Board Paper of Class 12-Science 2014 Economics (SET 2) - Solutions

• Question 1
  What is meant by collusive oligopoly? VIEW SOLUTION

• Question 2
  Define production function. VIEW SOLUTION

• Question 3
  Define supply. VIEW SOLUTION

• Question 4
  Large number of technical training institutions have been started by the government. State its economic value in the context of production possibilities frontier. VIEW SOLUTION

• Question 5
  When is demand called perfectly inelastic? VIEW SOLUTION

• Question 6
  How does change in per unit tax influence the supply of a good by a firm? Explain.
   

  OR

  
  How does subsidy influence the supply of a good by a firm? Explain. VIEW SOLUTION

• Question 7
  Why is a production possibilities curve downward sloping? Explain. VIEW SOLUTION

• Question 8
  Price elasticity of demand of a good is (−) 1. Calculate the percentage change in price that will raise the demand from 20 units to 30 units. VIEW SOLUTION

• Question 9
  Explain the implication of large number of buyers in a perfectly competitive market. VIEW SOLUTION

• Question 10
  Under what market condition does Average Revenue always equal Marginal Revenue? Explain. VIEW SOLUTION

• Question 11
  State the different phases of change in total product according to the Law of Variable Proportions. Use diagram.
   

  OR

  
  Explain the law of Variable Proportions. VIEW SOLUTION

• Question 12
  Assuming that a consumer consumes only two goods, explain the conditions of consumer's equilibrium with the help of Utility Analysis.
   

  OR

  
  A consumer consumes only two goods X and Y and is in equilibrium. Show that when price of good X falls, demand for good X rises. Use Utility Analysis. VIEW SOLUTION

• Question 13
  Distinguish between demand by an individual consumer and market demand of a good. Also state the factors leading to fall in demand by an individual consumer. VIEW SOLUTION

• Question 14
  What is meant by 'excess supply' of a good in a market? Explain its chain of effects on the market of that good. Use diagram.
   

   

  VIEW SOLUTION

• Question 15
  State the conditions of consumer's equilibrium in the Indifference Curve Analysis and explain the rationale behind these conditions.
   

  OR

  
  Explain the three properties of the Indifference Curves. VIEW SOLUTION

• Question 16
  From the following information about a firm, find the firm's equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also calculate profit at this output.

  Output (units)	Total Revenue (Rs.)	Total Cost (Rs.)
  1 2 3 4 5	8 16 24 32 40	10 18 23 31 41

  VIEW SOLUTION

• Question 17
  Define aggregate supply. VIEW SOLUTION

• Question 18
  What is devaluation? VIEW SOLUTION

• Question 19
  What is a central bank? VIEW SOLUTION

• Question 20
  What is meant by 'excess demand' in macroeconomics? VIEW SOLUTION

• Question 21
  What is 'primary deficit'? VIEW SOLUTION

• Question 22
  Explain the 'standard of deferred payment' function of money.
   

  OR

  
  Explain the 'store of value' function of money. VIEW SOLUTION

• Question 23
  How is balance of payment 'deficit' measured? Explain. VIEW SOLUTION

• Question 24
  What is 'appreciation' of domestic currency? What is its likely effect on exports and how? VIEW SOLUTION

• Question 25
  What are non-monetary exchanges? Give an example. Explain their impact on use of gross domestic product as an index of welfare of the people. VIEW SOLUTION

• Question 26
  Giving reason, state whether the following is a revenue expenditure or a capital expenditure in a government budget:
  
  (i) Expenditure on scholarships
  (ii) Expenditure of building a bridge. VIEW SOLUTION

• Question 27
  Government has started spending more on providing free services like education and health to the poor. Explain the economic value it reflects. VIEW SOLUTION

• Question 28
  Explain the concept of money supply and its components.
   

  OR

  
  Explain the 'currency authority' function of central bank. VIEW SOLUTION

• Question 29
  Calculate 'Marginal Propensity to Consume' from the following data about an economy which is in equilibrium:

  National income	=	800
  Autonomous consumption expenditure	=	100
  Investment expenditure	=	100

  VIEW SOLUTION

• Question 30
  Explain national income determination through the two alternative approaches. Use diagram.
   

  OR

  
  Outline the steps in deriving saving curve from the given consumption curve. Use diagram. VIEW SOLUTION

• Question 31
  Calculate 'National Income' and 'Gross National Disposable Income' from the following:

  		(Rs in Arab)
  (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix)	Net imports Net current transfers to abroad Net domestic fixed capital formation Government final consumption expenditure Private final consumption expenditure Consumption of fixed capital Net change in stocks Net factor income to abroad Net indirect tax	60 (−) 10 300 200 700 70 30 20 100

  VIEW SOLUTION

• Question 32
  How should the following be treated while estimating national income? You must give reason in support of your answer.
  
  (i) Bonus paid to employees
  (ii) Addition to stocks during a  year
  (iii) Purchase of taxi by a taxi driver. VIEW SOLUTION