# 12th Economics Paper Solutions Set 2 : 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 variable costs. (1)

Two examples of variable cost are cost of labour and cost of raw material

Q2 :

Given the meaning of market demand. (1)

Market demand refers to the aggregate (total) demand for all the consumers in the market at different prices.

Q3 :

Under which market form a firm”™s marginal revenue is always equal to price? (1)

Under Perfect Competition, marginal revenue is always equal to price.

Q4 :

When is the demand for a good said to be inelastic? (1)

Q5 :

Define marginal cost. (1)

Q6 :

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)

Q7 :

Explain the difference between an inferior good and a normal good. (3)

Q8 :

A firm”™s revenue rises from Rs 400 to Rs 500 when the price of its product rises from Rs 20 per unit to Rs 25 per unit. Calculate the price elasticity of supply. (3)

Q9 :

Complete the following table: (3)

 Output (Units) Average Cost (Rs) Marginal Cost (Rs) 1 12 ”¦”¦. 2 10 ”¦”¦.. 3 ”¦”¦. 10 4 10.5 ”¦”¦.. 5 11 ”¦”¦.. 6 ”¦”¦.. 17

Q10 :

Explain any two features of monopoly 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 :

The demand for good rises by 20 percent as a result of all in its price. Its price elasticity of demand is (−) 0.8. Calculate the percentage fall in price.

OR

How is price elasticity of demand affected by:

(i) Number of substitutes of available for the good.

(ii) Nature of the good. (4)

Q13 :

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

Q14 :

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)

Q15 :

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)

Q16 :

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

Q17 :

What is a Government Budget? (1)

Q18 :

Give two examples of indirect taxes. (1)

Q19 :

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

Q20 :

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

Q21 :

What are demand deposits? (1)

Q22 :

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

Q23 :

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

Q24 :

Explain the problem of double coincidence of wants faced under barter system. How has money solved it? (3)

Q25 :

Explain any one objective of Government Budget. (3)

Q26 :

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

OR

Distinguish between revenue deficit and fiscal deficit.

Q27 :

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.

Q28 :

How do commercial banks create deposits? Explain. (4)

Q29 :

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

Q30 :

In an economy, S = −100 + 0.6 Y is the saving function, where S is Saving and Y is National Income. If investment expenditure is 1,100, calculate: (6)

(i) Equilibrium level of National Income

(ii) Consumption expenditure at equilibrium level of National Income.

Q31 :

Calculate National Income from the following data: (6)

 S. No. Particulars (Rs in crores) (i) Private final consumption expenditure 900 (ii) Profit 100 (iii) Government final consumption expenditure 400 (iv) Net indirect taxes 100 (v) Gross domestic capital formation 250 (vi) Change in stock 50 (vii) Net factor income from abroad (−) 40 (viii)