Board Paper of Class 12-Humanities 2013 Economics (SET 3) - Solutions

Give an example each of fixed cost and variable cost. (1)

Under which market form a firm’s marginal revenue is always equal to price? (1)

Given the meaning of market demand. (1)

Define marginal cost. (1)

When is the demand for a good said to be inelastic? (1)

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

OR

Explain the condition of consumer’s equilibrium with the help of utility analysis. (3)

Explain the difference between an inferior good and a normal good. (3)

The price elasticity of supply of a good is 0.8. Its price rises by 50 percent. Calculate the percentage increase in its supply. (3)

Complete the following table: (3)

Explain “freedom of entry and exit to firms in industry” feature of monopolistic competition.

Production in an economy is below its potential due to unemployment. Government starts employment generation schemes. Explain its effect using production possibilities curve. (4)

Give the meaning of producer’s equilibrium. A producer that quantity of his product at which marginal cost and marginal revenue are equal. Is he earning maximum profits? Give reason for your answer. (4)

The price elasticity of demand for a good is − 0.4. If its price increases by 5 percent, by what percentage will its demand fall? Calculate. (4)

OR

Explain any two factors that affect the price elasticity of demand. Give suitable examples.

Explain the Law of Variables Proportions with the help of total product and marginal product curves. (6)

Explain consumer’s equilibrium with the help of Indifference Curve Analysis.

OR

Explain the relationship between

(i) Prices of other goods and demand for the given good.

(ii) Income of the buyers and demand for a good. (6)

Giving reasons, state whether the following statements are true or false.

(i) A monopolist can sell any quantity he likes at a price.

(ii) When equilibrium price of a good is less than its market price, there will be competition among the sellers. (6)

Give two examples of indirect taxes. (1)

How can increase in foreign direct investment affect the price of foreign exchange? (1)

Give one example of “externality” which reduces welfare of the people. (1)

What is a Government Budget? (1)

What are demand deposits? (1)

Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each. (3)

OR

Distinguish between revenue deficit and fiscal deficit.

Explain the effect of appreciation of domestic currency on imports. (3)

Distinguish between balance of trade and balance on current account. (3)

Explain the problem of double coincidence of wants faced under barter system. How has money solved it? (3)

Explain any one objective of Government Budget. (3)

Calculate “sales” from the following data: (4)

Explain “Banker to the Government” function of the Central Bank. (4)

Giving reasons categorise the following into stock and flow: (4)

(i) Capital

(ii) Saving

(iii) Gross domestic product

(iv) Wealth

OR

Explain the circular flow of income.

Calculate National Income from the following data: (6)

OR

Calculate net national disposable income from the following data:

C = 50 + 0.5 Y is the Consumption Function where C is consumption expenditure and Y is National Income and Investment expenditure is 2000 is an economy. Calculate (6)

(i) Equilibrium level of National Income.

(ii) Consumption expenditure at equilibrium level of national income.

Complete the following table: (6)