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Board Paper of Class 12-Commerce 2017 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
    The demand of a commodity when measured through the expenditure approach is inelastic. A fall in its price will result in : (choose the correct alternative)   (1)

    (a) no change in expenditure on it.
    (b) increase in expenditure on it.
    (c) decrease in expenditure on it.
    (d) any one of the above. VIEW SOLUTION

  • Question 2
    As we move along a downward sloping straight line demand curve from left to right, price elasticity of demand : (choose the correct alternative)   (1)

    (a) remains unchanged
    (b) goes on falling
    (c) goes on rising
    (d) falls initially then rises VIEW SOLUTION

  • Question 4
    Average revenue and price are always equal under : (choose the correct alternative)   (1)

    (a) perfect competition only
    (b) monopolistic competition only
    (c) monopoly only
    (d) all market forms VIEW SOLUTION

  • Question 5
    State any one feature of oligopoly.    (1) VIEW SOLUTION

  • Question 6
    Distinguish between microeconomics and macroeconomics.    (3) VIEW SOLUTION

  • Question 7
    State the meaning and properties of production possibilities frontier.   (3) VIEW SOLUTION

  • Question 8
    Show that demand of a commodity is inversely related to its price.     (3)

    Explain with the help of utility analysis.

    Why is an indifference curve negatively sloped? Explain. VIEW SOLUTION

  • Question 9
    Explain the conditions of consumer's equilibrium under indifference curve approach.    (4) VIEW SOLUTION

  • Question 10
    State different phases of the law of variable proportions on the basis to total product. Use diagram.  (4)

    Explain the geometric method of measuring price elasticity of supply. Use diagram. VIEW SOLUTION

  • Question 11
    Explain the 'free entry and exit of firms' feature of monopolistic competition.    (4) VIEW SOLUTION

  • Question 12
    When price of a commodity X falls by 10 per cent, its demand rises from 150 units to 180 units. Calculate is price elasticity of demand. How much should be the percentage fall in its price so that its demand rises from 150 to 210 units?    (6) VIEW SOLUTION

  • Question 13
    Complete the following table :    (6)
    Output units Total cost Rs. Average variable cost Rs. Marginal cost Rs. Average fixed cost Rs.
    0 30      
    1 ... ... 20 ...
    2 68 ... ... ...
    3 84 18 ... ...
    4 ... ... 18 ...
    5 125 19 ... 6

  • Question 14
    Good Y is a substitute of good X. The price of Y falls. Explain the chain of effects of this change in the market of X.


    Explain the chain of effects of excess supply of a good on its equilibrium price.    (6) VIEW SOLUTION

  • Question 15
    Given below is the cost schedule of a product produced by a firm. The market price per unit of the product at all levels of output is Rs. 12. Using marginal cost and marginal revenue approach, find out the level of equalibrium output. Give reasons for your answer:    (6)
    Output (Units) 1 2 3 4 5 6
    Average Cost (Rs.) 12 11 10 10 10.4 11

  • Question 16
    The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is called : (choose the correct alternative)  (1)

    (a) Statutory liquidity ratio

    (b) Deposit ratio

    (c) Cash reserve ratio

    (d) Legal reserve ratio VIEW SOLUTION

  • Question 17
    Aggregate demand can be increased by : (choose the correct alternative)  (1)

    (a) increasing bank rate

    (b) selling government securities by Reserve Bank of India

    (c) increasing cash reserve ratio

    (d) none of the above VIEW SOLUTION

  • Question 18
    Give the meaning of involuntary unemployment.  (1) VIEW SOLUTION

  • Question 19
    What is primary deficit?       (1) VIEW SOLUTION

  • Question 20
    Give the meaning of balance of payments.  (1) VIEW SOLUTION

  • Question 21
    Distinguish between final goods and intermediate goods. Give an example of each.  (3) VIEW SOLUTION

  • Question 22
    Explain the store of value function of money.  (3)

    State the meaning and components of money supply. VIEW SOLUTION

  • Question 23
    Explain the basis of classifying taxes into direct and indirect tax. Give examples.  (3) VIEW SOLUTION

  • Question 24
    Explain 'banker to the government' function of the central bank.  (4)

    Explain the role of reverse repo rate in controlling money supply. VIEW SOLUTION

  • Question 25
    Explain how government budget can be used to influence distribution of income?  (4) VIEW SOLUTION

  • Question 26
    An economy is in equilibrium. From the following data about an economy calculate autonomous consumption.    (4)

    (i) Income = 5000
    (ii) Marginal propensity to save = 0.2
    (iii) Investment expenditure = 800 VIEW SOLUTION

  • Question 27
    Why does the demand for foreign currency fall and supply rises when its price rises? Explain.  (6) VIEW SOLUTION

  • Question 28
    Explain 'non-monetary exchanges' as a limitation of using gross domestic product as an index of welfare of a country.  (6)

    How will you treat the following while estimating domestic product of a country? Give reasons for your answer:

    (a) Profits earned by branches of country's bank in other countries

    (b) Gifts given by an employer to his employees on independence day

    (c) Purchase of goods by foreign tourists VIEW SOLUTION

  • Question 29
    Calculate (a) net domestic product at factor cost and (b) gross national disposable income:  (6)
        Rs. in crores
    (i) Private final consumption expenditure 8000
    (ii) Government final consumption expenditure 1000
    (iii) Exports 70
    (iv) Imports 120
    (v) Consumption of fixed capital 60
    (vi) Gross domestic fixed capital formation 500
    (vii) Change in stock 100
    (viii) Factor income to abroad 40
    (ix) Factor income from abroad 90
    (x) Indirect taxes 700
    (xi) Subsidies 50
    (xii) Net current transfers to abroad (–) 30

  • Question 30
    Assuming that increase in investment is Rs. 1000 crore and marginal propensity to consume is 0.9, explain the working of multiplier.   (6) VIEW SOLUTION
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