Board Paper of Class 12-Science 2012 Economics (SET 3) - 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 1

Give meaning of an Economy.
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Question 2

What is market Demand?
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Question 3

What is the behaviour of average fixed cost as output increases?
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Question 4

What is the behaviour of average revenue in a market in which a firm can sell more only by lowering the price?
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Question 5

What is a price taker firm?
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Question 6

State reasons why does an economic problem arise?
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Question 7

Given price of a goods, how does a consumer decide as to how much of the good to buy?
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Question 8

Draw Average Variable Cost, Average Total Cost ad Marginal Cost curves in a single diagram.
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Question 9

A producer invests his own savings in starting a business and employs a manager to look after it. Identify implicit and explicit costs from this information. Explain.
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Question 10

Explain the implication of large number of buyers in a perfectly competitive market.

OR

Explain why firms are mutually interdependent in an oligopoly market.
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Question 11

Define an indifference map. Explain why an indifference curve to the right shows higher utility level.
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Question 12

A consumer buys 20 units of a good at a price of Rs 5 per unit. He incurs an expenditure of Rs120 when he buys 24 units. Calculate price elasticity of demand using the percentage method. Comment upon the likely shape of demand curve based on this information.
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Question 13

What does the Law of variable Proportions show? State the behaviour of total product according to this law.

OR

Explain how changes in prices of other products influence the supply of a given product.
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Question 14

Explain how do the following influence demand for a good:

(i) Rise in income of the consumer.

(ii) Fall in prices of the related goods.
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Question 15

Explain the conditions of a producer’s equilibrium in terms of marginal cost and marginal revenue. Use diagram.
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Question 16

Market for a good is in equilibrium. There is simultaneous “increase” both in demand and supply of the good. Explain its effect on market price.

OR

Market for a good is in equilibrium. There is simultaneous “decrease” both in demand and supply of the good. Explain its effect on market price.
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Question 17

Define stock variable.
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Question 18

Define capital goods.
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Question 19

What are demand deposits?
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Question 20

Define a Tax.
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Question 21

Give meaning of managed floating exchange rate.
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Question 22

Find Net Value Added at Market Price

S. No.	Items	Amount
(i)	Output sold (units)	800
(ii)	Price per unit of output (Rs)	20
(iii)	Excise (Rs)	1,600
(iv)	Import duty (Rs)	400
(v)	Net change in stocks (Rs)	(–) 500
(vi)	Depreciation (Rs)	1,000
(vii)	Intermediate Cost (Rs)	8,000

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Question 23

Explain the significance of the ‘Store of Value’ function of money.
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Question 24

Outline the steps taken in deriving saving curve from the consumption curve. Use diagram.
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Question 25

Find consumption expenditure from the following:

Items	Amount
Autonomous consumption	Rs 100
Marginal propensity to consume	0.70
National Income	Rs 1,000

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Question 26

Distinguish between Revenue Expenditure and Capital Expenditure in a government budget. Give examples.

OR

Explain the role of Government budget in allocation of resources.
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Question 27

Giving reasons to explain how the followings should be treated in estimating national income:

(i) Interest paid by bank on deposits by individuals.

(ii) National debt interest.
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Question 28

Explain the components of Legal reserve Ratio.

OR

Explain ‘bankers’ bank, function of Central bank.
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Question 29

Explain ‘Revenue Deficit’ in a Government budget? What does it indicate?
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Question 30

Find out (a) Gross National Product at market Price and (b) Net Current Transfers from Abroad:

S. No.	Items	(Rs crore)
(i)	Net indirect tax	35
(ii)	Private final consumption expenditure	500
(iii)	Net national disposable income	750
(iv)	Closing stock	10
(v)	Government final consumption expenditure	150
(vi)	Net domestic fixed capital formation	100
(vii)	Net factor income to abroad	(–) 15
(viii)	Net imports	20
(ix)	Opening stock	10
(x)	Consumption of fixed capital	50

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Question 31

Explain the concept of ‘excess demand’ in macroeconomics. Also explain the role of ‘open market operation’ in correcting it.

OR

Explain the concept of ‘deficient demand’ in macroeconomics. Also explain the role of Bank Rate in correcting it.
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Question 32

Explain the distinction between autonomous and accommodating transactions in balance of payments. Also explain the concept of balance of payments ‘deficit’ in this context.
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