Board Paper of Class 12-Commerce 2011 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

Define macroeconomics.
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Question 2

When is a firm called price maker?
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Question 3

Define a budget line.
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Question 4

What is ‘decrease’ in supply?
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Question 5

Define Production Function.
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Question 6

How is production possibility curve affected by unemployment in the economy? Explain.
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Question 7

From the following data calculate price elasticity of demand:

Price (Rs)

Demand (units)

9

100

9

150

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Question 8

Distinguish between explicit cost and implicit cost and give examples.
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Question 9

Draw in a single diagram the average revenue and marginal revenue curves of a firm which can sell any quantity of the good at a given price. Explain.
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Question 10

Explain the implications of the feature ‘large number of buyers’ in a perfectly competitive market.

OR

Explain the implications of the feature ‘homogeneous products’ in a perfectly competitive market.
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Question 11

Explain the law of diminishing marginal utility with the help of a total utility schedule.
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Question 12

Explain how rise in income of a consumer affects the demand of a good. Give examples.
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Question 13

Define marginal cost. Explain its relation with average cost

OR

Define variable cost explain the behaviour of total variable cost as output increases.
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Question 14

What is producer’s equilibrium? Explain the conditions of producer’s equilibrium through the ‘marginal cost and marginal revenue’ approach. Use diagram.
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Question 15

Explain the concepts of (i) marginal rate of substitution and (ii) budget line equation with the help of numerical examples.
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Question 16

Market for a good is in equilibrium. There is ‘increase’ in supply of the good. Explain the chain of effect of this change. Use diagram.

OR

Distinguish between ‘non-collusive’ and ‘collusive’ oligopoly. Explain the following features of oligopoly:

(i) Few firms

(ii) Non-price competition
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Question 17

What are stock variables?
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Question 18

Define ‘Depreciation’.
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Question 19

Define ‘Statutory Liquidity Ratio’.
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Question 20

Define Money.
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Question 21

What is foreign exchange?
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Question 22

Distinguish between balance of trade and balance on current account of balance of payments.
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Question 23

Explain how ‘non-monetary exchanges’ are a limitation in taking gross domestic product as an index of welfare.
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Question 24

As a result of increase in investment by Rs 60 crore, national income rises by Rs 240 crore. Calculate marginal propensity to consume.
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Question 25

Explain the distinction between voluntary and involuntary unemployment.
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Question 26

When price of a foreign currency falls, the demand for that foreign currency rises. Explain why.

OR

When price of a foreign currency falls, the supply of that foreign currency also falls. Explain, why.
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Question 27

Explain the ‘redistribution of income’ objective of a government budget.

OR

Explain the ‘economy stability objective of a government budget.
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Question 28

From the following data about a government budget find (a) revenue deficit, (b) fiscal deficit and (c) primary deficit:

S. No.	Items	(Rs Arab)
(i)	Tax revenue	47
(ii)	Capital receipts	34
(iii)	Non-tax revenue	10
(iv)	Borrowings	32
(v)	Revenue expenditure	80
(vi)	Interest payments	20

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Question 29

Giving reasons, explain the treatment assigned to the following while estimating national income:

(i) Family members working free on the farm owned by the family.

(ii) Payment of interest on borrowings by general government.
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Question 30

Explain the role of the following in correcting the inflationary gap in an economy:

(i) Legal reserves

(ii) Bank rate

OR

Explain the role of the following in correcting the deflationary gap in an economy:

(i) Open market operations

(ii) Margin requirements
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Question 31

Explain the following functions of the central bank:

(i) Bank of issue

(ii) Banker’s bank
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Question 32

Calculate (a) ‘Gross National Product at Market Price’ and (b) ‘Personal Disposable Income’ from the following:

S. No.	Items	(Rs in crore)
(i)	Net factor income to abroad	10
(ii)	Private income	1700
(iii)	Operating surplus	300
(iv)	Corporation tax	150
(v)	Undistributed profits	30
(vi)	Mixed income	500
(vii)	Consumption of fixed capital	100
(viii)	Personal taxes	200
(ix)	Compensation of employees	1200
(x)	Net indirect tax	250

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More Board Paper Solutions for Class 12 Commerce Economics

Board Paper Solutions for Other Subjects

Price (Rs)	Demand (units)
9	100
9	150