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Board Paper of Class 12-Commerce 2011 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 6

    How is production possibility curve affected by unemployment in the economy? Explain.

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  • Question 7

    When price of a good is Rs 13 per unit, the consumer buys 11 units of that good. When price rises to Rs 15 per unit, the consumer continues to buy 11 units. Calculate price elasticity of demand.

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  • Question 8

    Distinguish between explicit cost and implicit cost and give examples.

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  • Question 9

    Draw in a single diagram the average revenue and marginal revenue curves of a firm which can sell any quantity of the good at a given price. Explain.

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  • Question 10

    Explain the implications of the feature ‘large number of buyers’ in a perfectly competitive market.

    OR

    Explain the implications of the feature ‘homogeneous products’ in a perfectly competitive market.

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  • Question 11

    A consumer consumes only two goods X and Y. At a consumption level of these two goods, he finds that the ratio of marginal utility to price in case of X is higher than in case of Y. Explain the reaction of the consumer.

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  • Question 12

    Explain how rise in income of a consumer affects the demand of a good. Give examples.

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  • Question 13

    Define marginal cost. Explain its relation with average cost

    OR

    Define variable cost explain the behaviour of total variable cost as output increases.

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  • Question 14

    What is producer’s equilibrium? Explain the conditions of producer’s equilibrium through the ‘marginal cost and marginal revenue’ approach. Use diagram.

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  • Question 15

    Explain the conditions of consumer’s equilibrium with the help of the Indifference Curve Analysis.

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  • Question 16

    Market for a good is in equilibrium. There is ‘increase’ in supply of the good. Explain the chain of effect of this change. Use diagram.

    OR

    Distinguish between ‘non-collusive’ and ‘collusive’ oligopoly. Explain the following features of oligopoly:

    (i) Few firms

    (ii) Non-price competition

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  • Question 19

    Define ‘Statutory Liquidity Ratio’.

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  • Question 22

    Which transactions determine the balance of trade? When is balance of trade in surplus?

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  • Question 23

    Explain how ‘non-monetary exchanges’ are a limitation in taking gross domestic product as an index of welfare.

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  • Question 24

    In an economy the marginal propensity to consume is 0.75. investment expenditure in the economy increases by Rs 75 crore. Calculate the total increase in national income.

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  • Question 25

    Explain the distinction between voluntary and involuntary unemployment.

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  • Question 26

    When price of a foreign currency falls, the demand for that foreign currency rises. Explain why.

    OR

    When price of a foreign currency falls, the supply of that foreign currency also falls. Explain, why.

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  • Question 27

    Explain the ‘redistribution of income’ objective of a government budget.

    OR

    Explain the ‘economy stability objective of a government budget.

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  • Question 28

    From the following data about a government budget find (a) revenue deficit, (b) fiscal deficit and (c) primary deficit:

    S. No.

    Items

    (Rs Arab)

    (i)

    Tax revenue

    47

    (ii)

    Capital receipts

    34

    (iii)

    Non-tax revenue

    10

    (iv)

    Borrowings

    32

    (v)

    Revenue expenditure

    80

    (vi)

    Interest payments

    20

     

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  • Question 29

    Giving reasons, explain the treatment assigned to the following while estimating national income:

    (i) Family members working free on the farm owned by the family.

    (ii) Payment of interest on borrowings by general government.

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  • Question 30

    Explain the role of the following in correcting the inflationary gap in an economy:

    (i) Legal reserves

    (ii) Bank rate

    OR

    Explain the role of the following in correcting the deflationary gap in an economy:

    (i) Open market operations

    (ii) Margin requirements

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  • Question 31

    Explain the following functions of the central bank:

    (i) Bank of issue

    (ii) Banker’s bank

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  • Question 32

    Calculate (a) ‘Net Domestic product at Factor Cost’ and (b) ‘Private Income’ from the following:

    S. No.

    Items

    (Rs in crore)

    (i)

    Domestic product accruing to government

    300

    (ii)

    Wages and salaries

    1000

    (iii)

    Net current transfers to abroad

     (–) 20

    (iv)

    Rent

    100

    (v)

    Interest paid by the production units

    130

    (vi)

    National debt interest

    30

    (vii)

    Corporation tax

    50

    (viii)

    Current transfers by government

    40

    (ix)

    Contribution to social security schemes by employers

    200

    (x)

    Dividends

    100

    (xi)

    Undistributed profits

    20

    (xii)

    Net factor income to abroad

    0

     

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