Ahlcon Public School, Mayur Vihar, PH - 1 Assignment - 1 Class - Xii Economics (Session: 2018-19) Value Based Questions From All Chapters

AHLCON PUBLIC SCHOOL, MAYUR VIHAR, PH – 1
ASSIGNMENT - 1
CLASS - XII ECONOMICS (SESSION: 2018-19)
VALUE BASED QUESTIONS FROM ALL CHAPTERS.
Q.1 How do you account for a rise in demand even when own price of the commodity is rising?
Ans. 1. Present or expected income of the consumers is rising

2. Severe scarcity of the commodity.
Q.2 Farmers may suffer a loss even when they reap a good harvest. Does your demand – supply
analysis provide an answer to this paradox?
Ans. Owing to their poverty, farmers are often driven to a distressed sale of their produce. But good
harvest causes a glut (of supply) in the market which causes price crash. Implying a fall in
farmers in income.
Q.3 How is elasticity of demand relevant to you when as a monopolist, you are a price maker?
Q.4 Why do people buy inferior goods at the first instance, even when their consumption is phased out
as income rises?
Ans: Because inferior goods are essentials of life.
Q.5 Imagine yourself as a CEO of a global software company like Microsoft. How will you decide
your price policy?
Ans: It is the part of oligopoly market so it is decided in group.
Q.6 Imagine yourself a producer (a perfectly competitive market) focusing on profit maximization.
Will you prefer striking an equilibrium in a state of increasing returns.
Ans: It is a situation when every additional unit of output adds more and more to total profits.
Q.7 Market economics promote disparities in income distribution even when resources are optimally
utilized substantiate this observation.
Q.8 Growth and equity are often confronted as conflicting issues while addressing the problem of
‘How to produce’. Explain.
Q.9 Why has the govt. of India failed to combat inflation even when a series of monetary measures are
available?
Ans: These are related to control or lowering the demand for goods and services by making the
availability of credit costlier and difficult. It does not address the supply side of the problem.
Q.10 If disposable income of the people is raised by lowering the rate of taxation, how will it help rain
the level of GDP?
Ans: It is expected to raise the level of Ad. A rise in AD will induce higher level of planned output.
Implying a higher level of GDP.
Q.11 Subsidy on diesel oil is a wasteful expenditure by the govt. Write one point in support of this
observation and one against it.
- Because subsidy is unduly reaped by a richer section of the society who get cheaper oil to run
their luxury cars.
- Farmers need to be given diesel at the low price. So that, the cost of farming does not rise and
farming remains a profitable occupation.
Q.12 If US dollar becomes costlier in terms of the Indian rupee, it is good as well as bad for the
domestic growth. How?
Ans: It is good because purchasing power of USD dollar in the Indian market increases. Accordingly,
demand for the domestic goods is expected to rise. A rise in exports is a key factor in domestic
growth.
It is bad because imports of essential capital goods become expensive.
The market price of US dollar increased considerably leading to rise in the prices of imports of
essential goods. What can central bank do to ease the situation?
Ans: The central bank can sell its reserves of US dollars in the money market to reduce the pressure of
demand for dollars. In case of supply aligns with demand, the price of dollar will fall in terms of
the Indian rupee.
Q.14 Explain how introduction of money has led to the expansion of markets.
Ans: It enhanced the mobility of capital across different parts of the world.
Money has led to the emergence of money markets, availability of funds, both for consumption
and investment.
Money has broken the barriers of barter system.
Q.15 Why should rising MPs be cause of worry when it is a sign of rising GDP in the economy?
Ans: Rising MPS means falling MPC, as MPS + MPC – 1. It indicates that lesser and lesser
proportion of the additional income goes to consumption expenditure. Implying a gradual
shrinkage of AD in relation to  . In such a situation, the economy might slip into a state of
recession or economic slow down.
Q.16 How would you argue for and against foreign investment?
Q.17 How would you comment on the statement that increase in interest rate leads to an appreciation of
domestic currency?
Q.18 Underemployment is a critical feature of the Indian. Can we really explain in terms of the
deficiency of demand?
Q.19 Identify two such situations when elasticity of supply is low when there is a substantial rise in
price related to rise in demand for a commodity.
Q.20 Output of food grain in India at one stage was less than its domestic demand. Now it was less
than its domestic demand. Now it is not. Does it mean that the law of diminishing returns has
failed in Indian agriculture?
Ans: It does not mean failure of the law but postponement of the law.
ASSIGNMENT - 2
UNIT – I : INTRODUCTION, MICRO ECONOMICS
Q.1 With the help of suitable example explain the problem of ‘For whom to produce’.
Q,2 Explain the problem of ‘what to produce’.
Q.3 Determine the ‘marginal opportunity cost’ from the following data –
Goods X (units) 100 120

Good Y (units) 140 100
Q.4 An economy produces two goods X and Y. Its production possibilities are shown in the following
table. Calculate MRT and comment on the shape of PPC.
Possibility A B C D E F
Good X 20 14 9 5 2 0
Good Y 0 1 2 3 4 5
Q.5 Complete the following table:

Possibilities A B C D E
Good X 0 10 20 _ 40
Good Y 200 180 _ 80 0
MOC _ _ 4 6 _
Q.6 Dr. Parul runs an eye clinic at gurgaon and her annual earnings are 20 lakhs. If she works in Fortis
Hospital in the city, she can get a salary of 15 lakhs. What is the opportunity cost of having clinic
in the city?
Q.7 What is an opportunity cost? Explain with the help of a numerical example.
Q.8 What is ‘marginal rate of transformation’, explain with the help of an example.
Q.9 Explain the central problem of ‘how to produce’.
Q.10 Define production possibility curve. Explain why it is downward sloping from left to right.
Q.11 Why does an economic problem arise? Explain.
Q.12 Explain how a production possibility curve is affected when resources are inefficiently employed
in an economy.
Q.13 Production in an economy is below its potential due to unemployment. Government starts
employment generation schemes. Explain its effect using production possibility curve.
Q.14 Why is a production possibility curve concave? Explain.
Q.15 Define an economy. What are capital (market), planned and mixed economies?
Q.16 Distinguish between market and mixed economy.
Q.17 Your are to simply tick () Yes or No

(a) Economic problem and scarcity of resources are not related to each other. Yes/No
(b) If there were no choices in resource allocation, microeconomics would have not existed.
Yes/No
(c) In a free economy, decision relating ‘for whom to produce’ enhances the gulf between rich
and poor. Yes/No
(d) All resources are not equally scarce all the time. Yes/No
(e) Lack of scarcity implies lack of economic problem. Yes/No
ASSIGNMENT - 3
UNIT 1 & 2: INTRODUCTION & CONSUMER’S EQUILIBRIUM AND DEMAND
Q.1 VERY SHORT ANSWER QUESTIONS
i) Give two characteristics of economic resources.

