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Board Paper of Class 12-Commerce 2009 Economics (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 two examples of Microeconomic studies.

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  • Question 2

    When is the demand of a commodity said to be inelastic?

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  • Question 4

    What causes a downward movement along a supply curve?

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  • Question 6

    Why does an economic problem arise? Explain.

    OR

    Explain the problem of ‘What to produce’.

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  • Question 7

    Distinguish between a normal good and an inferior good. Give example in each case.

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  • Question 8

    How is the price elasticity of demand of a commodity affected by the number of its substitutes? Explain.

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  • Question 9

    Explain the meaning of ‘increase in supply’ and ‘increase in quantity supplied’ with the help of a schedule.

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  • Question 10

    Why is a firm under Perfect Competition a price-taker? Explain.

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  • Question 11

    Complete the following table:

    Output (Units)

    Average Variable Cost

    (Rs)

    Total Cost

     (Rs)

    Marginal Cost

    (Rs)

    1

    -

    60

    20

    2

    18

    -

    -

    3

    -

    -

    18

    4

    20

    120

    -

    5

    22

    -

    -

    OR

    Complete the following table:

    Output (Units)

    Price

    (Rs)

    Total Revenue

     (Rs)

    Marginal Revenue

    (Rs)

    4

    9

    36

     

    5

    -

    -

    4

    6

    -

    42

    -

    7

    6

    -

    -

    8

    -

    40

    -

     

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  • Question 12

    Commodities X and Y have equal price elasticity of supply. The supply of X rises from 400 units to 500 units due to a 20 per cent rise in its price. Calculate the percentage fall in supply of Y if its price falls by 9 per cent.

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  • Question 13

    From the following schedule find out the level of output at which the producer is in equilibrium. Give reasons for your answer.

    Output

    (Units)

    Price

    (Rs)

    Total Cost

    (Rs)

    1

    24

    26

    2

    24

    50

    3

    24

    72

    4

    24

    92

    5

    24

    115

    6

    24

    139

    7

    24

    165

     

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  • Question 14

    Explain the causes of a rightward shift in demand curve of a commodity of an individual consumer.

    OR

    Explain the conditions of consumer’s equilibrium in case of (i) single commodity and (ii) two commodities. Use utility approach.

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  • Question 15

    Giving reasons, state whether the following statements are true or false:

    (i) When there are diminishing returns to a factor, total product always decreases.

    (ii) Total product will increase only when marginal product increases.

    (iii) When marginal revenue is zero, average revenue will be constant.

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  • Question 16

    With the help of a diagram explain the effect of “decrease” in demand of a commodity on its equilibrium price and quantity.

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  • Question 17

    Why is repayment of loan a capital expenditure?

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  • Question 18

    What is meant by excess demand in Macroeconomics?

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  • Question 19

    What can be the minimum value of investment multiplier?

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  • Question 22

    Complete the following table:

    Income

    Saving

    Marginal Propensity to Consume

    Average Propensity to Save

    0

    – 12

     

     

    20

    – 6

    40

    0

    60

    6

     

     

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  • Question 23

    State any three points of distinction between Central Bank and Commercial Banks.

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  • Question 24

    How can a government budget help in reducing inequalities of income? Explain.

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  • Question 25

    Explain the circular flow of income.

    OR

    Distinguish between intermediate products and final products. Give examples.

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  • Question 26

    List the items of the current account of balance of payments account. Also define ‘balance of trade’.

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  • Question 27

    Explain the meaning and two merits of fixed foreign exchange rate.

    OR

    Explain two sources each of demand and supply of foreign exchange.

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  • Question 28

    State the four functions of money. Explain any one of them.

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  • Question 29

    Distinguish between:

    (i) Direct tax and indirect tax.

    (ii) Revenue deficit and fiscal deficit.

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  • Question 30

    How will you treat the following while estimating domestic factor income of India? Give reasons for your answer.

    (i) Remittances from non-resident Indians to their families in India.

    (ii) Rent paid by the embassy of Japan in India to a resident Indian.

    (iii) Profits earned by branches of foreign bank in India.

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  • Question 31

    Give consumption function C = 100 + 0.75 Y (where C = consumption expenditure and Y = national income) and investment expenditure Rs. 1000, calculate.

    (i) Equilibrium level of national income.

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

    OR

    What changes will take place to bring an economy in equilibrium if

    (i) Planned savings are greater than planned investment and

    (ii) Planned savings are less than planned investment

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  • Question 32

    Calculate “Gross National Product at factor cost” from the following data by (i) income method, and (ii) expenditure method:

    S. No.

    Items

    (Rs in crore)

    (i)

    Private final consumption expenditure

    1,000

    (ii)

    Net domestic capital formation

    200

    (iii)

    Profits

    400

    (iv)

    Compensation of employees

    800

    (v)

    Rent

    250

    (vi)

    Government final consumption expenditure 

    500

    (vii)

    Consumption of fixed capital

    60

    (viii)

    Interest

    150

    (ix)

    Net current transfers from rest of the world

    (–) 80

    (x)

    Net factor income from abroad

    (–) 10

    (xi)

    Net exports

    (–) 20

    (xii)

    Net indirect taxes

    80

     

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