Board Paper of Class 12-Commerce 2009 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 questions (i) to (xv) : [15 × 2] = [30 Marks]

(i) Mention two examples of macro-economic analysis.

(ii) How does an increase in income, affect the quantity demanded of an inferior commodity ?

(iii) When does marginal utility become negative ?

(iv) Draw demand curves showing :

Ed = 0; Ed = ∞.

(v) State two significant differences between extension in supply and increase in supply.

(vi) Define average product. How can you get average product from total product ?

(vii) Differentiate between money cost and real cost.

(viii) When can the AR = MR = Price ? Give reasons for your answer.

(ix) Define the market which has product differentiation as a distinguishing characteristic.

(x) What do you mean by collective bargaining ?

(xi) Mention two non-tax sources of revenue of central government.

(xii) What do you mean by transfer payment ? Give one example.

(xiii) Discuss any one importance of a budget.

(xiv) Why do countries engage in international trade ? Give two reasons.

(xv) Mention two adverse effects of an internal public debt.

VIEW SOLUTION

Question 2

(a) Explain the relationship between total product and marginal product using diagrams. [6]

(b) Why does the total cost curve start from the Y axis in the short run ? Explain the shape of LAC curve. [8]

VIEW SOLUTION

Question 3

(a) Explain with the help of diagrams how equilibrium price and quantity changes when both demand and supply decreases. [6]

(b) Define supply. Explain four factors affecting supply. [8]

VIEW SOLUTION

Question 4

(a) Explain the Ricardian Theory of Rent under extensive cultivation. [6]

(b) State and critically evaluate any four assumptions of Marginal Productivity Theory of Distribution. [8]

VIEW SOLUTION

Question 5

(a) Enumerate four characteristics of perfect competition. [6]

(b) Discuss how is short run equilibrium attained by a perfectly competitive firm under the following situations : [8]

(i) A firm incurring a loss.

(ii) A firm earning supernormal profit.

VIEW SOLUTION

Question 6

(a) Explain how elasticity of demand helps a producer, a finance minister, a monopolist and an exporter. [6]

(b) Discuss four causes for the inverse relationship between price and quantity demanded of a commodity. How are Giffen goods an exception ? [8]

VIEW SOLUTION

Question 7

(a) Discuss four methods of debt redemption. [6]

(b) Define deficit financing. Explain four reasons as to why the government's expenditure has increased in recent years.** [8]

VIEW SOLUTION

Question 8

(a) Explain the Ricardian theory of international trade.** [6]

(b) Define Balance of Payment. Discuss any four causes of disequilibrium in the Balance of Payment. [8]

VIEW SOLUTION

Question 9

(a) (i) How are the following treated in National Income calculations : [2]

(1) Pension.

(2) Income from sale of an old Television set.

(ii) Estimate Operating Surplus from the following data : [4]

Rs (in crores)

(i) Profit before tax 320

(ii) Royalty 30

(iii) Corporate tax 100

(iv) Interest 415

(v) Rent 327

(vi) Mixed income 510

(vii) Dividend 200

(viii) Indirect tax 180

(b) Explain briefly the steps involved in calculating National Income by expenditure method. Mention any two precautions which are required to be taken while calculating National Income by this method. [8]

VIEW SOLUTION

Answer briefly each of the questions (i) to (xv) : [15 × 2] = [30 Marks]
(i)	Mention two examples of macro-economic analysis.
(ii)	How does an increase in income, affect the quantity demanded of an inferior commodity ?
(iii)	When does marginal utility become negative ?
(iv)	Draw demand curves showing :
	Ed = 0; Ed = ∞.
(v)	State two significant differences between extension in supply and increase in supply.
(vi)	Define average product. How can you get average product from total product ?
(vii)	Differentiate between money cost and real cost.
(viii)	When can the AR = MR = Price ? Give reasons for your answer.
(ix)	Define the market which has product differentiation as a distinguishing characteristic.
(x)	What do you mean by collective bargaining ?
(xi)	Mention two non-tax sources of revenue of central government.
(xii)	What do you mean by transfer payment ? Give one example.
(xiii)	Discuss any one importance of a budget.
(xiv)	Why do countries engage in international trade ? Give two reasons.
(xv)	Mention two adverse effects of an internal public debt.

(a)	Explain the relationship between total product and marginal product using diagrams.	[6]
(b)	Why does the total cost curve start from the Y axis in the short run ? Explain the shape of LAC curve.	[8]

(a)	Explain with the help of diagrams how equilibrium price and quantity changes when both demand and supply decreases.	[6]
(b)	Define supply. Explain four factors affecting supply.	[8]

(a)	Explain the Ricardian Theory of Rent under extensive cultivation.	[6]
(b)	State and critically evaluate any four assumptions of Marginal Productivity Theory of Distribution.	[8]

(a)	Enumerate four characteristics of perfect competition.	[6]
(b)	Discuss how is short run equilibrium attained by a perfectly competitive firm under the following situations :	[8]
	(i) A firm incurring a loss.
	(ii) A firm earning supernormal profit.

(a)	Explain how elasticity of demand helps a producer, a finance minister, a monopolist and an exporter.	[6]
(b)	Discuss four causes for the inverse relationship between price and quantity demanded of a commodity. How are Giffen goods an exception ?	[8]

(a)	Discuss four methods of debt redemption.	[6]
(b)	Define deficit financing. Explain four reasons as to why the government's expenditure has increased in recent years.**	[8]

(a)	Explain the Ricardian theory of international trade.**	[6]
(b)	Define Balance of Payment. Discuss any four causes of disequilibrium in the Balance of Payment.	[8]

(a)	(i)	How are the following treated in National Income calculations :			[2]
		(1) Pension.
		(2) Income from sale of an old Television set.
	(ii)	Estimate Operating Surplus from the following data :			[4]
				Rs (in crores)
		(i)	Profit before tax	320
		(ii)	Royalty	30
		(iii)	Corporate tax	100
		(iv)	Interest	415
		(v)	Rent	327
		(vi)	Mixed income	510
		(vii)	Dividend	200
		(viii)	Indirect tax	180
(b)		Explain briefly the steps involved in calculating National Income by expenditure method. Mention any two precautions which are required to be taken while calculating National Income by this method.			[8]