ii) What are two assumptions of PP curve?
iii) When is PP curve is a straight line?
iv) When is PP curve concave?
v) When is PP curve convex?
vi) Define opportunity cost.
vii) How is market demand curve derived from individual demand curves?
viii) Give the formulae for the calculation of total utility (TU).
ix) What is marginal rate of substitution? Define it.
x) Define market demand?
xi) What is meant by price elasticity of demand?
Q.2 SHORT Answer questions (60/70 words)
i) Explain the central problem of ‘what to produce’?

ii) Why is there need for economizing of resources? Explain.
iii) Draw a PP curve assuming marginal opportunity cost to be constant.
iv) Draw a PP curve assuming marginal opportunity cost to be falling.
v) Draw a PP curve assuming marginal opportunity cost to be rising.
vi) Define utility. Describe the law of diminishing marginal utility.
vii) What happens to the demand for a given good when prices of its related goods change.
(1) A rise in money income of the households.

(2) A fall in price of other commodities.
viii) Distinguish between normal goods & inferior goods.

ix) A consumer buys 80 units of a good at a price of Rs. 4 per unit. When the price falls, he buys
100 units. If price elasticity of demand is (-)1, find out the new price.
x) At a price of Rs. 4 per unit a consumer buys 50 units of a goods. The price elasticity of
demand is (-)2. How many units will the consumer buy at Rs. 3 per unit.
xi) At a price of Rs. 50 per unit, the quantity demanded of a commodity is 1000 units. When its
price falls by 10%, its quantity demanded rises to 1080 units. Calculate its price elasticity of
demand. Is its demand inelastic & Give reasons for your answer.
xii) Explain what happens to a PP curve when resources increase: Use diagram.
Q.3 LONG ANSWER QUESTIONS
i) Explain consumer equilibrium with the help of utility approach.

ii) How does concept of opportunity cost help us to obtain situation of full and efficient use of
resources of Production Possibility Curve?
ASSIGNMENT - 4
UNIT– 3 – PRODUCER BEHAVIOR AND SUPPLY
Very Short Questions
1. Define supply.
2. Define market supply of a good.
3. How is elasticity of supply curve?
4. What is the shape of supply curve?
5. When does a seller more quantity on the same price or same quantity on a lower price?
6. What is the shape of supply curve when elasticity of supply is infinite?
7. What effect does an increase in input price have on supply curve?
8. What is supply curve?
9. If a farmer grows rice and wheat, how will an increase in the price of wheat effect the supply
curve of rice?
10. If two supply curves intersect which one has higher price elasticity at the point of intersection.
11. How will an increase in the number of firms shift the market supply curve?
12. What is the price elasticity associated with a supply curve that is vertical?
13. Due to improvement of technology, the marginal cost of production of television has gone down.
How will it affect the supply curve of television?
14. What effect does an increase in excise tax rate have on the supply curve of the product?
15. What is meant by change in supply?
16. State the Law of supply.
Short Answer Questions.
1. What is meant by change in supply? Explain with diagram.

2. What is meant by change in quantity supply? Explain with diagram.
3. The coefficient of elasticity of supply, of a commodity is 3. A seller supplies 20 units of this
commodity at a price of Rs. 8 per unit. How much quantity of this commodity will the seller
supply when price rises by Rs. 2 per unit?
4. The coefficient of elasticity of supply of a commodity is 1.2. What quantity of the commodity
will a seller supply at price of Rs. 5/unit if he supplies 80 units at Rs. 4/unit?
5. If the price of the commodity is Rs. 10/unit and its quantity supplied at this price is 500 units. If
its price falls by 10% and quantity supplied falls to 400 units, calculate its price elasticity of
supply.
6. Explain law of supply with supply schedule and a curve.
Long Answer Questions-
1. Explain the determinants of supply curve.

2. Explain the factors affecting elasticity of supply.
3. Explain the concept of elasticity. Explain the types of elasticity with diagrams.
4. What are the reasons for the positive slope of supply?
5. Differentiate between expansion and increase, contraction and decrease.
6. What is market supply curve? Explain with schedule and diagram, also explain its determinants.
7. Explain the effect of technical progress and rise in input prices on the supply of good.
8. Distinguish between ‘change in supply’ and ‘change in quantity supplied’.
ASSIGNMENT - 5
UNIT– 3- PRODUCER BEHAVIOR AND SUPPLY
Very Short Answer Questions.
1. Define production function.

2. When TP increases at decreasing rate. What happens to MP?
3. What does division of labour mean?
4. What are fixed factors?
5. What is meant by marginal costs?
6. Which costs are present only in the short run and not in the long run?
7. What is the reason behind the ‘U’ shape of the MC curve?
8. What is the general shape of the AFC curve?
9. What will happen to ATC when MC > ATC?
10. What is meant by volume discounts?
11. Name two factors behind increasing returns to scale in the long run?
12. How is total product derived from marginal product schedule?
13. Define Average product.
14. What is explicit cost?
Short Answer Questions-
1. Explain the relationship between TP and MP with diagram.

2. Explain the relationship between MP and AP with diagram.
3. Explain the concept of opportunity cost with examples. Describe its significance.
4. What is meant by division of labour ? Name its two advantages.
5. Distinguish between fixed cost and variable cost. Give an example of each.
6. Suppose, a firm’s TFC is Rs. 100 and its MC schedule is the following.
Out put (units) 1 2 3 4 5 6 7

MC (Rs.) 10 20 390 40 50 60 70
Calculate TC and AC.
7. Complete the following table:
Output (units) 0 1 2 3 4
TC(Rs.) 80 180 270 350 440
AVC (Rs) - - - - -
MC (Rs.) - - - - -
Long Answer Questions-
1. Explain the law of variable proportions.

