Board Paper of Class 12-Science 2014 Economics (SET 1) - Solutions

General Instructions :
(i) All questions in both the sections are compulsory.
(ii) Marks for questions are indicated against each.
(iii) Question 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) Question Nos. 6-10 and 22-26 are short-answer questions carrying 3 marks each. Answer to them should not normally exceed 60 words each.
(v) Question Nos. 11-13 and 27-29 are also short-answer questions carrying 4 marks each. Answer to them should not normally exceed 70 words each.
(vi) Question Nos. 14-16 and 30-32 are long-answer questions carrying 6 marks each. Answer to them should not normally exceed 100 words each.
(vii) Questions marked star (*) are value based questions.
(viii) Answer should be brief and to the point and the above word limit should be adhered to as far as possible.

Question 1
The government has started promoting foreign capital. What is its economic value in the context of Production Possibilities Frontier ? VIEW SOLUTION

Question 2
Define indifference curve. VIEW SOLUTION

Question 3

Define marginal product.
VIEW SOLUTION

Question 4
What is market supply of a product ? VIEW SOLUTION

Question 5
What is imperfect oligopoly ? VIEW SOLUTION

Question 6
Why is Production Possibilities Curve concave ? Explain. VIEW SOLUTION

Question 7
When the price of a good falls from Rs 10 to Rs 8 per unit, its demand rises from 20 units to 24 units. What can you say about price elasticity of demand of the good through the 'expenditure approach' ? VIEW SOLUTION

Question 8
Explain how technological progress is a determinant of supply of a good by a firm.

OR

Explain how input prices are a determinant of supply of a good by a firm. VIEW SOLUTION

Question 9
Why is Average Revenue always equal to price? VIEW SOLUTION

Question 10
Why is the number of firms small in oligopoly? Explain. VIEW SOLUTION

Question 11
A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of good X rises, the consumer buys less of good X. Use utility analysis.

OR

Given the price of a good, how will a consumer decide as to how much quantity of that good to buy? Use utility analysis. VIEW SOLUTION

Question 12
Give the meaning of "inferior" good and explain the same with the help of an example. VIEW SOLUTION

Question 13
Giving reasons, explain the 'Law of Variable Proportions'. VIEW SOLUTION

Question 14
Explain why is an indifference curve (a) downward sloping and (b) convex.

OR

Explain the concept of 'Marginal Rate of Substitution' with the help of a numerical example. Also explain its behaviour along an indifference curve. VIEW SOLUTION

Question 15

From the following information about a firm, find the firm's equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also find profit at this output.

Output (units)	Total Revenue (Rs)	Total Cost (Rs)
1	6	7
2	12	13
3	18	17
4	24	23
5	30	31

VIEW SOLUTION

Question 16
Market of a commodity is in equilibrium. Demand for the commodity 'decreases'. Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram. VIEW SOLUTION

Question 17
What are time deposits? VIEW SOLUTION

Question 18
Define inflationary gap. VIEW SOLUTION

Question 19
What is full employment? VIEW SOLUTION

Question 20
Define fiscal deficit. VIEW SOLUTION

Question 21
Define foreign exchange rate. VIEW SOLUTION

Question 22
What are externalities? Give an example of a positive externality and its impact on welfare of the people. VIEW SOLUTION

Question 23
Explain the significance of the 'Unit of Account' function of money.

OR

Explain the significance of the 'Standard of Deferred Payment' function of money. VIEW SOLUTION

Question 24
Is the following a revenue receipt or a capital receipt in the context of government budget and why?
(i) Tax receipts
(ii) Disinvestment VIEW SOLUTION

Question 25
Distinguish between 'autonomous' and accommodating' Balance of Payments transactions. VIEW SOLUTION

Question 26
Foreign exchange rate in India is on the rise recently. What impact is it likely to have on exports and how ? VIEW SOLUTION

Question 27
Explain 'Banker to the Government' function of the central bank.

OR

Explain 'Bankers' Bank' function of the central bank. VIEW SOLUTION

Question 28
Calculate Marginal Propensity to Consume from the following data about an economy which is in equilibrium :

National income = 2000

Autonomous consumption expenditure = 200

Investment expenditure = 100

VIEW SOLUTION

Question 29
Tax rates on higher income group have been increased. Which economic value does it reflect ? Explain. VIEW SOLUTION

Question 30

Calculate 'Net National Product at Factor Cost' and 'Gross National Disposable Income' from the following:

		(Rs in Arab)
(i)	Social security contributions by employees	90
(ii)	Wages and salaries	800
(iii)	Net current transfers to abroad	(−) 30
(iv)	Rent and royalty	300
(v)	Net factor income to abroad	50
(vi)	Social security contributions by employers	100
(vii)	Profit	500
(viii)	Interest	400
(ix)	Consumption of fixed capital	200
(x)	Net indirect tax	250

VIEW SOLUTION

Question 31
How should the following be treated in estimating national income of a country? You must give reason for your answer.
(i) Taking care of aged parents
(ii) Payment of corporate tax
(iii) Expenditure on providing police services by the government VIEW SOLUTION

Question 32
When is an economy in equilibrium ? Explain with the help of Saving and Investment functions. Also explain the changes that take place in an economy when the economy is not in equilibrium. Use diagram.
OR

Outline the steps required to be taken in deriving the Consumption Curve from the given Saving Curve. Use diagram. VIEW SOLUTION

More Board Paper Solutions for Class 12 Science Economics

Board Paper Solutions for Other Subjects

National income	= 2000
Autonomous consumption expenditure	= 200
Investment expenditure	= 100