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# Board Paper of Class 12-Humanities 2013 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 3

When is the demand for a good said to be inelastic?

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• Question 5

Under which market form a firm’s marginal revenue is always equal to price?

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• Question 6

Explain the difference between an inferior good and a normal good.

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• Question 7

Explain the law of diminishing marginal utility with the help of a total utility schedule.

OR

Explain the condition of consumer’s equilibrium with the help of utility analysis. (3)

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• Question 8

When the price of a good rises from Rs 20 per unit to Rs 30 per unit, the revenue of the firm producing this good rises from Rs 100 to Rs 300. Calculate the price elasticity of supply. (3)

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• Question 9

Complete the following table: (3)

 Units Average Product Marginal Product of Labour (Units) (Units) 1 8 ……. 2 10 …….. 3 ……. 10 4 9 …….. 5 …… 4 6 7 ……..
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• Question 10

Explain “large number of buyers and sellers” features of a perfectly competitive market. (3)

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• Question 11

Production in an economy is below its potential due to unemployment. Government starts employment generation schemes. Explain its effect using production possibilities curve. (4)

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• Question 12

Explain the conditions of producer’s equilibrium with the help of a numerical example. (4)

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• Question 13

The price elasticity of demand for a good is − 0.4. If its price increases by 5 percent, by what percentage will its demand fall? Calculate. (4)

OR

Explain any two factors that affect the price elasticity of demand. Give suitable examples.

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• Question 14

Giving reasons, state whether the following statements are true or false.

(i) A monopolist can sell any quantity he likes at a price.

(ii) When equilibrium price of a good is less than its market price, there will be competition among the sellers. (6)

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• Question 15

Explain the Law of Variables Proportions with the help of total product and marginal product curves. (6)

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• Question 16

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

OR

Explain the relationship between

(i) Prices of other goods and demand for the given good.

(ii) Income of the buyers and demand for a good. (6)

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• Question 17

How can increase in foreign direct investment affect the price of foreign exchange? (1)

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• Question 19

Give one example of “externality” which reduces welfare of the people. (1)

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• Question 20

Give two examples of indirect taxes. (1)

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• Question 22

Explain the problem of double coincidence of wants faced under barter system. How has money solved it? (1)

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• Question 23

Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each. (3)

OR

Distinguish between revenue deficit and fiscal deficit.

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• Question 24

Explain any one objective of Government Budget. (3)

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• Question 25

Explain the effect of appreciation of domestic currency on imports. (3)

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• Question 26

Distinguish between balance of trade and balance on current account. (3)

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• Question 27

Calculate “sales” from the following data: (4)

 S. Particulars (Rs No. in lakhs) (i) Net value added 560 at factor cost (ii) Depreciation 60 (iii) Change in stock (−) 30 (iv) Intermediate 1,000 cost (v) Exports 200 (vi) Indirect taxes 60
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• Question 28

Giving reasons categorise the following into stock and flow: (4)

(i) Capital

(ii) Saving

(iii) Gross domestic product

(iv) Wealth

OR

Explain the circular flow of income.

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• Question 29

Explain “Banker to the Government” function of the Central Bank. (4)

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• Question 30

C = 100 + 0.4 Y is the Consumption Function of an economy where C is Consumption Expenditure and Y is National Income. Investment expenditure is 1,100. Calculate (6)

(i) Equilibrium level of National Income.

(ii) Consumption expenditure at equilibrium level of national income.

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• Question 31

Complete the following table: (6)

 Income Consumption expenditure Marginal Average (Rs) (Rs) propensity propensity to save to save 0 80 100 140 0.4 …… 200 …… …… 0 …… 240 …… 0.20 …… 260 0.8 0.35
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• Question 32

Calculate National Income from the following data: (6)

 S. Particulars (Rs No. in crores) (i) Private final 900 consumption expenditure (ii) Profit 100 (iii) Government final 400 consumption expenditure (iv) Net indirect 100 taxes (v) Gross domestic 250 capital formation (vi) Change in stock 50 (vii) Net factor (−) income from abroad 40 (viii) Consumption of 20 fixed capital (ix) Net imports 30

OR

Calculate net national disposable income from the following data:

 S. Particulars (Rs No. in crores) (i) Gross domestic 2,000 product at market price (ii) Net current (−) transfers to rest of the world 200 (iii) Net indirect 150 taxes (iv) Net factor 60 income to abroad (v) National debt 70 interest (vi) Consumption of 200 fixed capital (vii) Current 150 transfers from Government
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