2. Differentiate between Internal economies and external economies of scale.
ASSIGNMENT - 6
UNIT– 4 –FORMS OF MARKET & PRICE DETERMINATION UNDER PERFECT
COMPETITION WITH SIMPLE APPLICATIONS
Q.1 Market for a good is in equilibrium. There is simultaneous ‘increase’ or ‘decrease’ both in
demand and supply of the good. Explain its effects on market price.
Q.2 What happens to equilibrium price of a commodity if there is an ‘increase’ in its demand and
‘decrease’ in its supply?
Q.3 State any three factors that can cause an ‘increase’ in demand of a commodity.
Q.4 Explain the implications of the following in perfect competition.
a) Large number of buyers and sellers.

b) Freedom of entry and exit of firms.
Q.5 Explain why are firms mutually interdependent in an oligopoly market.
Q.6 ‘Industry is price maker and firm is price taker’, explain
Q.7 Explain why there are only a few firms in an oligopoly market.
Q.8 Market for a good is in equilibrium. There is simultaneous ‘decrease’ both in demand and supply
but there is no change in market price. Explain with the help of a schedule how it is possible.
Q.9 Explain the chain of reactions in the market if the price is a) higher than equilibrium price b)
lower than equilibrium price.
Q.10 What happens to the equilibrium price when demand for a commodity decreases, supply
remaining unchanged?
Q.11 What is the impact of excess supply on equilibrium price?
Q.12 Distinguish between oligopoly and monopoly markets.
Q.13 What prevents a perfectly competitive firm to lower the product price and capture the entire
market?
Q.14 ‘A monopolist is a price maker’. How?
Q.15 What facilities partial control over price?
Q.16 Why are patent rights granted?
Q.17 Differentiate between price discrimination and product differentiation.
Q.18 What are cartels? Give an example.

Q.19 What form of market it is when there are only two firms producing a commodity?
Q.20 How are decisions taken by consumers and producers in a market co-ordinated?
Q.21 Why price remains unchanged when supply curve is perfectly elastic and demand curve shifts?
Q.22 With the help of a demand and supply schedule, explain the concepts of excess demand and
excess supply of a commodity. Also, explain their effect on the price of a commodity.
Q.23 Explain the effects of price ceiling.
Q.24 Explain economically viable and non- viable industry with help of diagram.
Q.25 What are the effects of ‘price’ floor (minimum price ceiling) on the market of a good ? use
diagram
.
Q.26 What is meant by ‘excess supply’ of a good in a market? Explain its chain of effects on the
market for that good use diagram.
ASSIGNMENT - 7
UNIT–5- NATIONAL INCOME ACCOUNTING
Q.1 What is circular flow of income?
Q.2 What is the difference between real flow and money flow?
Q.3 What is nominal GNP?
Q.4 What is GNP deflator?
Q.5 What is Green GNP?
Q.6 Explain the concepts of injections and leakages in an open economy.
Q.7 Distinguish between stock and flow? Compare net investment and capital with flow of water into
a tank?
Q.8 Write down some of the limitations of using GDP as an index of welfare of a country.
Q.9 Give examples of factor income earned from abroad by Indian residents.
Q.10 Are the following items included in estimating a country’s national income?
a) Expenditure on purchase of an old house

b) Brokerage on sale of shares
c) Meals given to the beggars.
Q.11 Are the following items included in estimating national income –
a) Receipts of scholarship from govt.

b) Sale of shares
c) Construction of new houses
d) Vegetables grown for self consumption
e) Cooking done by housewife.
ASSIGNMENT - 8
UNIT–5- NUMERICALS ON VALUE ADDED / PRODUCTION METHOD
Q.1 In the imaginary economy described below only the transactions shown take place –
(A, B, C are industries)
A sells to B for Rs.60 and to C for Rs.60
B sells to private consumption for Rs.50 and exports for Rs.40
C sells to public consumption for Rs.35 and accumulates unsold stocks worth Rs.35.
Find value added by industry of origin, and also value of different components or final
expenditure on national product. [Ans: value added – Rs.160, components – Rs.160]
Q.2 Find value added by industry.
a) A imports goods worth Rs.100 crores and exports worth Rs. 60 crores and sells for Rs.20 crores to
C and for Rs.60 crores to consumers.
b) B sells goods worth Rs.80 crores to C and for Rs.60 crores to consumers.
c) C imports goods worth Rs.120 crores and sells goods for Rs.50 crores to govt. [Ans. Rs.190]
Q.3 Calculate NVAFC
a. Opening stocks 20
b. Purchases 40
c. Wages 90
d. Operating surplus 40
a. IT 30
b. Depreciation 20
c. Unsold stock 25
d. sales 215
[Ans: Rs.130Cr)
Q.4 Calculate value added by firm X.
a. Sales 600
b. Purchases of raw material 200
c. Import of raw material 100
d. Import of machines 200
e. Closing stock 40
f. Opening stock 10
[Ans: Rs.430]
Q.5 An economy has only two firms A and B on the basis of the following information about these
firms, find out
a. Value added by firms A and B

b. GDPMP
a. Export by firm A 30
b. Import by firm A 60
c. Sales to h.h. by firm A 100
d. Sales to firm B by firm A 50
e. Sales to firm A by firm B 40
f. Sales to H.H by firm B 80
[Ans: by firm Rs.80, By firm Rs.70]
Q.6 Calculate GVAFC
a. Purchases of raw material 1000
b. Wages and salary 800
c. Rent 200
d. Interest 150
e. Profit 800
f. Depreciation 150
g. I.T 300
h. Subsidies (-)150
i. Closing Stock 1000
j. Opening stock (-)400
k. Sales 2650
[Ans: Rs.2100]
Q.7 Calculate NVAFC

a. Subsidy 40
b. Sales 800
c. Depreciation 30
d. Exports 100
e. Closing stock 20
f. Opening stock 50
g. Intermediate purchase 500
h. Purchase of machinery for own use 200
i. Import of raw material 60
[Ans: Rs.280]
Q.8 Calculate value added by A and B and GNPFC
a. Sales by firm A 100

b. Purchase from firm B by firm A 40
c. Purchases from firm A by firm B. 60
d. Sales by firm B. 200
e. Closing stock of firm A 20
f. Closing stock of firm B. 35
g. Opening stock of firm A 25
h. Opening stock of firm B. 45
i. Indirect Taxes paid by both the firms 30
j. Factor income to abroad 30
k. Factor income from abroad 25
[Ans: By A – Rs.55, by B – Rs.130, GNPFC – 150]
Q.9 Calculate value of output

a. NVAFC 100
b. Intermediate consumption 75
c. Excise duty 20
d. Subsidy 05
e. Depreciation 10
[Ans: Rs.200]
Q.10 Calculate intermediate consumption.
a. Value of output 200

b. NVAFC 80
c. Sales Tax 15
d. Subsidy 05
e. Depreciation 20 [Ans: Rs.90]
Q.11 Calculate Sales –
a. NVAFC 300
b. Net addition to stocks (-)20
c. Sales tax 30
d. Depreciation 10
e. Intermediate consumption 100
f. Subsidy 5 [Ans: Rs.455]
Q.12 Calculate GVAMP and National Income
a. Value of output by 1800 + 1200 + 1300

Primary, secondary, tertiary sectors
b. Value of intermediate inputs purchased by
Primary secondary, tertiary sectors 800 + 400 + 350
c. I T paid by all the sectors 150
d. Consumption of fixed capital by all sectors 180
e. Factor income received by residents from row 90
f. Factor income paid to non residents 120
g. Subsidies received by all the sectors 80
[Ans: Rs = GVAMP Rs.950cr. , NY Rs.2470 Cr.]

