Class 12 Economics Solved Paper (2011 Outside Delhi Set-III) | Additional Study Material for Commerce PDF Download

Ques 1: Define macroeconomics.
Ans: Macroeconomics is that branch of economics, which deals with the economic activities performed by all the sectors facing economic problems and different situations for a country (economy) as a whole.

Ques 2:

Ans:

Given,

Initial Price, P = 9

Initial Quantity demanded, Q = 100

Final Price,P₁ = 9

Final Quantity demanded,Q₁ = 150

ΔP=( −P)=(9−9)=0 and
ΔQ=(Q)=(150100)=50
Now,

Substituting the values,

Hence, demand is Perfectly Elastic. 

Ques 3: Explain the law of diminishing marginal utility with the help of a total utility schedule.
Ans: Law of Diminishing Marginal Utility states that as a consumer consumes more and more units of a commodity at succession, then the Marginal Utility derived from the consumption of each additional unit of the commodity falls.

From the above schedule, it can be observed that for two units of consumption, marginal utility is 80. For the third unit, the marginal utility falls to 60. For the fourth unit, the marginal utility further falls to 50 and so on. Thus, as more and more units of a commodity are consumed, the marginal utility derived from the consumption of each additional unit falls.

Ques 4: Explain the concepts of (i) marginal rate of substitution and (ii) budget line equation with the help of numerical examples.
Ans: (i) Marginal Rate of Substitution (MRS) refers to the rate at which a consumer is willing to substitute one good for each additional unit of the other good. Algebraically,

It shows how many units of good Y the consumer is willing to sacrifice to gain one additional unit of good X.
The following schedule explains the concepts of MRS:

As the consumer moves from consumption combination P to consumption combination Q, consumption of good X increases from 2 units to 3 units while, the consumption of good Y falls from 10 units to 5 units. That is to gain one additional unit of good X, the consumer sacrifices 5 units of good K Thus, the MRS is 5. Similarly, as the consumer moves from point R to point 5, he is willing to sacrifice only one unit of good Y for one additional unit of good X. Thus, MRS is 1.
(ii) Budget line is a line that represents the different combinations of two goods that are affordable and are available to a consumer given his/her level of income and the market prices of the goods if" the consumer spends his entire income on the two goods.

The equation of the budget line is represented as follows:

                        P₁x₁+P₂x₂=M

For example, consider a consumer who has income (M) of Rs 100. He wants to purchase two goods, good 1 and good 2. Good 1 costs (P₁) Rs. 5 per unit, while good 2 costs (P₂) Rs. 4 per unit. In this case, the budget line is of the form, 5x₁+4x₂=100

Ques 5: Distinguish between balance of trade and balance on current account of balance of payments.
Ans: 

Ques 6: As a result of increase in mvestment by Rs. 60 crore, national income rises by Rs. 240 crore. Calculate marginal propensity to consume.
Ans: 

ΔI = 60

ΔY = 240

To Calculate: MPC

We know,

Multiplier, K =
Also we know, 

or

Or,        4(1−MPC)=1

Or,        MPC = 0.75

Ques 7: 

Giving reasons, explain the treatment assigned to the following while estimating National Income.

(i) Expenditure on maintenance of a building.

(ii) Expenditure on adding a floor to the building.
Ans: 

(i) Expenditure on maintenance of a building will not be included in the National Income because it is not adding anything in capital formation.

(ii) Expenditure on adding a floor to the building will be included in the National Income because it is a part of domestic capital formation.

Ques 8: 

Ans:

(a) GNP_MP

= Compensation of employees + Mixed Income + Operating surplus + consumption of fixed capital + Net indirect tax - Net factor income to abroad

= (ix) + (vi) + (iii) + (vii) + (x) - (i)

=1,200+500+300+100+250−10

=2,350−10= Rs. 2,340 crores