Board Paper of Class 12-Humanities 2012 Economics (SET 2) - 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

Define Microeconomics?
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Question 2

Give one reason for shift in demand curve.
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Question 3

What is the behaviour of Total Variable Cost, as output increases?
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Question 4

What is the behaviour of Marginal Revenue in a market in which a firm can sell any quantity of the output it produces at a given price?
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Question 5

What is a price-maker firm?
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Question 6

Explain the central problem of ‘how to produce’.
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Question 7

Explain the implications of large number of sellers in a perfectly competitive market.

OR

Explain why there are only a few firms in an oligopoly market.

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Question 8

Draw total Variable Cost, Total Cost, and Total Fixed Cost curves in a single diagram.
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Question 9

A producer starts a business by investing his own savings and hiring the labour. Identify implicit and explicit costs from this information. Explain.
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Question 10

Explain the implications of large number of sellers in a perfectly competitive market.

OR

Explain why there are only a few firms in an oligopoly market.
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Question 11

Define a budget line. When can it shift to the right?
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Question 12

A consumer buys 14 units of a good at a price of Rs. 8 per unit. At price Rs. 7 per unit he spends Rs. 98 on the good. Calculate price elasticity of demand by the percentage method. Comment upon the 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 marginal product according to this law.

OR

Explain how changes in prices of inputs influence the supply of a product.
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Question 14

Explain the difference between (i) inferior goods and normal goods and (ii) cardinal utility and ordinal utility. Give example in each case.
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Question 15

Explain the distinction between “change in quantity supplied” and “change in supply”. Use diagram.
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Question 16

Market for a good is in equilibrium. There is simultaneous “decrease” both in demand and supply but there is no change in market price. Explain with the help of a schedule how it is possible.

OR

Market for a good is in equilibrium. Explain the chain of reactions in the market if the price is (i) higher than equilibrium price and (ii) lower than equilibrium price.
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Question 17

Define flow variable.
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Question 18

Define Consumption Goods.
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Question 19

What are time deposits?
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Question 20

Define a ‘Direct tax’.
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Question 21

What is a fixed exchange rate?
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Question 22

Find Gross Value Added at Factor Cost:

S.No	Items	Amount
(i)	Units of output sold	2,000
(ii)	Price per unit of output (Rs)	20
(iii)	Depreciation (Rs)	2,000
(iv)	Change in stocks (Rs)	(–) 500
(v)	Intermediate costs (Rs)	15,000
(vi)	Subsidy (Rs)	3,000

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Question 23

Explain the ‘standard of deferred payment’ function of money.
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Question 24

Outline the steps taken in deriving Consumption Curve from the Saving Curve. Use diagram.

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Question 25

Find National Income from the following:

Items	Amount
Autonomous Consumption	Rs 100
Marginal propensity to consume	0.60
Investment	Rs 200

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Question 26

Distinguish between revenue receipts and capital receipts in a government budget. Give example in each case.

OR

Explain the role of government budget in bringing economic stability
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Question 27

Giving reason, explain how should the following be treated while estimating national income:

(i) Expenditure on free services provided by government

(ii) Payment of interest by a government firm
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Question 28

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

OR

Explain ‘government’s banker’ function of the central bank.
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Question 29

Explain the concept of ‘fiscal deficit’ in a government budget. What does it indicate?
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Question 30

Find out (i) National Income and (ii) Net national Disposable Income:

S.No	Items	(Rs crore)
(i)	Net imports	(–) 10
(ii)	Net domestic fixed capital formation	100
(iii)	Private final consumption expenditure	600
(iv)	Consumption of fixed capital	60
(v)	Change in stocks	(–) 50
(vi)	Government final consumption expenditure	200
(vii)	Net factor income to abroad	20
(viii)	Net current transfers to abroad	30
(ix)	Net Indirect Tax	70
(x)	Factor income from abroad	10

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Question 31

Explain the concept of ‘inflationary gap’. Also explain the role of ‘legal reserves’ in reducing it.

OR

Explain the concept of ‘deflationary gap’. Also explain the role of ‘margin requirements’ in reducing it.
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Question 32

Give the meaning of ‘foreign exchange’ and ‘foreign exchange rate’. Giving reason, explain the relation between foreign exchange rate and demand for foreign exchange.
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