Board Paper of Class 12-Commerce 2010 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
Define a budget line.VIEW SOLUTION
- Question 2
What is meant by inferior good in economics?VIEW SOLUTION
- Question 3
In which market form can a firm not influence the price of the product?VIEW SOLUTION
- Question 4
Define monopoly.VIEW SOLUTION
- Question 5
What can you say about the number of buyers and sellers under monopolistic competition?VIEW SOLUTION
- Question 6
Explain the effect of the following on the price elasticity of demand of a commodity:
(i) Number of substitutes
(ii) Nature of the commodityVIEW SOLUTION
- Question 7
Explain any two causes of ‘increase’ in demand of a commodity.
Explain the inverse relationship between price and quantity demanded of a commodity.VIEW SOLUTION
- Question 8
A firm’s average fixed cost, when it produces 2 units, is Rs 30. Its average total cost schedule is given below. Calculate its marginal cost and average variable cost at each level of output.
Average Total Cost (Rs)
- Question 9
Total revenue is Rs 400 when the price of the commodity is Rs 2 per unit. When price rises to Rs 3 per unit, the quantity supplied is 300 units. Calculate the price elasticity of supply.VIEW SOLUTION
- Question 10
Why is the number of firms small in an oligopoly market? Explain.VIEW SOLUTION
- Question 11
Explain the problem of ‘how to produce’.
Distinguish between microeconomics and macroeconomics. Give examplesVIEW SOLUTION
- Question 12
When price of a commodity falls by Rs 1 per unit, its quantity demanded rises by 3 units. Its price elasticity of demand is (−) 2. Calculate its quantity demanded if the price before the change was Rs 10 per unit.VIEW SOLUTION
- Question 13
How does the equilibrium price of a ‘normal’ commodity change when income of its buyers falls? Explain the chain effects.VIEW SOLUTION
- Question 14
State whether the following statements are true or false. Give reasons for your answer:
(i) When marginal revenue is constant and not equal to zero, then total revenue will also be constant.
(ii) As soon as marginal cost starts rising, average variable cost also starts rising.
(iii) Total product always increases whether there is increasing returns or diminishing returns to a factor.VIEW SOLUTION
- Question 15
What are the conditions of consumer’s equilibrium under the indifference curve approach? What changes will take place if the conditions are not fulfilled to reach equilibrium?VIEW SOLUTION
- Question 16
From the following schedule find out the level of output at which the producer is in equilibrium, using marginal cost and marginal revenue approach. Give reasons for your answer.
Price per unit
Explain the law of returns to a factor with the help of total product and marginal product schedule.VIEW SOLUTION
- Question 17
Give the meaning of money.VIEW SOLUTION
- Question 18
What is meant by revenue deficit?VIEW SOLUTION
- Question 19
What is ex-ante aggregate demand?VIEW SOLUTION
- Question 20
Give the meaning of inflationary gap.VIEW SOLUTION
- Question 21
State two sources of demand for foreign exchange.VIEW SOLUTION
- Question 22
Distinguish between real and nominal gross domestic product.
Giving reasons, classify the following into intermediate and final goods.
(i) Machines purchased by a dealer of machines.
(ii) A car purchased by a household.VIEW SOLUTION
- Question 23
Explain the ‘banker to the government’ function of the central bank.VIEW SOLUTION
- Question 24
- Question 25
Distinguish between autonomous and accommodating transactions of balance of payments account.VIEW SOLUTION
- Question 26
Giving two examples, explain why there is a rise in demand for a foreign currency when its price falls.VIEW SOLUTION
- Question 27
How does a commercial bank create money?
Explain how do ‘open market operations’ by the central bank affect money creation by commercial bank.VIEW SOLUTION
- Question 28
Giving reasons, state whether the following statements are true or false:
(i) When marginal propensity to consume is zero, the value of investment multiplier will also be zero.
(ii) Value of average propensity to save can never be less than zero.VIEW SOLUTION
- Question 29
(i) Capital expenditure and Revenue expenditure
(ii) Fiscal deficit and primary deficitVIEW SOLUTION
- Question 30
How will you treat the following while estimating national income of India? Give reasons for your answer.
(i) Dividend received by a foreigner from investment in shares of an Indian company.
(ii) Profits earned by a branch of an Indian bank in Canada.
(iii) Scholarship given to Indian students studying in India by a foreign company.
Explain the problem of double counting in estimating national income, with the help of an example. Also explain two alternative ways of avoiding the problem.VIEW SOLUTION
- Question 31
In an economy the equilibrium level of income is Rs. 12,000 crores. The ratio of marginal propensity to consume and marginal propensity to save is 3 : 1. Calculate the additional investment needed to reach a new equilibrium level of income of Rs. 20,000 crores.VIEW SOLUTION
- Question 32
Calculate (a) Gross domestic product at market price, and (b) Factor income from abroad from the following data:
(Rs in crore)
Compensation of employees
Gross national product at factor cost
Net current transfers from rest of the world
Factor income to abroad
Net indirect taxes
Net domestic capital formation
Gross fixed capital formation
Change in stock