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Board Paper of Class 12-Science 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 2

What does a rightward shift of demand curve indicate? (1)

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• Question 3

Under which market form is a firm a price taker? (1)

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• Question 4

When is the demand for a good said to be perfectly inelastic? (1)

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• Question 5

Give one reason for an “increase” in supply of a commodity. (1)

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• Question 6

How is the demand for a good affected by a rise in the prices of other goods? Explain. (3)

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• Question 7

A firm supplies 10 units of a good at a price of Rs 5 per unit. Price elasticity of supply is 1.25. What quantity will the firm supply at a price of Rs 7 per unit? (3)

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• Question 8

Explain the meaning of diminishing marginal rate of substitution with the help of a numerical example. (3)

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• Question 9

From the following table, find out the level of output at which the producer will be in equilibrium. Give reasons for your answer. (3)

 Output Marginal Revenue Marginal Cost (units) Rs Rs 1 8 10 2 8 8 3 8 7 4 8 8 5 8 9
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• Question 10

Why can a firm not earn abnormal profits under perfect competition in the long run? Explain. (3)

OR

Why is the demand curve of a firm under monopolistic competition more elastic than under monopoly? Explain.

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• Question 11

Equilibrium price of an essential medicine is too high. Explain what possible steps can be taken to bring down the equilibrium price but only through the market forces. Also explain the series of changes that will occur in the market. (4)

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• Question 12

Explain the meaning of opportunity cost with the help of production possibility schedule. (4)

OR

With the help of suitable example explain the problem of ‘for whom to produce’.

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• Question 13

A 5 percent fall in the price of a good raises its demand from 300 units to 318 units. Calculate its price elasticity of demand. (4)

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• Question 14

Explain three properties of indifference curves. (6)

OR

Explain the conditions of consumer’s equilibrium under indifference curve approach.

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• Question 15

If equilibrium price of a good is greater than its market price, explain all the changes that will take place in the market. Use diagram. (6)

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• Question 16

Giving reasons, state whether the following statements are true or false: (6)

(i) Average product will increase only when marginal product increases.

(ii) With increase in level of output, average fixed cost goes on falling till it reaches zero.

(iii) Under diminishing returns to a factor, total product continues to increase till marginal product reaches zero.

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• Question 17

Give two examples of intermediate goods. (1)

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• Question 18

State the components of supply of money. (1)

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• Question 19

What one step can be taken through market to reduce the consumption of a product harmful for health? (1)

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• Question 20

How can Reserve Bank of India help in bringing down the foreign exchange rate which is very high? (1)

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• Question 22

Explain the ‘medium of exchange’ function of money. (3)

OR

Explain the ‘lender of last resort’ function of central bank.

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• Question 23

Distinguish between revenue receipts and capital receipts. Give an example of each. (3)

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• Question 24

How can budgetary policy be used to reduce inequalities of income? (3)

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• Question 25

Explain the effect of depreciation of domestic currency on exports. (3)

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• Question 26

How is exchange rate determined in the foreign exchange market? Explain. (3)

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• Question 27

Calculate ‘Sales’ from the following data: (4)

 (Rs in lakhs) (i) Subsidies 200 (ii) Opening stock 100 (iii) Closing stock 600 (iv) Intermediate 3,000 consumption (v) Consumption of 700 fixed capital (vi) Profit 750 (vii) Net value added 2,000 at factor cost
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• Question 28

Distinguish between “real” gross domestic product and “nominal” gross domestic product. Which of these is a better index of welfare of the people and why? (4)

OR

Distinguish between stocks and flows. Give two examples of each.

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• Question 29

Explain the credit creation role of commercial banks with the help of a numerical example. (4)

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• Question 30

From the data given below about an economy, calculate (a) investment expenditure and (b) consumption expenditure. (6)

 (i) Equilibrium level 5,000 of income (ii) Autonomous 500 consumption (iii) Marginal 0.4 propensity to consume
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• Question 31

Explain the meaning of under-employment equilibrium. Explain two measures by which full-employment equilibrium can be reached. (6)

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• Question 32

Calculate “Gross National Product at Market Price” from the following data: 6

 S.No. Particulars (Rs in crores) (i) Compensation of 2,000 employees (ii) Interest 500 (iii) Rent 700 (iv) Profits 800 (v) Employer’s 200 contribution to social security schemes (vi) Dividends 300 (vii) Consumption of 100 fixed capital (viii) Net indirect 250 taxes (ix) Net exports 70 (x) Net factor 150 income to abroad (xi) Mixed income of 1,500 self-employed

OR

Calculate “Gross National Disposable Income” from the following data:

 S.No. Particulars (Rs in crores) (i) Net domestic 3,000 product at factor cost (ii) Indirect taxes 300 (iii) Net current 250 transfers from rest of the world (iv) Current 100 transfers from the government (v) Net factor 150 income to abroad (vi) Consumption of 200 fixed capital (vii) Subsidies 100
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