ASSIGNMENT - 9
UNIT–5- NATIONAL INCOME AND RELATED AGGREGATES
Q.1 Items included or excluded in National Income.
a. Broker’s commission on the sale / purchase of second hand goods or financial assets like shares
and bonds. (Y)
b. Undistributed profit, corporate tax (Y)
c. Interest on loans paid by commercial banks (Y)
d. Services provided by the owners of production units like irrupted rent of owner occupied
house, production for self consumption. (Y)
e. Payment for goods and services for private consumption e.g. railway fare by households,
school fees paid by students. (Y)
f. Free services (dispensary, education) by govt., govt. expenditure on street lighting, water
supply etc. (Y)
g. Capital formation (investment) like purchase of machinery by a firm, construction of a new
house etc. (Y)
h. Payment of bonus, retirement pension, subsidized lunch, house rent allowance by employer.
(Y)
i. Profits earned by an Indian company from its branches abroad, wages received by Indian
employees working in foreign embassies, rent received by Indian residents on their buildings
rented out to foreign companies or banks. (Y)
j. Sale and purchase of financial assets like shares bonds etc. (N)
k. Compulsory transfer payment like wealth tax, death duties etc. (N)
l. National debt interest. (N)
m. Illegal incomes like income from smuggling, black marketing etc. (N)
n. Sale and purchase of second hand goods like old machinery, old house (N)
o. Windfall gains like winning of lottery etc. (N)
p. Financial help given to recover from capital loss (N)
q. Intermediate consumption expenditure like purchase of raw material, advertisement expenses
of a production unit (N)
r. Capital gains like profit due to increase in the price of land, etc. (N)
s. Non market transactions like services a house wife, leisure time activities like gardening (N)
t. Transfer incomes or payments like pocket money, donations to charitable trusts etc. (N)
u. Construction of a news house (Y)
v. Increase in the prices of stocks lying with a trader. (N)
w. Durable goods purchased by a household (Y)
x. Growing vegetables in a kitchen garden of the house (N)
y. Gifts received from abroad (N)
z. Wages received by Indian employees working in Pakistan Embassy.
ASSIGNMENT - 10
UNIT–5- NATIONAL INCOME
Q.1 Are the following included in ‘Domestic Income.’ Give reasons-
a) Profits earned by a resident of India from his company in Singapore. (N)

b) C.O.E to the residents of Japan working in Indian Embassy in Japan. (Y)
c) Profits earned by Indian employees working in the Japanese Embassy in India (N)
d) Pension on retirement (Y)
e) Capital gains. (N)
f) Profits earned by a branch of an American Bank in India. (Y)
g) Salaries paid to Koreans working in Indian Embassy in Korea. (Y)
h) Profits earned by foreign banks from their branches in India. (Y)
i) Salaries received by Indian residents, working in American Embassy in India. (N)
j) Profits earned by an Indian company from its branch in Singapore (N)
Q.2 How will you treat the following while estimating National Income –
a) Salaries received by Indian residents working in Russian Embassy in India (Y)

b) Profits earned by an Indian bank from its branches abroad. (Y)
c) Entertainment tax received by the government. (N)
d) Profits earned by Indian company from its branch in London. (Y)
Q.2 Are the following statements true or false –
a) Car purchased by a dealer is a final good. (F)

b) Car purchased by a taxi driver is a final good. (T)
c) Car purchased by a household is a final good (T)
d) All producer goods are capital goods. (F)
Q.3 Are the following True or False
a) Tractor purchased by a farmer is a capital good. (T)

b) Fuel used by a transport a final good (F)
c) Milk used in a restaurant is a capital good. (F)
d) Spares of a truck is a capital good. (F)
Q.4 Are the following residents of India –
a) Nigerian students studying in Delhi University (N)

b) The American High commissioner posted the US Commission in India. (N)
ASSIGNMENT - 11
CHAPTER –5- NATIONAL INCOME
Questions on GDP, NDP, GNP, NNP
Q.1 Find out NNPMP
a) GNPMP 45,800
b) Consumption of fixed capital 1,580
c) Net factor Income from abroad -80 [Ans: 44,220]
Q.2 Find out NDPFC
a) NDPMP 24,900
b) I T 1,100
c) Subsidies 450 [Ans: 24,250]
Q.3 Find out NNPMP
a) Domestic Income 4500

b) Excise duties 150
c) Consumption of fixed capital 320
d) Subsidies 100
e) Net factor income from abroad (-)50 [Ans: 4400]
Q.4 Find out GNPMP, NNPFC, NDPMP
a) GNPFC 5,700
b) I T 200
c) NFIA 250
d) Subsidies 100
e) Consumption of fixed capital 80 [Ans: 5800, 5620, 5470]
Q.5 Suppose the GDPMP of India in 2005 – 2006 was Rs.75000 Cr. And NFIA was (-) Rs.250 Crores.
Calculate GNPMP. [Ans: Rs.74,750Cr.]
Q.6 Find out NNPMP
a. GNPMP 45,800
b. Consumption of fixed capital 1,580 [ Ans: Rs.44,220 Cr.]
Q.7 NDPFC
a) NDPMP 25,900
b) I T 1,200
c) Subsidies 350 [Ans: Rs.25,050]
Q.8 Calculate GNPMP
a) GDPFC 4500
b) Excise duty 100
d) Subsidies 50
e) NF IA (-) 100 [Ans: Rs.4450]
Q.9 GDPFC
a) NNPMP 33,650
b) NFIA 250
d) Indirect Taxes 600
e) Subsidies 300 [Ans: Rs.34,130]
Q.10 Calculate NNPMP
a) Domestic Income 3500

b) Excise duties 200
d) Subsidies 100
e) NFIA (-)100 [Ans: Rs.3500]
Q.11 Calculate NNPFC
a) Wages and salaries 4,520

b) Rent 850
c) Interest 310
d) Profit 1650
e) NFIA (-) 100 [Ans: Rs.7,230]
ASSIGNMENT - 12
CHAPTER –5- NATIONAL INCOME
Q.1 From the following data, calculate GNPMP by expenditure method:

