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Board Paper of Class 12-Science 2017 Economics Abroad(SET 3) - 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
    A firm is not a price maker under   (1)

    (a) oligopoly

    (b) monopolistic competition

    (c) monopoly

    (d) perfect competition VIEW SOLUTION
  • Question 2
    The expenditure on a good would change in the opposite direction as the price changes only when demand is   (1)

    (a) elastic

    (b) inelastic

    (c) perfectly inelastic

    (d) unitary elastic VIEW SOLUTION
  • Question 3
    There are only a few sellers under   (1)

    (a) Perfect competition

    (b) Monopolistic competition

    (c) Monopoly

    (d) Oligopoly VIEW SOLUTION
  • Question 5
    When marginal utility is zero, total utility is   (1)

    (a) zero

    (b) minimum

    (c) maximum

    (d) negative VIEW SOLUTION
  • Question 6
    Why is a Production Possibility Curve concave to the origin? Explain.  (3)

    Why does an economic problem arise? Explain.  (3) VIEW SOLUTION
  • Question 7
    Give any three factors that can cause a rightward shift of demand curve.  (3) VIEW SOLUTION
  • Question 8
    Explain the meaning of opportunity cost with the help of an example.  (3) VIEW SOLUTION
  • Question 9
    Explain the meaning of marginal rate of substitution. Why does it diminish as one good is substituted for the other? Explain.  (4)

    Explain the meaning of budget line. What can cause a change in it? Explain.  (4) VIEW SOLUTION
  • Question 10
    State the relation between marginal product and average product. Show this relation in a diagram.  (4) VIEW SOLUTION
  • Question 11
    Explain the "interdependence between firms" characteristic of oligopoly market.   (4) VIEW SOLUTION
  • Question 12
    When the price of X doubles, its quantity demanded falls by 60 percent. Calculate its price elasticity of demand. What should be the percentage change in price so that its quantity demanded doubles?   (6) VIEW SOLUTION
  • Question 13
    Complete the following table :    (6)
    Cost Rs
    Average Variable Cost Rs Total
    Cost Rs
    Fixed Cost Rs
    1 60 ...... 120 ......
    2 ...... ...... 174 ......
    3 ...... 54 ...... ......
    4 54 ...... ...... 15
    5 ...... 57 345 ......
  • Question 14
    Explain the meaning and implications of maximum price ceiling and minimum price ceiling.  (6)

    State whether the following statements are true or false. Give reasons for your answer :  (6)

    (i) When equilibrium price is greater than market price there will be excess supply in the market.

    (ii) X and Y are complementary goods. A fall in the price of Y will result in a rise in the price of X. VIEW SOLUTION
  • Question 15
    Explain the conditions of producer's equilibrium with the help of a numerical example. Use marginal cost and marginal revenue approach.  (6) VIEW SOLUTION
  • Question 16
    Give the meaning of under-employment equilibrium.   (1) VIEW SOLUTION
  • Question 17
    What is meant by trade deficit?    (1) VIEW SOLUTION
  • Question 19
    When aggregate demand is greater than aggregate supply, inventories   (1)

    (a) fall

    (b) rise

    (c) do not change

    (d) first fall, then rise VIEW SOLUTION
  • Question 20
    Repo rate is the rate at which     (1)

    (a) commercial banks purchase government securities from the central bank

    (b) commercial banks can take loans from the central bank

    (c) commercial banks can keep their deposits with the central bank

    (d) short-term loans are given by commercial banks VIEW SOLUTION
  • Question 21
    State any three functions of money.  (3)

    Define money. Lists its components.  (3) VIEW SOLUTION
  • Question 22
    Explain 'mixed income of self-employed' and give an example.  (3) VIEW SOLUTION
  • Question 23
    Giving reasons, classify the following into revenue receipts and capital receipts :   (3)

    (i) Recovery of loans

    (ii) Profits of public sector undertakings

    (iii) Borrowings VIEW SOLUTION
  • Question 24
    Explain how can government budget be useful in influencing allocation of resources in an economy.  (4) VIEW SOLUTION
  • Question 25
    An economy is in equilibrium. From the following data calculate investment expenditure :  (4)

    (i) Marginal propensity to consume = 0·9

    (ii) Autonomous consumption = 200

    (iii) Level of income = 10000 VIEW SOLUTION
  • Question 26
    Explain money creation function of commercial banks.  (4)

    Explain the "varying reserve requirements" method of credit control by the central bank.   (4) VIEW SOLUTION
  • Question 27
    Explain the distinction between the flexible exchange rate and the managed floating exchange rate.  (6)

    Explain by giving examples, the distinction between depreciation and devaluation of domestic currency.  (6) VIEW SOLUTION
  • Question 28
    What precautions should be taken while estimating national income by value added method? Explain.  (6) VIEW SOLUTION
  • Question 29
    In an economy, investment increased by 1,100 and as a result of it income increased by 5,500. Had the marginal propensity to save been 25 percent, what would have been the increase in income?   (6) VIEW SOLUTION
  • Question 30
    Calculate (a) national income, and (b) net national disposable income:    (6)
        (Rs in crores)
    (i) Compensation of employees 2,000
    (ii) Profit 800
    (iii) Rent 300
    (iv) Interest 250
    (v) Mixed income of self-employed 7,000
    (vi) Net current transfers to abroad 200
    (vii) Net exports (–) 100
    (viii) Net indirect taxes 1,500
    (ix) Net factor income to abroad 60
    (x) Consumption of fixed capital 120
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