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# Board Paper of Class 12-Commerce 2008 Economics Delhi(SET 1) - Solutions

General Instructions:
(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

Give meaning of ‘opportunity cost,’

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• Question 6

Explain the central problem “what to produce”.

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• Question 7

When price of a good rises from Rs 5 per unit to Rs 6 per unit, its demand falls from 20 units to 10 units. Compare expenditures on the good to determine whether demand is elastic or inelastic.

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• Question 8

What is the relation between good X and good Y in each case, if with fall in the price of X demand for good (Y) (i) rises and (ii) falls? Give reason.

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• Question 9

Explain the effect of technical progress on the supply of a good.

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• Question 11

Explain the conditions leading to maximization of profits by a producer. Use total cost and total revenue approach.

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• Question 12

Complete the following table:

 Output (Units) Average Revenue (Rs) Marginal Revenue (Rs) Total Revenue (Rs) 1 - 15 - 2 - - 26 3 11 - - 4 - 3 -

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• Question 13

Complete the following table:

 Output  (Units) Total Variable Cost (Rs) Average Variable Cost (Rs) Marginal Cost (Rs) 1 10 - - - - 8 6 3 27 - - - - 10 13

OR

Complete the following table:

 Output  (Units) Total Variable Cost (Rs) Average Variable Cost  (Rs) Marginal Cost (Rs) 1 - 12 - 2 20 - - - - 10 10 4 40 - -

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• Question 14

A consumer consumers only two goods. Explain his equilibrium with the help of utility approach.

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• Question 15

Explain the Law of Variable Proportions through the behaviour of both Total Product and marginal product. Give reasons.

OR

Explain “Returns to Scale” using numerical examples. Give reasons.

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• Question 16

Market for a good is in equilibrium. What is the effect on equilibrium price and quantity if both market demand and market supply of the goods increase in the same proportion? Use diagram.

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• Question 17

Give meaning of involuntary unemployment.

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• Question 20

State any one objective of government budget.

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• Question 21

Define flexible exchange rate system.

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• Question 22

Calculate ‘value of output’ from the following data:

 S. No. Particulars (Rs lakhs) (i) Net value added at factor cost 100 (ii) Intermediate consumption 75 (iii) Excise duty 20 (iv) Subsidy 5 (v) Depreciation 10

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• Question 23

When exchange rate of foreign currency rises, its supply rises. How? Explain.

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• Question 24

State components of the current account of balance of payments account.

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• Question 25

What is bank rate policy? How does it work as a method of credit control?

OR

What are open market operations? How do these work as a method of credit control?

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• Question 26

Give meanings of capital receipts and revenue receipts with an example of each.

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• Question 27

As a result of increase in investment by Rs 125 crore, national income increase by Rs. 500 crore. Calculate marginal propensity to consume.

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• Question 28

Give four agency functions of commercial banks.

OR

Explain the acceptance of deposits function of commercial banks.

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• Question 29

What is fiscal deficit? What are its implications?

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• Question 30

Calculate ‘Net Domestic Product of Factor Cost’ and ‘Gross National Disposable Income’ from the following data:

 S. No. Items (Rs in crore) (i) Net current transfers from abroad (–5) (ii) Private final consumption expenditure 250 (iii) Net factor income from abroad 15 (iv) Government final consumption expenditure 50 (v) Consumption of fixed capital 25 (vi) Net exports (–) 10 (vii) Subsidies 10 (viii) Net domestic capital formation 30 (ix) Indirect tax 20

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• Question 31

Explain determination of equilibrium level of income using ‘consumption plus investment’ approach. Use diagram.

OR

Explain determination of equilibrium level of income using ‘saving-investment’ approach. Use diagram.

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• Question 32

Giving reasons explain how the following are treated while estimating national income:

(i) Payment of fees to a lawyer engaged by a firm.

(ii) Rent free house to an employee by an employer.

(iii) Purchases by foreign tourists.

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