12th Economics Paper Solutions Set 1 : CBSE Delhi Previous Year 2013

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 two examples of fixed costs.

Two examples of fixed cost are cost of machinery and cost of building.

Q2 :

Define marginal cost.

Marginal Cost is defined as the additional cost to the Total Cost, which is incurred for producing one more unit of output.

Q3 :

When is the demand for a good said to be inelastic?

The demand for a good is said to be inelastic if the percentage change in the demand for a good is less than the percentage change in its price.

Q4 :

Given the meaning of market demand.

Q5 :

Under which market form a firm”™s marginal revenue is always equal to price?

Q6 :

Explain the difference between an inferior good and a normal good.

Q7 :

Explain the law of diminishing marginal utility with the help of a total utility schedule.

OR

Explain the condition of consumer”™s equilibrium with the help of utility analysis. (3)

Q8 :

When the price of a good rises from Rs 20 per unit to Rs 30 per unit, the revenue of the firm producing this good rises from Rs 100 to Rs 300. Calculate the price elasticity of supply. (3)

Q9 :

Complete the following table: (3)

 Units of Labour Average Product (Units) Marginal Product (Units) 1 8 ”¦”¦. 2 10 ”¦”¦.. 3 ”¦”¦. 10 4 9 ”¦”¦.. 5 ”¦”¦ 4 6 7 ”¦”¦..

Q10 :

Explain “large number of buyers and sellers” features of a perfectly competitive market. (3)

Q11 :

Production in an economy is below its potential due to unemployment. Government starts employment generation schemes. Explain its effect using production possibilities curve. (4)

Q12 :

Explain the conditions of producer”™s equilibrium with the help of a numerical example. (4)

Q13 :

The price elasticity of demand for a good is − 0.4. If its price increases by 5 percent, by what percentage will its demand fall? Calculate. (4)

OR

Explain any two factors that affect the price elasticity of demand. Give suitable examples.

Q14 :

Giving reasons, state whether the following statements are true or false.

(i) A monopolist can sell any quantity he likes at a price.

(ii) When equilibrium price of a good is less than its market price, there will be competition among the sellers. (6)

Q15 :

Explain the Law of Variables Proportions with the help of total product and marginal product curves. (6)

Q16 :

Explain consumer”™s equilibrium with the help of Indifference Curve Analysis.

OR

Explain the relationship between

(i) Prices of other goods and demand for the given good.

(ii) Income of the buyers and demand for a good. (6)

Q17 :

How can increase in foreign direct investment affect the price of foreign exchange? (1)

Q18 :

What are demand deposits? (1)

Q19 :

Give one example of “externality” which reduces welfare of the people. (1)

Q20 :

Give two examples of indirect taxes. (1)

Q21 :

What is a Government Budget? (1)

Q22 :

Explain the problem of double coincidence of wants faced under barter system. How has money solved it? (1)

Q23 :

Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each. (3)

OR

Distinguish between revenue deficit and fiscal deficit.

Q24 :

Explain any one objective of Government Budget. (3)

Q25 :

Explain the effect of appreciation of domestic currency on imports. (3)

Q26 :

Distinguish between balance of trade and balance on current account. (3)

Q27 :

Calculate “sales” from the following data: (4)

 S. No. Particulars (Rs in lakhs) (i) Net value added at factor cost 560 (ii) Depreciation 60 (iii) Change in stock (−) 30 (iv) Intermediate cost 1,000 (v) Exports 200 (vi) Indirect taxes 60

Q28 :

Giving reasons categorise the following into stock and flow: (4)

(i) Capital

(ii) Saving

(iii) Gross domestic product

(iv) Wealth

OR

Explain the circular flow of income.

Q29 :

Explain “Banker to the Government” function of the Central Bank. (4)

Q30 :

C = 100 + 0.4 Y is the Consumption Function of an economy where C is Consumption Expenditure and Y is National Income. Investment expenditure is 1,100. Calculate (6)

(i) Equilibrium level of National Income.

(ii) Consumption expenditure at equilibrium level of national income.

Q31 :

Complete the following table: (6)

 Income (Rs) Consumption expenditure (Rs) Marginal propensity to save Average propensity to save 0 80 100 140 0.4 ”¦”¦ 200 ”¦”¦ ”¦”¦ 0 ”¦”¦ 240 ”¦”¦ 0.20 ”¦”¦ 260 0.8 0.35