# 12th Economics Paper Solutions Set 3 : 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 an example each of fixed cost and variable cost. (1)

Example of Fixed Cost- Cost of Machinery

Example of Variable Cost- Labour Cost (wages and salaries)

Q2 :

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.

Q3 :

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.

Q4 :

Define marginal cost. (1)

Q5 :

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

The price elasticity of supply of a good is 0.8. Its price rises by 50 percent. Calculate the percentage increase in its supply. (3)

Q9 :

Complete the following table: (3)

 Units of Labour Average Product (Units) Marginal Product (Units) 1 16 ”¦”¦. 2 20 ”¦”¦.. 3 ”¦”¦. 20 4 18 ”¦”¦.. 5 ”¦”¦ 8 6 14 ”¦”¦..

Q10 :

Explain “freedom of entry and exit to firms in industry” feature of monopolistic competition.

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 :

Give the meaning of producer”™s equilibrium. A producer that quantity of his product at which marginal cost and marginal revenue are equal. Is he earning maximum profits? Give reason for your answer. (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 :

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

Q15 :

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)

Q16 :

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)

Q17 :

Give two examples of indirect taxes. (1)

Q18 :

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

Q19 :

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

Q20 :

What is a Government Budget? (1)

Q21 :

What are demand deposits? (1)

Q22 :

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

OR

Distinguish between revenue deficit and fiscal deficit.

Q23 :

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

Q24 :

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

Q25 :

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

Q26 :

Explain any one objective of Government Budget. (3)

Q27 :

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

 (Rs in lakhs) (i) Intermediate costs 700 (ii) Consumption of fixed capital 80 (iii) Change in stock (−) 50 (iv) Subsidy 60 (v) Net value added at factor cost 1300 (vi) Exports 50

Q28 :

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

Q29 :

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.

Q30 :

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)

Q31 :

C = 50 + 0.5 Y is the Consumption Function where C is consumption expenditure and Y is National Income and Investment expenditure is 2000 is an economy. Calculate (6)

(i) Equilibrium level of National Income.

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