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Important Question Bank, Micro Economics, Class 12 Notes | Study Economics for CBSE Class 12 Board Examinations - Commerce

Document Description: Important Question Bank, Micro Economics, Class 12 for Commerce 2022 is part of Economics for CBSE Class 12 Board Examinations preparation. The notes and questions for Important Question Bank, Micro Economics, Class 12 have been prepared according to the Commerce exam syllabus. Information about Important Question Bank, Micro Economics, Class 12 covers topics like and Important Question Bank, Micro Economics, Class 12 Example, for Commerce 2022 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Important Question Bank, Micro Economics, Class 12.

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MICRO QUESTION’S

 

(Q1)    What are the three central problem of an economy ?

or

What are the problem relating to allocation of resources ?                                                                                                           

or

Explain problem of “what to produce/ choice of goods to be produced” with the help of example and PPC?

or

Explain problem of  how to produce/choice of technique ” with the help of example and PPC ?                                 

or

When is allocation of resources considered inefficient in an economy ?

(Q2)    What do you mean by Economics problem and why there is need for economising of resources ?

or

What are the causes of Central Problem or economic problem ? or Why does they arises ?

or

Do rich countries also face central problems ? Give reasons.                             

or

Do all economics have same type of central problem ? Comment                     

 

(Q3)    With the help of a hypothetical table show PPC ? Why does it is concave sloping and downward sloping ?

or

Define Marginal Opportunity Cost / Marginal rate of transformation. Explain the concept with a hypothetical numerical example.                                                                                                       

(Q4) Draw PPC and show (i) Full employment / efficient use of resources

                                                (ii) Inefficient / Under-utilisation of resources   

                                                (iii) Growth of resources

or

Explain its effect of the following on PPC

            (a)  Production in an economy is below its potential due to unemployment . Govt. starts income generation schemes .

            (b) Economic slowdown in some parts of the world has adversely affected demand for Indian exports

            (c)  The government has started promoting foreign capital.

            (d) Large no. of technical training institutions have been started by the government.

            (e)  Govt establishes  a Large number of institute of science and technology

            (f)  there is widespreas flood or any other natural calamity

            (g) launching of ‘Clean India Mission’ (Swachh Bharat  Mission)

            (h) large scale outflow of foreign capital

            (i) “Make in India” appeal to the foreign investors by the Prime Minister of India

            (j) efforts towards reducing unemployment

            (k) efforts for Widespread of education  

            (l) launching of ‘Digital India’ programme

            (m) Massive Unemployment in the country

 

(Q5)    How many units of a commodity consumer should buy to get maximum utility ? Explain with numerical example                                                                                                or

Given the market price of good, how does a consumer decide as to how many units of that good to buy? Explain  

or

Given below is the utility schedule of a consumer for commodity X.The price of the  commodity is Rs. 6 per unit. How many units should the consumer purchase to maximize satisfaction? (Assume that utility is expressed in utils and 1 util = Re. 1). Give reasons for your answer.

Important Question Bank, Micro Economics, Class 12 Notes | Study Economics for CBSE Class 12 Board Examinations - Commerce

(Q6)    Explain the concept of consumer equilibrium with the help of marginal utility                      schedule (when consumer is buying two commodity)  

or

Explain how a consumer consuming two commodity X and Y attains equilibrium under utility approach?

or

For a consumer to be in equilibrium ratio of utilities of good must be equal to the ratio of prices of the two goods ? Explain                                                                                

(Q7)    A consumer consumes only two goods X and Y and is in equilibrium. Price of X falls. Explain the reaction of the consumer through the Utility Analysis.

or

A consumer consumes only two goods X and Y whose prices are Rs.2 and Rs.1 per unit respectively. If the consumer chooses a combination of the two goods with marginal utility of X being 4 and that of Y also being 4, is the consumer in equilibrium? Give reasons. Explain what will a rational consumer do in this situation. Use marginal utility analysis.             