(Rs. in crores)
Inventory Investment 100
Exports 200
NFIA (-)50
Personal consumption Expenditure 3500
Gross residential construction investment 300
Govt. Purchases of Goods & Services 1000
Gross Public Investment 200
Gross Business fixed Investment 300
Imports 100
Ans: (Rs.5450 Crores)
Q.2 Calculate GNPFC from the following data :

(Rs. in crores)
Net domestic capital formation 350
Closing stock 100
Govt. final consumption expenditure 200
NIT 50
Closing stock 60
Consumption of fixed capital 50
Net exports (-)10
Private final consumption expenditure 1500
Imports 20
NFIA (-)10
Ans: (Rs.2030 Crores)
Q.3 Calculate (a) GNPMP (b) NNPFC
(Rs. in crores)
Gross domestic capital formation 94
Net exports (-)6
NFIA (-)3
Net change in stocks 11
NIT 43
Government final consumption Expenditure 47
Ans: (Rs.310 crores)
Q.4 Calculate NDPFC from the following data:
(Rs. in crores)
Net fixed capital formation 180
Indirect taxes 180
Govt. Current transfers to household 25
Govt. final consumption expenditure 100
NFIA (-)10
MISE 560
Change in stock 60
Subsidies 20
Exports 100
Imports 120
Q.5 Calculate National Income by:
(a) Income Method (b) Expenditure Method
(Rs. in crores)
Compensation of employees 5200
Govt. consumption expenditure 1500
NIT 1400
Operating surplus 2000
Net exports (-)400
Gross fixed capital formation 2500
Net addition to stocks 400
NFIA 400
Mixed Income of self employed 6400
Q.6 From the following data, calculate N.I

(a) Income Method (b) Expenditure
(Rs. in crores)
Government final consumption expenditure 7000
Indirect Taxes 9000
Subsidies 1800
Net addition to stocks 3000
Operating surplus 10000
Exports 4800
Imports 5600
NFIA (-)300
Ans: (Rs. 61700 crores)
Q.7 From the following data, calculate:

(a) GNPMP by Expenditure Method (b) GDPMP by Income Method
(Rs. in crores)
Gross Domestic Capital formation 40
Net exports (-)5
Wages & salaries 165
Employers contribution to social security schemes 10
Profits 15
Interests 20
Indirect taxes 30
Subsidies 5
Rent 15
NFIA 5
Ans: (GNPMP = Rs. 260 crores), (GDPMP = Rs. 255 crores)
Q.8 From the following data calculate National Income by Income method & output method.
(Rs. in crores)
Value of output of primary sector 1000
Value of output of other sectors 400
Raw materials purchased by primary sector 500
Raw materials purchased by other sector 300
Factor Income received from the ROW 10
Factor Income paid to ROW 15
Depriciation 55
Indirect Taxes 100
Subsidies 20
Mixed Income of Self Employed 200
Rent 40
Interest 30
Profits 25
Q.9 Calculate NNPMP by (a) Income method & (b) Expenditure method.
(Rs. in crores)
Compensation of employees paid by Government 300
Employers contribution to social security schemes 100
Operating Surplus 1000
Net capital formation 450
Exports 10
Imports 40
Indirect Taxes 140
Subsidies 20
Purchases by non-residential households in domestic market 50
NFIA 20
Q.10 Calculate (i) Private Income (ii) Personal Income (iii) Personal Disposable Income
(Rs. in crores)
Factor Income from Net Domestic Product accruing to private sector 300
Income from property & entrepreneurship accruing to Govt. department 70
Savings of non-departmental enterprise 60
Factor Income from abroad 20
Depreciation 35
Current transfers 15
Factor Income to abroad 30
Corporate Tax 25
Current transfers from govt. administrative department 40
Direct Taxes paid by households 20
National debt Interest 5
Savings of private corporate sector 80
Ans: (Rs. 370, Rs.265, Rs.245)
Q.11 With the help of following data, calculate: (i) GNPMP (ii) Private Income
(iii) Personal Income (iv) National Disposable Income
(Rs. in crores)
GDPFC 38400
Corporation tax 1400
Income from domestic product accruing to private sector 27400
NIT 2500
NFIA (-)300
Net other current transfers from ROW 900
Q.12 From the information given below, calculate :

(i) NDPFC (ii) Private Income (iii) PDI
(Rs. in crores)
Corporation Tax 1251
Undistributed profits 464
Personal Consumption Expenditure 67890
Direct taxes on persons 2100
Personal savings 11406
National debt. Interest 964
Net Current transfers from ROW 1271
NFIA (-)201
Transfer payment 1981
Income from domestic product accruing to the government 2333
Ans: (Rs. 79296, Rs.83111, Rs.81429)
Q.13 Calculate (a) Private Income (b) PDI (c) GNPFC

(Rs. in crores)
NDPFC 2700
NFIA (-)45
Income from property & entrepreneurship to Govt. administrative department 75
Savings of non-departmental enterprises 9
National debt interest 90
Current transfers from ROW 27
Current transfers from Govt. administrative departments 72
Savings of the private corporate 48
Direct personal taxes 75
Corporate profit tax 27
.14 With the help of following data, calculate (i) Private Income (ii) National Income
(Rs. in crores)
Interest on National debt. 1100
P.D.I. 36400
Corporations tax 2300
Direct taxes paid by household 3200
Income from property & entrepreneurship accruing to govt. administrative 5900
departments
Savings of non departmental enterprises 1400
Net other current transfers from ROW 700
Ans: Rs.45,600 ; Rs.51,100
Q.15 Find out private Income from the following data:
(Rs. in crores)
Income from domestic product accruing to private sector 20000
Interest on National debt 125
NFIA (-)350
NIT 100
Net exports (-)200
Income from domestic product accruing to government sector 2000
ASSIGNMENT - 13
CHAPTER –6 – MONEY AND BANKING
Q.1 What is cash reserve ratio?
Q.2 Explain the process of money creation by commercial banks, giving a numerical example.
Q.3 Explain the concept of ‘excess demand’ in macro economics’. Also explain the role of open
market operation’ in correcting it.
Q.4 Explain ‘bankers’ bank, function of central bank.
Q.5 Explain the components of legal reserve ratio.
Q.6 Explain the significance of the ‘store of value’ function of money.
Q.7 What are time deposits?
Q.8 What is ‘statutory liquidity ratio’?
Q.9 Distinguish between money value of money and commodity value of money.
Q.10 What are the principal components of money supply?
Q.11 What is barter system and what are its drawbacks?
Q.12 What is fiat money?
Q.13 How is central bank different from a commercial bank?
Q.14 Define bank rate.
Q.15 Explain the process of money / credit creation by commercial banks.

