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Board Paper of Class 12-Commerce 2007 Economics (SET 1) - Solutions

General Instructions
1) This question paper contains two sections: A and B.
2) There are 9 questions in total.

Section A
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.

Section B
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 question (i) to (xv) .                                                [15 ✕ 2 = 30]
    (i) What are inferior goods?
    (ii) State the Law of Diminishing Marginal Utility.
    (iii) Give two exception to the Law of Demand.
    (iv) Distinguish between fixed factor and variable factor.
    (v) What is meant by Marginal Physical Product (MPP)?
    (vi) Show with the help of a diagram the effect of change in demand and equilibrium price, when supply is perfectly inelastic?
    (vii) Differentiate between intermediate goods and final goods.
    (viii) Define Micro Economics.
    (ix) Explain the shape of the total variable cost curve with the help of a diagram.
    (x) What are the two types of production functions?
    (xi) Differentiate between money flow of income and real flow of income
    (xii) What is meant by Foreign Exchange Rate?
    (xiii) Mention two compulsive reasons for deficit financing in India.
    (xiv) What is meant by Balance of Current Account?
    (xv) Differentiate between revenue budget and capital budget.
  • Question 2
    (a) Describe any two methods of measurements of elasticity of demand. [8]
    (b) Explain any four factors affecting the demand for a commodity [6]
  • Question 3
    (a) Sate and explain the law of supply with its assumptions. Discuss two exceptions to the law of supply. [8]
    (b) The cost function of a firm is given below: [6]
    Output 0 1 2 3 4 5 6
    Total Cost 40 80 110 126 128 135 180
    Find the following:
    (i) Total Fixed Cost                            (ii) Total Variable Cost
    (iii) Average FIxed Cost                     (iv) Average Variable Cost
    (v) Average Total Cost                       (vi) Marginal Cost
  • Question 4
    (a) Explain two causes each of increasing returns, diminishing returns and negative returns to a variable factor. [8]
    (b) Enumerate any four applications of the concept of opportunity cost. [6]
  • Question 5
    (a) Explain the features of an Oligopoly market. How is an Oligopoly market different from a Monopoly market? [8]
    (b) How does a monopolistic competitive firm reach equilibrium in the long run? Explain with the help of a diagram. [6]
  • Question 6
    (a) Define Differential Rent. Discuss any four criticisms of the Ricardian Theory of Rent. [8]
    (b) What is interest? Explain the components of gross interest. [6]
  • Question 7
    (a) (i) Explain the components of Compensation of Employees [8]
      (ii) Calculate the Compensation of Employees from the following data:  
    (in crores)
      Wages and Salaries received by the Employees
    Dearness Allowance
    Medical expenses on Employees
    Life Insurance Premium paid by Employees
    Contribution to Provident Fund by Employer
    (b) Describe the steps involved in estimating the national income by the Value Added Method. [6]
  • Question 8
    (a) What is VAT? Discuss its merits and demerits [8]
    (b) Describe the effect of public borrowing on an economy. [6]
  • Question 9
    (a) What is meant by Absolute Cost Difference? Examine the role of international trade in the growth of an economy. [8]
    (b) Distinguish between devaluation and depreciation of a currency. Explain with examples, how they affect the foreign trade of a country. [6]
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