(Q8)    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.    

(Q9) ‘Higher indifference curve represents higher level of satisfaction to the  consumer’. Explain the statement, also state the underlying assumption related to this property of indifference curve.            

(Q10) Define a budget line.  ? Why it is downward sloping                       

(Q11) What is budget set ? Explain what can lead to change in budget set or When can it shift to the right       

(Q12) Why is the consumer in equilibrium when he buys only that combination of the two goods that is shown at the point of tangency of  the budget line with an indifference curve? Explain.

or

Show diagrammatically the conditions for consumer’s equilibrium, in Hicksian analysis of demand.                   

 

(Q13) State the conditions of consumer’s equilibrium in the Indifference Curve Analysis and explain the rationale behind these conditions.                                                                      ”or

            A consumer consumes only two goods. For the consumer to be in equilibrium why must Marginal Rate of Substitution between the two goods must be equal to the ratio of prices of these two goods ? Is it enough to ensure equilibrium ?

or

            A consumer consumes only two goods, each priced at rupee one per unit. If the consumer chooses a combination of the two goods with marginal rate of substitution equal to 2 , is the consumer in equilibrium? Give reasons. Explain what will a rational consumer do in this situation.

(Q14) Explain the difference between cardinal utility and ordinal utility. Give example in each case. Which of these is better approach and why ?           

(Q15) How is demand for a commodity effected by rise in “price of related commodity” ? What is the relation between good x and good y in each case , if with a fall in price of x demand for good y (i) rises (ii) falls . Give reason.

or     

On 19 December 2013, the following news item was printed in the Economic Times :

            “Households in Southern India prefer to eat oranges for breakfast as banana plantations in Kerala have been destroyed and prices of apples and grapes have also risen.”

Analyse the impact of the rise in price of apples and grapes on the market of oranges.

(Q16) How is demand for a commodity effected by change in “income of the consumer ” ? Explain the difference between (i) inferior goods and normal goods  Give example in each case.

or

A good is an ‘inferior’ good for one and at the same time ‘normal’ good for another consumer. Do you agree ? Explain.     

(Q17) Explain any three factors that causes rightward shift of demand curve ?

or 

Explain with diagram the effect of following changes on demand of commodity       

            (i) Fall in price of substitute good

            (ii) Rise in income of consumer

            (iii)Fall in income if commodity is inferior

            (iv) Rise in price of complementary good / Unfavourable change in taste of buyer.

 

(Q18) Differentiate between “Change in Demand” and “Change in Quantity Demanded”?  (or part thereof like Expansion in demand and Decrease in demand ?

(Q19) State three reasons behind law of demand ?  

or

Explain the inverse relationship between the price of a commodity and its demand

(Q20) Derive the inverse relation between price of good and its demand from the single  commodity equilibrium condition “ Marginal Utility = Price”

or

Show that price and demand of a commodity are inversely related ? Use utility analysis

 

(Q21) “If a product price increases a family spending on product has to increase”? Defend or Refute.

or

            A consumer buys 8 units of a good at a price of Rs.7 per unit. When price rises to Rs. 8 per unit he buys 7 units. Calculate price elasticity of demand through the expenditure approach. Comment upon the shape of demand curve based on this information.

or

            Suppose the price elasticity of demand is (-)0. 2 .How will the expenditure on the good be affected if there is a 10 % increase in the price of good ?

(Q22) Draw a straight line demand curve , locate three points on it and mention their  elasticity ? (Geometric method of measuring Elasticity of Demand)

or

The diagram shows AE is the demand curve of a commodity. On the basis of this diagram, state whether the following statements are true or false. Give reasons for your answer : 

(a) Demand at point B is price inelastic.

(b) Demand at point C is more price elastic than at point B.

(c) Demand at point C is price elastic.