ASSIGNMENT - 14
CHAPTER –6- MONEY AND BANKING
CREDIT CREATION.:- It is one of the most significant functions performed by commercial banks.
Credit is defined as finance made available by one party to another party on a certain rate of interest.
Depositors have current account in commercial banks and can meet their obligations through cheques.
These banks have the power to expand or contract demand deposits. This power is known as credit
creation or credit contract ion. For example - if cash reserves are Rs. 1000 and if demand deposits are
Rs.10,00 , then the commercial banks are creating credits ten times of their cash reserves. So, on the
basis of cash reserves of Rs.1000, the commercial banks are contributing Rs.10,000 to the supply of
money. Following is the brief description of how it happens:-
a) The commercial banks know that, all the depositors would not show up in the banks to withdraw
all their deposits at a point of time.
b) The experience shows that withdrawls are generally around 10% of deposits as cash reserves.
c) If CRR = 10%, total cash reserves of Rs.1000 allows the banks to offer loans up to Rs.10,000
according to this formula –
1 1
Demand deposits =  cash reserves = 1000 = Rs. 10,000
CRR 10%
d) We can thus conclude that if cash reserves of the commercial banks are increased by Rs.1000,
then credit supply in the economy will increase by Rs. 10,000 on the accumption that CRR = 10%
Demandeposits 10,000
Credit multiplier = =  10
cashreserve 1000
OR
1 1
Credit multiplier =   10
CRR 10%
Primary and Secondary deposits –
Primary deposits are cash deposits with the commercial banks by the people. These are reflected
as a part of ‘demand deposits’ of the banks.
Secondary deposits are those which arise on account of loans by the banks to the people.
Primary deposits point to savings of the depositors with the banks while secondary deposits point
to barrowings of the depositors from the bank. Secondary deposits are also known as derivative
deposits.
ASSIGNMENT - 15
UNIT–7– DETERMINATION OF INCOME AND EMPLOYMENT
Q.1 Give the meaning of involuntary unemployment.
Q.2 What is the relationship between MPC and MPS.
Q.3 What is cash reserve ratio?
Q.4 Explain the process of money creation by commercial banks, giving a numerical example.
Q.5 Explain equilibrium level of national income using savings and investment approach. Draw
diagram.
Q.6 Draw a straight line consumption curve. From it derive a saving curve explaining the process of
derivation. Use diagram to support your answer.
Q.7 Given consumption function C = 100 + .75 Y and investment expenditure Rs. 1000, calculate.
a) Equilibrium level of national income

b) Consumption expenditure at equilibrium level of national income.
Q.8 Find C, when c  200 , MPS = 0.5 and Y = 1,000
Q.9 Find S, when c  200 , MPS = 0.4 and Y = 1000.
Q.10 APC and MPC are two parameters. The value of which parameter can be greater than one and
when?
Q.11 Can APS be greater than one? Give reasons.
Q.12 Can APS ever be negative? If yes, give an example.
Q.13 If PDI is Rs.1000 Cr. And consumption expenditure is Rs.750 Cr, find out APS.
Q.14 Can MPS or MPC ever be negative? Give reasons in support of your answer.
Q.15 Complete the following table.
Income Consumption MPC APS

40 -
0 -
- 120 -
0.8
- 200 -
- 0.8
- 280 -
0.8
Q.16 Complete the following table –
Income Saving APC MPC

-30
0
-15 -
50 -
-
0 -
100 -
-
15
150
Q.17 Complete the following table –
Income MPC Saving APC
- -
0
0.75 30
100 -
0.75 - -
200
- -
0.75
300
-
Q.18 complete the following table –
Income Consumption MPS APS

0 40 - -
50 70 - -
100 100 - -
150 120 - -
ASSIGNMENT - 16
UNIT–8 – FOREIGN EXCHANGE RATE, MEANING & DETERMINATION
Meaning: Foreign exchange rate is the price of one currency in terms of another. It is the rate at which
exports and imports of a nation is valued at a given point in time.
Foreign Exchange Market – The foreign exchange market is the market where the national currencies are
traded for one another. Foreign exchange market performs mainly three functions.
d) to transfer the purchasing power between countries. (transfer function)

e) to provide credit channels for foreign trade (credit function)
f) to protect against foreign exchange risks (hedging function)
Demand for foreign exchange - The demand for foreign exchange arises because of the following –
a) for making payments of imports of goods and services.

b) For making investments and lending abroad by the domestic residents.
c) To speculate on the value of foreign currencies.
d) To send a gift abroad.
Supply side of foreign exchange - It comes from the following sources –
a) the domestic exporters of goods and services.

b) The foreigners who invest and lend in the home country.
c) Flow of foreign exchange due to speculation.
d) Inward unilateral transfers such as receiving of gifts from abroad.
Determination of rate of exchange - The determination will take place at that point where demand for
foreign exchange is equal to supply of foreign exchange. Foreign exchange market like any other
normal market contains a downward sloping demand curve and an upward sloping supply curve.
The price on the vertical axis is stated in terms of domestic currency ( that is, how many rupees
for one US dollars). The horizontal axis measures the quantity demanded or supplied.
It is necessary to understand the slope

of demand and supply curve
1) The demand curve is sloping down

because less foreign exchange
is demanded as the
exchange rate increases which means the rise in price
of foreign exchange well increase the
rupee cost of foreign goods..
2) The supply is upward sloping which means the supply of foreign exchange increases as the
exchange rate increases.
The increase in exchange rate means that more rupees are required to buy one US dollar.
When this occurs, rupee is said to be depreciating (currency depreciation)
When the exchange rate falls, the rupee cost of Us dollar is decreasing and the Indian rupee is said
to be appreciating ( currency appreciation)
Types of Exchange rate - The determination of foreign exchange depends on specific international
arrangements –
1) Fixed exchange rate system - It is a system where in the rate of exchange between two or
more countries does not vary or varies only within narrow limits.
This was associated with the gold standards system during 1880 – 1914. Under this the value of
each currency was fixed according to the gold value of currencies. For example. if US dollar ($)
is exchangeable for 22 gm of gold and the British pound ( ) for 110 gm gold then one pound is
equal to 5 US $ (110 / 22)
Merits - i) Promotes international trade ii) promotes international investment

iii)economic stabilization
Demerits - i) large reserves of foreign currencies ii) sacrifice of the objectives of full employment
and stable prices.
2) Flexible exchange rate – is a system where the value of one currency in terms of another is
free to fluctuate and establish its equilibrium in the exchange market through the forces of
demand and supply.
Merits - a) simple in operation

b) no need for foreign exchange reserves
c) exchange controls not required.
Demerits – a) inflationary bias.

