Board Paper of Class 12-Commerce 2012 Economics (SET 2) - 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

What is a price taker firm?
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Question 2

Give meaning of an Economy.
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Question 3

What is the behaviour of average revenue in a market in which a firm can sell more only by lowering the price?
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Question 4

What is market Demand?
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Question 5

What is the behaviour of average fixed cost as output increase?
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Question 6

What is ‘Marginal Rate of Transformation’? Explain with the help of an example.
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Question 7

Explain the implication of large number of buyers in a perfectly competitive market.

OR

Explain why are firms mutually interdependent in an oligopoly market.
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Question 8

Given price of a good, how does a consumer decide as to how much of that good to buy?
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Question 9

A producer borrows money and opens a shop. The shop premise is owned by him. Identify the implicit and explicit costs from this information. Explain.
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Question 10

Draw Average Variable Cost, Average Total Cost and Marginal Cost Curves in a single diagram.
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Question 11

Define Marginal Rate of Substitution. Explain why is an indifference curve convex?
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Question 12

A consumer buys 10 units of a good at a price of Rs 9 per unit. At price of Rs 10 per unit he buys 9 units. What is price elasticity of demand. Use expenditure approach. Comment on the likely shape of demand curve on the basis of this measure of elasticity.
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Question 13

What does the Law of Variable Proportions show? State the behavior of total product according to this law.

OR

Explain how changes in prices of other products influence the supply of a given product.
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Question 14

Market for a good is in equilibrium. There in simultaneous “increase” both in demand and supply of the good. Explain its effect on market price.

OR

Marker for a good is in equilibrium. There is simultaneous “decrease” both in demand and supply of the good. Explain its effect on market price.
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Question 15

Explain how do the following influences demand for a good:

(i) Rise in income of the consumer.

(ii) Fall in prices of the related goods.
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Question 16

Explain the conditions of a producer’s equilibrium in terms of marginal cost and marginal revenue.
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Question 17

Given meaning of managed floating exchange rate.
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Question 18

Define a Tax.
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Question 19

Define stock variable.
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Question 20

Define capital goods.
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Question 21

What are demand deposits?
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Question 22

Calculate Net Value Added at Factor Cost:

S. No.	Items	Amount
(i)	Consumption of fixed capital (Rs)	600
(ii)	Import duty (Rs)	400
(iii)	Output sold (units)	2,000
(iv)	Price per unit of output (Rs)	10
(v)	Net change in stock (Rs)	(–) 50
(vi)	Intermediate cost (Rs)	10,000
(vii)	Subsidy (Rs)	500

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Question 23

Distinguish between Revenue Expenditure and Capital Expenditure in a government budget. Give example.

OR

Explain the role of government budget in allocation of resources.
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Question 24

Explain the significance of the ‘Store of Value’ function of money.
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Question 25

Find ‘investment’ from the following:

Items	Amount (Rs)
National Income	Rs 500
Autonomous Consumption	Rs 100
Marginal propensity to consume	0.75

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Question 26

Outline the steps taken in deriving saving curve from the consumption curve. Use diagram.
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Question 27

Giving reason explain how should the following be treated in estimating national income:

(i) Payment of bonus by a firm

(ii) Payment of interest on a loan taken by an employee from the employer
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Question 28

Explain ‘revenue deficit’ in a Government budget? What does it indicate?
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Question 29

Explain the components of Legal Reserve Ratio.

OR

Explain ‘bankers’ bank, function of Central bank.
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Question 30

Find out (a) Net National Product at Market price and (b) Gross National Disposable

Income:

S. No.	Items	(Rs crore)
(i)	Net current transfers from abroad	(–) 10
(ii)	Wages and Salaries	1,000
(iii)	Net factor income to abroad	(–) 20
(iv)	Social security contributions by employers	100
(v)	Net Indirect Tax	80
(vi)	Rent	300
(vii)	Consumption of fixed capital	120
(viii)	Corporation Tax	50
(ix)	Dividend	200
(x)	Undistributed profits	60
(xi)	Interest	400

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Question 31

Explain the distinction between autonomous and accommodating transaction in balance of payments. Also explain the concept of balance of payment ‘deficit’ in this context.
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Question 32

Explain the concept of ‘excess demand’ in macroeconomics. Also explain the role of ‘open market operation’ in correcting it.

OR

Explain the concept of ‘deficient demand’ in macroeconomics. Also explain the role of Bank Rate in correcting it.
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