Scanner - Central Problem (2015-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce

Commerce: Scanner - Central Problem (2015-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce

The document Scanner - Central Problem (2015-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce is a part of the Commerce Course Crash Course of Micro Economics -Class 12.
All you need of Commerce at this link: Commerce

C.B.S.E Paper 2015

(Q1) What will be the impact of recently launched ‘Clean India Mission’ (Swachh Bharat Mission) on the production possibilities curve of the economy and why ? (D)

Ans: Cleanliness reduces chances of people falling ill and, thus can ensure better health.This in turn will reduce forced absenteeism from work, raise efficiency level and thus raise country’s production potential. Rise in this potential shifts PP curve to the right. (Diagram not required)

(Q2) What will likely be the impact of large scale outflow of foreign capital on production possibilities curve of the economy and why ?(D)

Ans: Large scale outflow of foreign capital from the economy will reduce resources and thus production potential of the country will fall. Fall in production potential in turn will shift the PP-Curve downwards.

(Q3) What is likely to be the impact of “Make in India” appeal to the foreign investors by the Prime Minister of India, on the production possibilities frontier of India ? Explain. (3M)

Ans: ‘Make in India’ appeal signifies invitation to foreign producers to produce in India. This will lead to increase in resources thus raising production potential of the country. As a result PP curve will shift upwards.    (3M)

(Q4) What is likely to be the impact of efforts towards reducing unemployment on the production potential of the economy ? Explain. (3 M)

Ans: Reducing unemployment has no effect on the production potential of the country.It is because production potential is determined assuming full employment.
Unemployment indicated that the country is operating below potential. Reducing unemployment simply helps in reaching potential. (3M)

(Q5) What will be the impact of “Education for All Campaign” (Sarv Shiksha Abhiyan) on the production possibilities curve of the Indian economy and why ? (F)

Ans: Education raises efficiency by making a worker a skilled worker. This will increase production potential shifting the PP curve upwards.

(Q6) What is likely be the impact of large scale inflow of foreign capital in India on production possibilities curve and why ? (F)

Ans :: Inflow of foreign capital into the country means increase in resources. This will raise production potential of the country leading to upward shift of PP curve.

(Q7) The Government establishes a large number of Institutes of science and technology. How will it affect the production possibility frontier ? Explain. (3)

Ans : By these institutes skill development will improve. This would result in increase in the production potential of the country. So the PP will shift to the right.

(Q8) Do rich countries also face central problems ? Give reasons. [Delhi(c)]

(Q9) Describe the problem of ‘what to produce’. (3)

(Q10) Describe the problem of ‘how to produce’. (3)

Ans :‘How to produce’ refers to the selection of the technique of production to be used for producing goods. Techniques are classified into labour intensive and capital intensive.Labour intensive technique uses more of labour than capital. Capital – intensive technique uses more of capital than labour. So the choice is between using more capital or more labour.

(Q11) Describe the problem of ‘for whom to produce’.

(Q12) Giving reason comment on the shape of Production Possibilities Curve based on the following schedule :(3 M)

Good X (units)          0         1            2          3         4

Good Y (units)        16        12          8           4         0

Good X (Units)   Good Y        (Units) MRT

  0                        16                    -

  1                        12                 4Y:1X

  2                         8                  4Y:1X

  3                         4                  4Y:1X

  4                         0                  4Y:1X

Since MRT is constant, PP curve will be downward sloping straight line. (Diagram not required)

 

(Q13) Giving reason comment on the shape of production possibilities curve based on the following schedule:(D)

Good X (units)   0    1   2   3   4

Good Y (units)   8    6   4   2   0

 

(Q14) Giving reason comment on the shape of production possibilities curve based on the following schedule: (f)

Good X (units)    0   1   2   3   4

Good Y (units)    4   3   2   1   0

(Q15) Giving reason comment on the shape of production possibilities curve based on the following schedule: (D)