b) widespread speculation
c) unstable condition
Difference between Fixed Flexible
1) foreign is officially declared by the Government 1) determined by the demand and

supply forces.
2) foreign central banks stand ready to purchase and 2) no intervention of central
sell their currencies. Banks.
3) very small variation from the fixed value is possible. 3) changes in the exchange
rate all the terms.
Operation of foreign exchange market - It operates in two ways –
Spot market - In this market only spot transaction are taken up. This market is of daily nature and does
not deal in future transactions of foreign exchange.
EER effective exchange rate
NEER Nominal effective exchange rate
REER Real effective exchange rate
Forward market - It is seen that most of the international transactions materialise much later than the
value date when the transaction is signed.
Crawling Peg - According to this system, a country specifies a parity value for its currency and permits a
small variation around that parity. In this system there is ceiling and floor limits so that it can
provide for some discipline on the part of monetary authorities.
Managed floating - In this system, there is official declaration of rules and guidelines for intervention, no
pre fixed parity values and no announced time for variation.
Wider bands system - This system allowed only 1% variation an either side of the parity values.
ASSIGNMENT - 17
UNIT: 8– GOVERNMENT BUDGET AND THE ECONOMY (NOTES)
Budget means the annual financial statement containing an estimate of all anticipated revenue and
expenditure of the govt. for the coming financial year.
Objectives of govt. budget –
1. Activities to secure a reallocation of resources - Sometimes market forces fail to allocate resources
efficiently. The govt. has to re – allocate them in time with social and economic consideration. For
example production of harmful consumption goods can be discouraged through heavy taxation and
production of socially useful goods can be encouraged through subsidies.
2. Redistribution of income and wealth - Govt. through its budgetary policy tries to reduce inequalities
of income and wealthy. The govt. uses the instruments of taxation and expenditure on social security,
subsidy etc.
3. Economic stability – The govt. budget is used to prevent economic fluctuations (inflation and
deflation)
4. Management of public enterprises - Govt. undertakes commercial activities through its public
enterprises. There are certain industries which should come under state regulation to promote social
welfare.
Impact of budget on the economy - There are three levels at which the budget impacts the economy –
1. Aggregate fiscal discipline – This means having control over expenditures, given the quantum of
revenues. This is necessary for proper macro economic performance.
2. The second is the allocation of resources based on social priorities.
3. The third is the effective and efficient provision of programmes and delivery of services.
Components of the budget - There are two main components of a budget –
Budget receipts and budget expenditure.
Budget receipts - refer to the estimated money receipts of a goct. from all sources during a fiscal year.
They may be classified into two –
a) revenue receipts – refer to choose receipts of the govt. which neither create any liability for the
govt. nor cause any reduction in the assets of the govt. for example revenue from tax is revenue
receipts but loans taken but the govt. from the public is not. This is divided into two tax and non
tax revenue.
b) Capital receipts – refer to those receipts which tend to create a liability for the govt. or cause
reduction in its assets. These kinds of receipts include
- loans raised by the govt. from public, RBI, other parties though sale of treasury bills
- loans from foreign govt. and international institution
- recoveries of loans
- disinvestment proceeds (revenue through the sale of shares of public sector undertakings
- small savings (post office deposits) and deposits in the PPF etc.
Components of budgetary receipts
Revenue receipts capital receipts
A. Receipts from the revenue

1.personal income tax 1. Recovery of loans and advances
2.corporate tax 2. small savings (deposits in post office, time
3.interest tax deposits recurring deposits,
4.expenditure tax NSC, India Vikas Patra)
5.wealth tax 3. Provident funds
6.custom tax 4. Disinvestment proceeds
7.central excise duties 5. External Assistance
B. Receipt from non term revenue
1. Interest receipts
2. Dividends and profits
3. Revenue from services provided
4. Grants in aid
Budget Expenditure – may be classified into three ways –
1) Revenue Expenditure and capital expenditure - is the expenditure incurred for the normal running of
govt. departments and provision of various services, interest charges on department incurred by the
govt. subsidies etc. In general any expenditure that does not result in the caution of assets is treated as
revenue expenditure.
Capital expenditure consists mainly of expenditure on acquisition of assets like land, buildings,
machinery, equipment, investment in shares etc. and loans and advances granted by the central govt.
companies, corporation and other parties.
2) Plan and non plan expenditure - Plan expenditure is that public expenditure which represents current
development and investment outlays that arise due to plan proposals while non plan expenditure is all
other expenditure.
3) Developmental and non developmental expenditure – Developmental expenditure includes plan
expenditure of railways, posts and telecommunications, and non departmental undertakings, market
loans, term loans etc.
Non developmental expenditure include expenditures on defense, interest payments tax collection, police
and others.
Types of budget – There are three types
1) Balanced budget is said to be balanced when govt. revenue and expenditure are equal.
2) When govt’s expenditure is greater than govt. revenue than it is said a deficit budget.
3) When revenue of the govt. is greater than expenditure of the govt. than budget is said a surplus
budget merits and demerits of different types of budget.
Balanced budget’s merits
a) It keeps price rise under control

b) It restricts wasteful public expenditure.
Demerits - (a) It does not promote economic growth.

(b) It does not provide anyu solution to the problem of unemployment.
Surplus budget - merits - (a) It is helpful in reducing inflationary gap as it reduces the level
of aggregate demand in the economy.
(b) It restricts freedom of action on the part of govt.
Demerits - (a) It is harmful during the period of depression

(b) It is not suitable for underdeveloped countries like India.
Deficit budget – Merits (a) It is most desirable when the level of AD is low in the economy.
(b)It accelerates growth
(c) It would be needed for the monetization of the economy.
Demerits – a) not desirable during inflation

b) It would lead to wasteful and unnecessary expenditure
Measures of budget deficits.
1. Revenue deficits – refers to the excess of revenue expenditure over revenue receipts.
Implications – a) It indicates dis -savings on govt. account

b) In this case capital receipts are used to finance consumption expenditure of the
govt.
c) It implies a repayment burden in future.
2. Fiscal deficit - is the excess of total expenditure (both on revenue and capital accounts) over revenue
receipts and capital receipts including borrowings.
Implications – (1) debt trap (2) Inflation (3) does not income increase development expenditures
expenditure (4) foreign debenture
Measures to correct it - (1) borrowly from internal and external sources.

