# 12th Economics Paper Solutions Set 1 : CBSE Delhi Previous Year 2012

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 an Economy.

Economy is a system which provides the people of society to earn a living.

Q2 :

What is market Demand?

Market demand for a good is the sum total of demands of all the consumers in a market at a particular price .

Q3 :

What is the behaviour of average fixed cost as output increases?

Average Fixed Cost refers to the fixed cost per unit of output produced. It is derived by dividing the Total Fixed Cost by quantity of output produced. That is, As output increases, the average fixed cost (AFC) falls.

Q4 :

What is the behaviour of average revenue in a market in which a firm can sell more only by lowering the price?

Q5 :

What is a price taker firm?

Q6 :

What is opportunity cost? Explain with the help of a numerical example.

Q7 :

Given price of a goods, how does a consumer decide as to how much of the good to buy?

Q8 :

Draw Average Variable Cost, Average Total Cost ad Marginal Cost curves in a single diagram.

Q9 :

An individual is both the owner and the manager of a shop taken on rent. Identify implicit cost and explicit cost from this information. Explain.

Q10 :

Explain the implication of large number of buyers in a perfectly competitive market.

OR

Explain why firms are mutually interdependent in an oligopoly market.

Q11 :

Define an indifference curve. Explain why an indifference curve is downward sloping from left to right.

Q12 :

When price of good is Rs 7 per unit a consumer buys 12 units. When price falls to Rs6 per unit he spends Rs 72 on the good. Calculate price elasticity of demand by using the percentage method. Comment on the likely shape of demand curve based on this measure of elasticity.

Q13 :

What does the Law of variable Proportions show? State the behaviour of total product according to this law.

OR

Explain how changes in prices of other products influence the supply of a given product.

Q14 :

Explain how do the following influence demand for a good:

(i) Rise in income of the consumer.

(ii) Fall in prices of the related goods.

Q15 :

Explain the conditions of a producer”™s equilibrium in terms of marginal cost and marginal revenue. Use diagram.

Q16 :

Market for a good is in equilibrium. There is simultaneous “increase” both in demand and supply of the good. Explain its effect on market price.

OR

Market for a good is in equilibrium. There is simultaneous “decrease” both in demand and supply of the good. Explain its effect on market price.

Q17 :

Define stock variable.

Q18 :

Define capital goods.

Q19 :

What are demand deposits?

Q20 :

Define a Tax.

Q21 :

Give meaning of managed floating exchange rate.

Q22 :

Calculate Gross Value Added at Factor Cost:

 (i) Units of output sold (units) 1,000 (ii) Price per unit of output (Rs.) 30 (iii) Depreciation (Rs.) 1,000 (iv) Intermediate cost (Rs.) 12,000 (v) Closing stock (Rs.)

Q23 :

Explain the significance of the “Store of Value”™ function of money.

Q24 :

Outline the steps taken in deriving saving curve from the consumption curve. Use diagram.

Q25 :

Find national income from the following:

 Autonomous consumption = Rs. 100 Marginal propensity to consume = 0.80 Investment = Rs 50

Q26 :

Distinguish between Revenue Expenditure and Capital Expenditure in a government budget. Give examples.

OR

Explain the role of Government budget in allocation of resources.

Q27 :

Giving reason explain how should the following be treated in estimating national income:

(i) Expenditure on fertilizers by a farmer.

(ii) Purchase of tractor by a farmer.

Q28 :

Explain the components of Legal reserve Ratio.

OR

Explain “bankers”™ bank, function of Central bank.

Q29 :

Explain “Revenue Deficit”™ in a Government budget? What does it indicate?

Q30 :

Find out (a) national income and (b) net national disposable income:

 S.No. Items (Rs crores) (i) Factor income from abroad 15 (ii) Private final consumption expenditure 600 (iii) Consumption of fixed capital 50 (iv) Government final consumption expenditure 200

Q31 :

Explain the concept of “excess demand”™ in macroeconomics. Also explain the role of “open market operation”™ in correcting it.

OR

Explain the concept of “deficient demand”™ in macroeconomics. Also explain the role of Bank Rate in correcting it.