Good X (units)   0   1     2     3    4

Good Y (units)    20   18  14   8    0

(Q16) Giving reason comment on the shape of Production Possibilities Curve based on the following schedule : (3 M)

Good X (units)    0    1    2    3    4

Good Y (units)   10   9   7     4    0

(Q17) Giving reason comment on the shape of Production Possibilities Curve based on the following schedule :(3 M)

Good X (units)   0   1    2    3  4

Good Y (units)  30  27 21 12  0

Ans : Good X (units)      Good Y          (units) MRT

              0                          30                            -

             1                           27                        3Y:1X

             2                           21                         6Y:1X

             3                           12                         9Y:1X           (11/2M)

             4                             0                         12Y:1X          (11/2M)

CBSE 2016

(Q1) Why do central problems of an economy arise ? Explain the central problem of “ for whom to produce” ?(6)

(Q2) Assuming that no resource is equally efficient in production of all goods, name the curve which shows production potential of the economy. Explain, giving reasons, its properties. (6)

Ans : The curve is called production possibilities frontier or curve(1)

Properties 

(1) PPF slope downwards from left to right.  (1)

It is because to produce more quantity of one good, some quantity of other good has to be sacrificed because resources are limited     (11/2)

(2) PPF is Concave      (1)

This implies that slope of the curve (i.e. marginal rate of transformation) increases as we move along the curve from left to right.  MRT increases because no resource is equally efficient in production of all goods, so that to obtain more quantity of one good, the quantity of the other good is sacrificed at an increasing rate.  (11/2)

(Q4) Explain the concepts of Opportunity Cost and Marginal Rate of Transformation using a production possibility schedule based on the assumption that no resource is equally efficient in production of all goods.

Ans : Suppose the only two goods produced are X and Y.

Scanner - Central Problem (2015-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce

(or any other relevant schedule) Opportunity Cost refers to the quantity of one good foregone to obtain more quantity of the other good. For example when we move from combination A to B the economy foregoes 2 units of Y to obtain one more units of X. So opportunity cost of obtaining 1X is 2Y.

MRT means quantity of one good sacrified to produce an additional unit of the other good. For example , When we move from combination B to C the MRT is  4Y:1X. MRT increases as to produce more of good X. We need to transfer less and less efficient resources from good Y.


CBSE 2017

(Q1) Give the meaning and characteristics of production possibility frontier.    

Ans : It is the locus of points representing such combinations of two goods that can be produced by fuller utilization of given resources. 

Characteristics :

(1) It slopes downward from left to right.

(2) It is concave to the origin.                         

(Q2)  Explain the problem of “what to produce”.                      

Ans : In an economy the resources are limited and these have alternate uses. So every economy faces the problem of what to produce with these resources. 

Whether to produce more of  necessities or more of luxury goods ? 

Whether to have more of agricultural goods or more of industrial goods etc ?


CBSE 2018

(Q1) Explain the central problem of “for whom to produce”.     

(Q2) Explain the central problem of “choice of technique”.   

(Q3) State the example of positive economics. 

(Q4) Define oppurtunity cost?                            (1M)

Ans: The value of next best alternative foregone.      

(Q5) In what circumtances may the production possibility frontier shift away from the origin ? Explain                                         (3M)

Ans: This problem deals with the situation where an economy must decide as to what goods or services it must produce and in what quantity. 

It is because the resources are scarce/limited and can be put to alternative uses. (to be marked as a whole)     

(Q6) Explain the central problem of “ What is produced and in what quantities”

Ans: Production Possibility Frontier may shift away from origin, due to the following :: 

(a) Increase in resources                 1 ½ 

(b) Improvement in technologies               1 ½

(Q7) When is allocation of resources considered inefficient in an economy ?   (extra ques)

(Q8) Explain how PPC is affecfted when resources are inefficiently employed in an economy ?


       

The document Scanner - Central Problem (2015-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce is a part of the Commerce Course Crash Course of Micro Economics -Class 12.
All you need of Commerce at this link: Commerce

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