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Board Paper of Class 12-Commerce 2016 Economics (SET 1) - Solutions

General Instructions:

 (i) All questions in both sections are compulsory. However, there is internal choice in some questions.

(ii) Marks for questions are indicated against each question.

(iii) Question No.1-5 and 16-20 are very short answer questions carrying 1 mark each. They are required to be answered in one sentence.

(iv) Question No.6-8 and 21-23 are short answer questions carrying 3 marks each. Answers to them should not normally exceed 60 words each.

(v) Question No.9-11 and 24-26 are also short answer questions carrying 4 marks each. Answers to them should not normally exceed 70 words each. 

(vi) Question No.12-15 and 27-30 are long answer questions carrying 6 marks each. Answers to them should not normally exceed 100 words each.

(vii) Answers should be brief and to the point and the above word limit be adhered to as far as possible.

  • Question 1
    What is the relation between Average Variable Cost and Average Total Cost, if Total Fixed Cost is zero? VIEW SOLUTION

  • Question 2
    A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will be :

    (Choose the correct alternative) :

    (a) Greater than Average Revenue

    (b) Less than Average Revenue

    (c) Equal to Average Revenue

    (d) Zero VIEW SOLUTION

  • Question 3
    When does 'change in demand' take place? VIEW SOLUTION

  • Question 4
    Differentiated products is a characteristic of :

    (Choose the correct alternative) :

    (a) Monopolistic competition only

    (b) Oligopoly only

    (c) Both monopolistic competition and oligopoly

    (d) Monopoly VIEW SOLUTION

  • Question 5
    Demand curve of a firm is perfectly elastic under :

    (Choose the correct alternative)

    (a) Perfect competition

    (b) Monopoly

    (c) Monopolistic competition

    (d) Oligopoly VIEW SOLUTION

  • Question 6
    A consumer consumes only two goods X and Y. Marginal utilities of X and Y are 3 and 4 respectively. Prices of X and Y are Rs 4 per unit each. Is consumer in equilibrium? What will be further reaction of the consumer? Give reasons. VIEW SOLUTION

  • Question 7
    What will be the effect of 10 percent rise in price of a good on its demand if price elasticity of demand is (a) Zero, (b) –1, (c) –2. VIEW SOLUTION

  • Question 8
    What is minimum price ceiling? Explain its implications.

    If the prevailing market price is above the equilibrium price, explain its chain of effects. VIEW SOLUTION

  • Question 9
    Define demand. Name the factors affecting market demand. VIEW SOLUTION

  • Question 10
    Define fixed cost. Give an example. Explain with reason the behaviour of Average Fixed Cost as output is increased.

    Define marginal product. State the behaviour of marginal product when only one input is increased and other inputs are hold constant. VIEW SOLUTION

  • Question 11
    When price of a commodity falls from Rs 12 per unit to Rs 9 per unit. the producer supplies 75 percent less output. Calculate price elasticity of supply. VIEW SOLUTION

  • Question 12
    Why do central problems of an economy arise? Explain the central problem of "for whom to produce"? VIEW SOLUTION

  • Question 13
    Explain three properties of indifference curves. VIEW SOLUTION

  • Question 14
    Examine the effect of (a) fall in the own price of good X and (b) rise in tax rate on good X, on the supply curve. Use diagrams. VIEW SOLUTION

  • Question 15
    Explain the implications of the following in a perfectly competitive market :

    (a) Large number of sellers

    (b) Homogeneous products.

    Explain the implications of the following in an oligopoly market :

    (a) Barriers to entry of new firms

    (b) A few or a few big sellers VIEW SOLUTION

  • Question 17
    National income is the sum of factor incomes accruing to :

    (Choose the correct alternative)

    (a) Nationals

    (b) Economic territory

    (c) Residents

    (d) Both residents and non-residents VIEW SOLUTION

  • Question 18
    What are revenue receipts in a government budget? VIEW SOLUTION

  • Question 19
    Primary deficit equals :

    (Choose the correct alternative)

    (a) Borrowings

    (b) Interest payments

    (c) Borrowings less interest payments

    (d) Borrowings and interest payments both VIEW SOLUTION

  • Question 20
    Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called :

    (Choose the correct alternative)

    (a) Current transactions

    (b) Capital transactions

    (c) Autonomous transactions

    (d) Accommodating transactions VIEW SOLUTION

  • Question 21
    Assuming real income to be Rs 200 crore and price index to be 135, calculate nominal income. VIEW SOLUTION

  • Question 22
    What is aggregate demand? State its components.

    Explain how controlling money supply is helpful in reducing excess demand. VIEW SOLUTION

  • Question 23
    An economy is in equilibrium. Calculate Marginal Propensity to Consume :

    National income = 1000

    Autonomous consumption expenditure = 200

    Investment expenditure = 100 VIEW SOLUTION

  • Question 24
    Sale of petrol and diesel cars is rising particularly in big cities. Analyse its impact on gross domestic product and welfare. VIEW SOLUTION

  • Question 25
    Explain the 'medium of exchange' function of money. How has it solved the related problem created by barter?

    Explain the 'standard of deferred payment' function of money. How has it solved the related problem created by barter? VIEW SOLUTION

  • Question 26
    Explain how 'Repo Rate' can be helpful in controlling credit creation. VIEW SOLUTION

  • Question 27
    What is the difference between revenue expenditure and capital expenditure? Explain how taxes and government expenditure can be used to influence.


    What is the difference between direct tax and indirect tax? Explain the role of government budget in influencing allocation of resources. VIEW SOLUTION

  • Question 28
    Given saving curve, derive consumption curve and state the steps in doing so. Use diagram. VIEW SOLUTION

  • Question 29
    Indian investors lend abroad. Answer the following questions :

    (a) In which sub-account and on which side of the Balance of Payments Account such lending is recorded? Give reasons.

    (b) Explain the impact of the leading on market exchange rate. VIEW SOLUTION

  • Question 30
    Find Gross National Product at Market Price and Private Income:
        (Rs crores)
    (i) Private final consumption expenditure 800
    (ii) Net current transfers to abroad 20
    (iii) Net factor income to abroad (–) 10
    (iv) Government final consumption expenditure 300
    (v) Net indirect tax 150
    (vi) Net domestic capital formation 200
    (vii) Current transfers from government 40
    (viii) Depreciation 100
    (ix) Net imports 30
    (x) Income accruing to government 90
    (xi) National debt interest 50
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