12th Economics Paper Solutions Set 1 : CBSE All India Previous Year 2008

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.
Q1 :

Define “Marginal Rate of Transformation”™.


Answer :

Marginal Rate of Transformation (MRT) implies that for the production of every additional unit of one good, more and more units of the other good have to be sacrificed. MRT for the two goods, X and Y is represented as follows.

Q2 :

What is a demand schedule?


Answer :

A demand schedule is a tabular presentation of the relationship between the price of a commodity and the quantity demanded of the commodity at a particular point of time.

Q3 :

Define “production function”™.


Answer :

The production function of a firm depicts the relationship between the inputs used in the production process and the final output produced. Algebraically, a production function is represented as follows.

Qx = f (L, K)                    

where,

L represents units of labour used (input one)

K represents units of capital used (input two)

Qx represents units of output x produced (output)

Q4 :

What is “market supply”™?


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q5 :

Define “equilibrium price”™.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q6 :

Explain the central problem of “choice of technique”™.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q7 :

Price elasticity of demand of a good is (−) 1. At a given price the consumer buys 60 units of the good. How many units will the consumer buy if the price falls by 10 per cent?


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q8 :

Given the market price of a good, how does a consumer decide as to how many units of that good to buy? Explain.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q9 :

What is the likely effect on the supply of a good if the prices of the inputs used in production of that good fall? Explain.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q10 :

Explain what happens to the profits in the long run if the firms are free to enter the industry.

OR

Explain what happens to losses in the long run if the firms are free to leave the industry.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q11 :

Explain producer”™s equilibrium using a schedule. Use total cost and total revenue approach.

OR

Distinguish between (i) fixed cost and variable cost giving examples and (ii) average cost and marginal cost giving an example.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q12 :

Draw supply curves with price elasticity of supply throughout equal to (i) zero, (ii) one, (iii) infinity and (iv) less than one.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q13 :

Complete the following table:

Price

(Rs)

Output

(Units)

Total Revenue

(Rs)

Marginal Revenue

(Rs)

1

6

4

2


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q14 :

Explain the effect of the following on demand for a good:

(i) Rise in income.

(ii) Rise in prices of related goods.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q15 :

Explain, with the help of numerical examples, the effect on total output of a good when all the inputs used in production of that good are increased simultaneously and in the same proportion.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q16 :

Given market equilibrium of a good, what are the effects of simultaneous increase in both demand and supply of that good on its equilibrium price and quantity.

OR

Explain the implications of the following:

(i) The feature differentiated products”™ under monopolistic competition.

(ii) The feature large number of seller”™s under perfect competition.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q17 :

Define “aggregate supply”™.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q18 :

Give meaning of deficient demand.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q19 :

What is a commercial bank?


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q20 :

Define government budget.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q21 :

What is fixed exchange rate system?


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q22 :

Calculate Net Value Added at factor cost from the following data:

S. No.

Items

(Rs lakhs)

(i)

Depreciation

20

(ii)

Intermediate cost

90

(iii)

Subsidy

5

(iv)

Sales


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q23 :

When exchange rate of foreign currency falls, its demand rises. Explain, how?


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q24 :

Distinguish between balance of trade and balance on current account.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q25 :

Explain the “medium of exchange”™ function of money.

OR

Explain the evolution of money.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q26 :

Give meaning of capital expenditure and revenue expenditure in a government budget.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q27 :

In an economy an increase in investment leads to increase in national income which is three times more than the increase in investment. Calculate marginal propensity of consume.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q28 :

Explain the lending function of commercial banks.

OR

Explain “banker to the government”™ function of central bank.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q29 :

What is revenue deficit? What are its implications?


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q30 :

Calculate “National Income”™ and Private Income”™ from the following data:

S. No.

Items

(Rs in crore)

(i)

Net current transfers to the rest of the world

10

(ii)

Private final consumption expenditure

600

(iii)

National debt interest

15

(iv)

Net exports

(–) 20


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q31 :

Explain consumption function with the help of a schedule and diagram.

OR

Explain “saving function”™ with the help of a schedule and diagram.


Answer :

Please Register/Login to get access to all solutions Facebook Login
Q32 :

Giving reasons, explain how the following are treated in estimating national income:

(i) Wheat grown by a farmer but used entirely for family”™s consumption.

(ii) Earnings of the shareholders from the sale of shares.

(iii) Expenditure by government on providing free education.


Answer :

Please Register/Login to get access to all solutions Facebook Login
View All Papers >>

12th Economics Paper Solutions Set 3 : CBSE Delhi Previous Year 2013 will be available online in PDF book soon. The solutions are absolutely Free. Soon you will be able to download the solutions.