(d) Price elasticity of demand at point C is greater than the

      price elasticity of demand at point “D”

Important Question Bank, Micro Economics, Class 12 Notes | Study Economics for CBSE Class 12 Board Examinations - Commerce  

(Q23) How does the following effect Price elasticity of demand

            (a) Nature of goods

            (b) Availability of close substitute

            (c) Own price of good 

 

(Q24) Explain meaning of increasing return to factor ?  Also explain reason for increasing return to factor ?                                                                                                                                 

(Q25)  Explain the behaviour of Total product and marginal Product when for increasing production only one input is increased while all other inputs are kept constant ?

or

            When a firm tries to increase its output by increasing quantity of only one factor of production ?

or

            Identify different phases of the law of variable proportions from the following schedule ? also give reason for each phase

Important Question Bank, Micro Economics, Class 12 Notes | Study Economics for CBSE Class 12 Board Examinations - Commerce

(Q26) All the input , used in the production of a good are increased in the same proportion. What are its possible effects on total physical product ? Explain using numerical example.

                                                                        or

Explain the effects on output when all are variable inputs and increased in same proportion ?

(Q27) Differentiate between return to factor and return to scale.

(Q28) Define Marginal Revenue ? What is its relationship with AR  when firm is able to sell more quantity of output at same price

or

            What is the relationship of MR with AR and TR under Perfect  Competition ?

or

            Why is average revenue curve of a firm parallel to x-axis under perfect competition ?                                

(Q29) Define Marginal Revenue ? What is its relationship with AR when firm is able to sell more only at lowering prices                                                                                                     ”or

            What is the relationship of MR with AR and TR under Imperfect Competition ?

or

            Why is average revenue curve of a firm negatively sloped under monopolistic competition ? Explain.

 

(Q30) Explian producer equilibrium with its condition ? (P = MC under perfect  competition)

or

            Give the meaning of producers equilibrium. A producer produces that quantity of his product at which marginal cost and marginal revenue are equal. Is he earning maximum profits ? Give reasons for your answers.                                                                         ”or

            On the basis of the information given below, determine the level of output at which the producer will be in equilibrium. Use the marginal cost – marginal revenue approach. Give reasons for your answer.         

Important Question Bank, Micro Economics, Class 12 Notes | Study Economics for CBSE Class 12 Board Examinations - Commerce

(Q31) Why will a producer not be in equi. if the conditions of equilibrium are not met.

or

            Elaborate the implication of the conditions of equilibrium of a firm.   

or

            Will a profit- maximising firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling ? Give an explanation

or

            “ A producer will increase his profit by reducing production when his MC is greater than his MR ”

 

(Q32) Distinguish between Fixed cost and Variable cost ? Give two example of each.

or

            Draw Total Variable Cost, Total Cost, and Total Fixed Cost curves in a single diagram.

or

            Explain the behaviour of total cost as output increases.

or

(Q33) Distinguish between Explicit Cost and Implicit Cost ? Give two example of each.

OR

A farmer takes a farm on rent and carries on farming with the help of family members. Identify explicit and implicit costs from this information. Explain.

or

A producer starts a business by investing his own savings and hiring the labour. Identify implicit costs from this information. Explain.  

or

A producer borrows money and starts a business. He himself looks after the business. Identify implicit and explicit costs from this information. Explain. 

OR

             Find out (a) explicit cost and (b) implicit cost from the following :

Important Question Bank, Micro Economics, Class 12 Notes | Study Economics for CBSE Class 12 Board Examinations - Commerce

(Q34)  On a single diagram draw ATC, AVC and MC ? Establish relationship between them. Explain the relation between (i) ATC and AVC and (ii) MC and AVC.

or

Why does ATC > AVC and the difference between ATC and AVC decreases with  increase in level of output and never coincides.  

OR

Giving reasons, state true or false : 

(a) With increase in level of output, average fixed cost goes on falling till it reaches zero.

(b) Total cost rises only when marginal cost rises.                                                             

(c) The difference between AC and AVC is always constant.

