12th Economics Paper Solutions Set 1 : CBSE Delhi 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 :

Give meaning of “opportunity cost,”™


Answer :

Opportunity cost refers to the cost of enjoying more of one good in terms of sacrificing the benefits of another good.

Q2 :

Define market demand.


Answer :

Market demand of a particular commodity refers to the aggregate demand for the commodity by all the consumers at different possible prices.

Q3 :

What does cost mean in economics?


Answer :

Cost in economics refers to the expenditure incurred by a firm for hiring various factors of production (such as land, labour, capital and entrepreneur) and employing the non-factors of production (such as raw materials, machinery, etc.). Thus, cost implies various payments made to different factors in order to organise/undertake the production process.

Q4 :

Define revenue.


Answer :

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Q5 :

Define market for a good.


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Q6 :

Explain the central problem “what to produce”.


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Q7 :

When price of a good rises from Rs 5 per unit to Rs 6 per unit, its demand falls from 20 units to 10 units. Compare expenditures on the good to determine whether demand is elastic or inelastic.


Answer :

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Q8 :

What is the relation between good X and good Y in each case, if with fall in the price of X demand for good (Y) (i) rises and (ii) falls? Give reason.


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Q9 :

Explain the effect of technical progress on the supply of a good.


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Q10 :

State three features of monopoly.


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Q11 :

Explain the conditions leading to maximization of profits by a producer. Use total cost and total revenue approach.


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Q12 :

Complete the following table:

Output (Units)

Average Revenue

(Rs)

Marginal Revenue

(Rs)

Total Revenue

(Rs)

1

-

15

-

2

-

-

26

3


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Q13 :

Complete the following table:

Output 

(Units)

Total Variable Cost

(Rs)

Average Variable Cost (Rs)

Marginal Cost

(Rs)

1

10

-

-

-

-

8

6

3


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Q14 :

A consumer consumers only two goods. Explain his equilibrium with the help of utility approach.


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Q15 :

Explain the Law of Variable Proportions through the behaviour of both Total Product and marginal product. Give reasons.

OR

Explain “Returns to Scale” using numerical examples. Give reasons.


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Q16 :

Market for a good is in equilibrium. What is the effect on equilibrium price and quantity if both market demand and market supply of the goods increase in the same proportion? Use diagram.


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Q17 :

Give meaning of involuntary unemployment.


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Q18 :

Define inflationary gap.


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Q19 :

What is a central bank?


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Q20 :

State any one objective of government budget.


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Q21 :

Define flexible exchange rate system.


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Q22 :

Calculate “value of output”™ from the following data:

S. No.

Particulars

(Rs lakhs)

(i)

Net value added at factor cost

100

(ii)

Intermediate consumption     

75

(iii)

Excise duty

20

(iv)

Subsidy

5


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Q23 :

When exchange rate of foreign currency rises, its supply rises. How? Explain.


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Q24 :

State components of the current account of balance of payments account.


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Q25 :

What is bank rate policy? How does it work as a method of credit control?

OR

What are open market operations? How do these work as a method of credit control?


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Q26 :

Give meanings of capital receipts and revenue receipts with an example of each.


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Q27 :

As a result of increase in investment by Rs 125 crore, national income increase by Rs. 500 crore. Calculate marginal propensity to consume.


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Q28 :

Give four agency functions of commercial banks.

OR

Explain the acceptance of deposits function of commercial banks.


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Q29 :

What is fiscal deficit? What are its implications?


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Q30 :

Calculate “Net Domestic Product of Factor Cost”™ and “Gross National Disposable Income”™ from the following data:

S. No.

Items

(Rs in crore)

(i)

Net current transfers from abroad

(–5)

(ii)

Private final consumption expenditure

250

(iii)

Net factor income from abroad

15

(iv)

Government final consumption expenditure


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Q31 :

Explain determination of equilibrium level of income using “consumption plus investment”™ approach. Use diagram.

OR

Explain determination of equilibrium level of income using “saving-investment”™ approach. Use diagram.


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Q32 :

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

(i) Payment of fees to a lawyer engaged by a firm.

(ii) Rent free house to an employee by an employer.

(iii) Purchases by foreign tourists.


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