12th Economics Paper Solutions Set 1 : CBSE All India Previous Year 2014

General Instructions :
(i) All questions in both the sections are compulsory.
(ii) Marks for questions are indicated against each.
(iii) Question 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) Question Nos. 6-10 and 22-26 are short-answer questions carrying 3 marks each. Answer to  them should not normally exceed 60 words each.
(v) Question Nos. 11-13 and 27-29 are also short-answer questions carrying 4 marks each. Answer to them should not normally exceed 70 words each.
(vi) Question Nos. 14-16 and 30-32 are long-answer questions carrying 6 marks each. Answer to them should not normally exceed 100 words each.
(vii) Questions marked star (*) are value based questions.
(viii) Answer should be brief and to the point and the above word limit should be adhered to as far as possible.
Q1 :

The government has started promoting foreign capital. What is its economic value in the context of Production Possibilities Frontier ?


Answer :

As the government has started promoting foreign capital, it will lead to an increase in the availability of resources, thereby shifting the Production Possibility Curve (PPC) parallelly to the right. Hence, an economic value is reflected in terms of increased output and resources.

Q2 :

Define indifference curve.


Answer :

An indifference curve is a curve that depicts various combinations of two goods that provide a consumer with the same level of satisfaction.

Q3 :

Define marginal product.


Answer :

Marginal product refers to the change in the total output brought by employing one additional unit of labour. 
Algebraically, marginal product = change in total productchange in labour units

 

 

Q4 :

What is market supply of a product ?


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Q5 :

What is imperfect oligopoly ?


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Q6 :

Why is Production Possibilities Curve concave ? Explain.


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Q7 :

When the price of a good falls from Rs 10 to Rs 8 per unit, its demand rises from 20 units to 24 units. What can you say about price elasticity of demand of the good through the 'expenditure approach' ?


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Q8 :

Explain how technological progress is a determinant of supply of a good by a firm.


OR
 
Explain how input prices are a determinant of supply of a good by a firm.


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Q9 :

Why is Average Revenue always equal to price?


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Q10 :

Why is the number of firms small in oligopoly? Explain.


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Q11 :

A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of good X rises, the consumer buys less of good X. Use utility analysis.
 

OR
 
Given the price of a good, how will a consumer decide as to how much quantity of that good to buy? Use utility analysis.


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Q12 :

Give the meaning of "inferior" good and explain the same with the help of an example.


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Q13 :

Giving reasons, explain the 'Law of Variable Proportions'.


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Q14 :

Explain why is an indifference curve (a) downward sloping and (b) convex.
 

OR

Explain the concept of 'Marginal Rate of Substitution' with the help of a numerical example. Also explain its behaviour along an indifference curve.


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Q15 :

From the following information about a firm, find the firm's equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also find profit at this output.
 

Output
(units)
Total Revenue
(Rs)
Total Cost
(Rs)
1 6 7
2 12 13
3 18 17
4 24 23
5 30 31


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Q16 :

 Market of a commodity is in equilibrium. Demand for the commodity 'decreases'. Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram.


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Q17 :

What are time deposits?


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Q18 :

Define inflationary gap.


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Q19 :

What is full employment?


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Q20 :

Define fiscal deficit.


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Q21 :

Define foreign exchange rate.


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Q22 :

What are externalities? Give an example of a positive externality and its impact on welfare of the people.


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Q23 :

Explain the significance of the 'Unit of Account' function of money.


OR
 
Explain the significance of the 'Standard of Deferred Payment' function of money.


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Q24 :

Is the following a revenue receipt or a capital receipt in the context of government budget and why?
(i) Tax receipts
(ii) Disinvestment


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Q25 :

Distinguish between 'autonomous' and accommodating' Balance of Payments transactions.


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Q26 :

Foreign exchange rate in India is on the rise recently. What impact is it likely to have on exports and how ?


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Q27 :

Explain 'Banker to the Government' function of the central bank.


OR

Explain 'Bankers' Bank' function of the central bank.


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Q28 :

Calculate Marginal Propensity to Consume from the following data about an economy which is in equilibrium :

National income = 2000
Autonomous consumption expenditure =   200
Investment expenditure =   100


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Q29 :

Tax rates on higher income group have been increased. Which economic value does it reflect ? Explain.


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Q30 :

Calculate 'Net National Product at Factor Cost' and 'Gross National Disposable Income' from the following:

    (Rs in Arab)
(i) Social security contributions by employees 90
(ii) Wages and salaries 800
(iii) Net current transfers to abroad (−) 30
(iv) Rent and royalty 300
(v) Net factor income to abroad 50
(vi) Social security contributions by employers 100
(vii) Profit 500
(viii) Interest 400
(ix) Consumption of fixed capital 200
(x) Net indirect tax 250


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Q31 :

How should the following be treated in estimating national income of a country? You must give reason for your answer.
(i) Taking care of aged parents
(ii) Payment of corporate tax
(iii) Expenditure on providing police services by the government


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Q32 :

When is an economy in equilibrium ? Explain with the help of Saving and Investment functions. Also explain the changes that take place in an economy when the economy is not in equilibrium. Use diagram.

OR

Outline the steps required to be taken in deriving the Consumption Curve from the given Saving Curve. Use diagram.


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12th Economics Paper Solutions Set 3 : CBSE Delhi Previous Year 2013 will be available online in PDF book soon. The solutions are absolutely Free. Soon you will be able to download the solutions.