(2) borrowly from the RBI
(3) Disinvestment
3. Primary deficit - It is simply fiscal deficit interest payments.
Implication - (1) It shows real burden of govt.

(2) It shows how much govt. borrowly is going to meet expenses other than interest
payment.
Budget deficit - The budget deficit is the difference between the total expenditure on one hand and
current revenue and net internal and external capital receipts of the govt. on the other hand.
ASSIGNMENT - 18
UNIT: 8– GOVERNMENT BUDGET AND THE ECONOMY
Q.1 What is government budget? Explain various components of budget.
Q.2 Explain the main objectives of the govt. Budget.
Q.3 What do you mean by budget expenditure? Explain its various components.
Q.4 What is fiscal deficit? Explain its main implications.
Q.5 What do you mean by tax? Why it is considered as revenue receipts? Give difference between
direct and indirect tax.
Q.6 Distinguish between revenue expenditure and capital expenditure.
Q.7 Distinguish between revenue receipts and capital receipts in a govt. budget. Give two examples
of each.
Q.8 what are the different sources of non tax revenue receipts in a govt. budget?
Q.9 Explain the terms ‘plan’ and ‘non plan’ expenditure of govt. Give examples of each.
Q.10 Explain balanced budget, deficit budget and surplus budget.
Q.11 What is revenue deficit? Explain its main implications?

ASSIGNMENT - 19
UNIT: 8– FOREIGN EXCHANGE RATE
Q.1 What do you mean by foreign exchange rate?
Q.2 Define fixed and flexible rate of exchange.
Q.3 What is forward exchange rate?
Q.4 Explain the concept of hedging and spot market.
Balance of Payment
Q.5 Define balance of payments.
Q.6 Define balance of payment on current account.
Q.7 What are visible and invisible items of balance of payments?
Q.8 When will there be a surplus in balance of trade?
Q.9 What are unilateral transfers? How are these accounted in BOP?
Q.10 What are autonomous and accommodating items ?

ASSIGNMENT - 20
UNIT – II – CONSUMER EQUILIBRIUM AND DEMAND
Q.1 A persons marginal utility schedule is given below. Derive his total utility schedule (assume that
total utility of consuming zero is zero)
Amount consumed 1 2 3 4 5 6
Marginal utility
7 10 8 6 3 0
Q.2 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 is Rs.1). Give reason for your answer.
Q.3 The consumer wants to consume two goods. The prices of the two goods are Rs.4 and Rs.5
respectively. The consumer income is Rs.20
a) Write down the equation of the budget line

b) How much of good 1 can the consumer consume, if she spends her entire income on that
good?
c) How much of good 2 can she consume if she spends her entire income on that good?
d) What is the slope of the budget line?
Q.4 Expenditure incurred on the purchase of petrol by Ajay is given below in the table at various
prices. Prepare demand schedule of Ajay.
Price of petrol
40 41 42 44 45
(Rs. Per litre)
Expenditure
(Rs. Per month) 200 164 126 88 45
Q.5 Following is the utility schedule of a consumer who wants to spend Rs. 20 on two goods X and Y.
Suppose prices of these goods are Rs.5 and Rs.2 respectively. How will the consumer attain his
equilibrium?
Units of goods 1 2 3 4 5 6
Marginal utility of 50 40 30 20 10 0
good X
Marginal utility of
24 22 20 18 16 14
good Y

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Ahlcon Public School, Mayur Vihar, PH - 1 Assignment - 1 Class - Xii Economics (Session: 2018-19) Value Based Questions From All Chapters

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AHLCON PUBLIC SCHOOL, MAYUR VIHAR, PH – 1

VALUE BASED QUESTIONS FROM ALL CHAPTERS.

Ans. 1. Present or expected income of the consumers is rising

Ans: Because inferior goods are essentials of life.

Ans: It is the part of oligopoly market so it is decided in group.

It is bad because imports of essential capital goods become expensive.

Money has broken the barriers of barter system.

Q,2 Explain the problem of ‘what to produce’.

Goods X (units) 100 120

Q.5 Complete the following table:

Q.9 Explain the central problem of ‘how to produce’.

Q.11 Why does an economic problem arise? Explain.

Q.14 Why is a production possibility curve concave? Explain.

Q.16 Distinguish between market and mixed economy.

Q.17 Your are to simply tick () Yes or No

Q.1 VERY SHORT ANSWER QUESTIONS

i) Give two characteristics of economic resources.

Q.2 SHORT Answer questions (60/70 words)

i) Explain the central problem of ‘what to produce’?

(1) A rise in money income of the households.

viii) Distinguish between normal goods & inferior goods.

Q.3 LONG ANSWER QUESTIONS

i) Explain consumer equilibrium with the help of utility approach.

Very Short Questions

Short Answer Questions.

1. What is meant by change in supply? Explain with diagram.

Long Answer Questions-

1. Explain the determinants of supply curve.

Very Short Answer Questions.

1. Define production function.

Short Answer Questions-

1. Explain the relationship between TP and MP with diagram.

Out put (units) 1 2 3 4 5 6 7

Calculate TC and AC.

7. Complete the following table:

Long Answer Questions-

1. Explain the law of variable proportions.

Q.4 Explain the implications of the following in perfect competition.

a) Large number of buyers and sellers.

Q.6 ‘Industry is price maker and firm is price taker’, explain

Q.11 What is the impact of excess supply on equilibrium price?

Q.12 Distinguish between oligopoly and monopoly markets.

Q.17 Differentiate between price discrimination and product differentiation.

Q.18 What are cartels? Give an example.

Q.23 Explain the effects of price ceiling.

Q.1 What is circular flow of income?

Q.3 What is nominal GNP?

Q.4 What is GNP deflator?

Q.5 What is Green GNP?

Q.6 Explain the concepts of injections and leakages in an open economy.

a) Expenditure on purchase of an old house

Q.11 Are the following items included in estimating national income –

a) Receipts of scholarship from govt.

Q.2 Find value added by industry.

Q.3 Calculate NVAFC

Q.4 Calculate value added by firm X.

a. Value added by firms A and B

Q.7 Calculate NVAFC

Q.8 Calculate value added by A and B and GNPFC

a. Sales by firm A 100

[Ans: By A – Rs.55, by B – Rs.130, GNPFC – 150]

Q.9 Calculate value of output