12th Economics Paper Solutions Set 3 : 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 :

State reasons why does an economic problem arise?

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 :

A producer invests his own savings in starting a business and employs a manager to look after it. Identify implicit and explicit costs 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 map. Explain why an indifference curve to the right shows higher utility level.

Q12 :

A consumer buys 20 units of a good at a price of Rs 5 per unit. He incurs an expenditure of Rs120 when he buys 24 units. Calculate price elasticity of demand using the percentage method. Comment upon the likely shape of demand curve based on this information.

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 :

Find Net Value Added at Market Price

 S. No. Items Amount (i) Output sold (units) 800 (ii) Price per unit of output (Rs) 20 (iii) Excise (Rs) 1,600 (iv) Import duty (Rs) 400

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 consumption expenditure from the following:

 Items Amount Autonomous consumption Rs 100 Marginal propensity to consume 0.70 National Income Rs 1,000

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 reasons to explain how the followings should be treated in estimating national income:

(i) Interest paid by bank on deposits by individuals.

(ii) National debt interest.

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) Gross National Product at market Price and (b) Net Current Transfers from Abroad:

 S. No. Items (Rs crore) (i) Net indirect tax 35 (ii) Private final consumption expenditure 500 (iii) Net national disposable income 750 (iv) Closing stock 10

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.