Board Paper of Class 12-Commerce 2006 Economics (SET 1) - Solutions
1) This question paper contains two sections: A and B.
2) There are 9 questions in total.
i. This section contains 1 question with fifteen sub-parts.
ii. Question No. 1 is compulsory.
iii. Attempt all the sub-parts of 2 marks each.
iv. This section is of 30 marks in total.
i. This section consists of 8 questions of 14 marks each.
ii. Attempt any 5 questions from question nos. 2 to 9.
iv. This whole section is of 70 marks in total.
- Question 1
Answer briefly each of the items (i) to (xv) in this question : [15 ✕ 2 = 30] (i) Define macro economics. (ii) What is cross elasticity of demand? (iii) Define the terms marginal rate of substitution. (iv) Differentiate between international trade and internal trade. (v) Draw a perfectly elastic demand curve. (vi) Mention two factors, other than price, which influence the supply of the commodity. (vii) What is meant by short-run and long-run in production? (viii) Define implicit cost. How is it different from explicit cost? (ix) Why is price per unit equal to the average revenue and marginal revenue? (x) What is product differentiation? (xi) Define Oligopoly. (xii) Draw a diagram to show the real flow and money flow of income under a two sector model of circular flow. (xiii) Why are the following not included in the estimation of the national income : (a) Sale of an old car (b) Winning a lottery (xiv) Distinguish between progressive and proportional tax. (xv) Mention two sources of tax revenue of State Government.
- Question 2
(a) Explain the basis of international trade using comparative cost analysis.  (b) Discus the components which are included in the Balance of Payment of a country. 
- Question 3
(a) Explain the law of demand with the help of a diagram and schedule. Give two reason why it slopes downwards to the right.  (b) Discuss with the help of diagram the concepts of increase of demand and extension of demand. 
- Question 4
(a) Explain any four factors determining the price elasticity of demand.  (b) Differentiate between stock and supply. With the help of diagram, explain the relationship between time period and supply. 
- Question 5
(a) Define average cost and marginal cost of production. Explain the shapes of the average cost curves.  (b) Differentiate between :  (i) Returns to scale and returns to a variable factors (ii) Internal and external economies.
- Question 6
(a) Explain any four features of monopolistic competition.  (b) Describe with the help of a diagram the supernormal profit earned by a monopoly firm in equilibrium, in the short-run. 
- Question 7
(a) What is modern theory of rent? How is rent determined when the supply of a factor is perfectly elastic, perfectly inelastic and relatively elastic? Explain with diagram.  (b) Explain the marginal productivity theory of distribution. 
- Question 8
(a) (i) Define the terms mixed income of self employed and operating surplus.  (ii) Calculate the operating surplus from the following data: Rs
Compensation of Employees
Personal Income Tax
(b) Explain four problems faced in the calculation of the national income in underdeveloped nations. 
- Question 9
(a) Explain the budgetary procedure followed in India.  (b) Discuss how equity, stability and growth can be achieved through the fiscal policy.