.
(b) Shift from a lower to a higher indifference curve.

OR

Explain the Law of Equi-Marginal Utility
VIEW SOLUTION

• Question 13
Primary deficit in a government budget will be zero, when ________ (Choose the correct alternative)
(a) Revenue deficit in zero
(b) Net interest payments are zero
(c) Fiscal deficit is zero
(d) Fiscal deficit is equal to interest payment VIEW SOLUTION

• Question 14
In order to encourage investment in the economy, the Central Bank may _____. (Choose the correct alternative)
(a) Reduce Cash Reserve ratio
(b) Increase Cash Reserve Ratio
(c) Sell Government securities in open market
(d) Increase Bank Rate VIEW SOLUTION

• Question 15
What do you mean by a direct tax?
OR
What do you mean by an indirect tax? VIEW SOLUTION

• Question 17
Calculate change in final income, if Marginal Propensity to Consume (MPC) is 0.8 and change in initial investment is ₹ 1,000 crores. VIEW SOLUTION

• Question 18
State the impact of "Excess Demand" under the Keynesian theory on employment, in an economy.
OR
State the meaning of the following:
(a) Ex-Ante Savings
(b) Full Employment
(c) Autonomous Consumption VIEW SOLUTION

• Question 19
Classify the following statements as revenue receipts or capital receipts. Give valid reasons in support of your answer.
(a) Financial help from a multinational corporation for victims in a flood affected area.

(b) Sale of shares of a Public Sector Undertaking (PSU) to a private company, Y Ltd.

(c) Dividends paid to the Government by the State Bank of India.

(d) Borrowings from International Monetary Fund (IMF). VIEW SOLUTION

• Question 20
"Higher Gross Domestic Product (GDP) means greater per capita availability of goods in the economy." Do you agree with the given statement? Give valid reason in support of your answer.
OR
Explain the meaning of Real Gross Domestic Product and Nominal Gross Domestic Product, using a numerical example.
VIEW SOLUTION

• Question 21
Distinguish between 'Qualitative and Quantitative tools' of credit control as may be used by a Central Bank. VIEW SOLUTION

• Question 22

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

VIEW SOLUTION

• Question 23
Discuss the adjustment mechanism in the following situations :

(a) Aggregate demand is lesser than Aggregate Supply.

(b) Ex-Ante Investments are greater than Ex-Ante Savings. VIEW SOLUTION

• Question 24
Define the following :

(b) Gross Domestic Product
(c) Flow Variables
(d) Income from property and entrepreneurship

OR

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
VIEW SOLUTION
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