(d) Average cost will rise only when marginal cost rises.              

(e) When MC rises, AVC must rise.       

 

(Q35) Explain Law of Supply with the help of diagram? What is meant by assumption other the being same on which law is based                                                                              

 

(Q36) Explain three determinants effecting Market Supply of a commodity ?

or

List three causes of increase in Supply ?

OR 

Show the effect of following on supply curve of a commodity

            (a) Price of related goods falls

            (b) Change in Technology that reduces MC of producing T.V or Technological advancement

            (c) Subsidy on production of a good on supply of a commodity. 

            (d) Increase in Price of Input ( Labour wages increases )                                      

 

(Q37) Explain the distinction between “change in quantity supplied” and “change in supply” with the help of a table.

(Q38) Explain the significance of ‘minus sign’ attached to the measure of price elasticity of demand in case of a normal good, as compared to the ‘plus sign’ attached to the measure of price elasticity of supply.           

(Q39) ‘Supply curve is the rising portion of marginal cost curve over and above the minimum of Average Variable cost curve’. Do you agree? Give valid reason.

(Q40) Explain Geometric method of measuring E. of Supply (in case of straight line supply curve) ?

or

What will be the price elasticity of supply if supply curve is a positively sloped straight line?

(Q41) Why is the demand curve of a firm under monopolistic competition more elastic than under monopoly ? Explain.

(Q42) What happens to the profits in the long run if firms are free to enter in the industry? Why can a firm not earn abnormal profits under perfect competition in the long run ? Explain the implication of “Freedom of Entry and Exit”  

(Q43)  Explain the implication of the following features                                                     

            (a) “ Large number of sellers ” under perfect competition

            (b) “ Homogeneous products ”under of perfect competition

            (c) “ Differential products ” under monopolistic competition

            (d) “ non-price competition”  under monopolistic market // oligopoly market

            (e) “ barriers to entry”  under oligopoly or monopoly

            (f) “ price rigidity ” under oligopoly.     

            (g) Interdependence between firms under oligopoly.         

 

(Q44) Explain why there are only a few firms in an oligopoly market.

or

Explain any two sources of restricted entry under monopoly. 

 

(Q45) Distinguish between

            (a) cooperative and non-cooperative oligopoly.                               

            (b) Perfect and imperfect oligopoly

 

(Q46)  With help of suitable diagram explain process of determination of equilibrium price of a commodity under perfect competitive market ?

or

IF for a given price there is excess supply,how will the equilibrium  be reached ? use diagram.

or

IF for a given price there is excess demand,how will the equilibrium reached ?use diagram What changes (adjustment) will take place if price is not at equilibrium level ?

or

Market for a good is in equilibrium. Explain the chain of reactions in the market if the price is higher than equilibrium price

or

If equilibrium price of a good is greater than its market price, explain all the changes that will take place in the market. Use diagram. 

(Q47) When supply and demand of commodity both increases equilibrium price may not change, may increase, may decrease ?

OR

There is a simultaneous ‘decrease’ in demand and supply of a commodity. When will it result in :

 (a) No change in equilibrium price.      

(b) A fall in equilibrium price.     Use diagrams.                                                                                                                                

(Q48) Explain with diagram the chain effect on equilibrium price and demand and supply  of  

    (a) increase in demand

    (b) income increases in case of inferior good

    (c) leftward shift of supply curve   

    (d) reduction in taxation policy               

            (3M each or NOTE : 6M each )

     (e) The following headline appeared in the Hindustan Times on 2 August 2014 : “Crop damaged in Himachal sent tomato prices roaring in Delhi ”.

(Q49)  Explain ‘price ceiling’ and its effects

or

Explain ‘black marketing’ as a direct consequence of price ceiling.                              

 

(Q50) Explain ‘price floor’ and its effect  

or 

Explain the concept of ‘buffer stock’ as a tool of price floor.                   

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