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HIMALAYAN INTERNATIONAL RESIDENTIAL SCHOOL PRACTICE EXAMINATION 2015 2016 ECONOMICS Time: 03:00Hrs. CLASS 12 Name: ........................................................... DATE: ../ . / 2015 Max. Marks: 80 Candidates are allowed additional 15 mins for only reading the paper. They must NOT start writing during this time. Answer all questions from part I which is compulsory. Answer ANY FIVE questions from Part II. The intended marks for questions are given in brackets [ ]. Part I (Compulsory) Answer all questions Question 1. [10 x 2=20] Answer briefly each of the following questions (i) to (x) Justify the following as price taker / price makers. a. an oligopoly market b. a perfectly competitive market. ii. With the help of a diagram, show how the equilibrium price and quantity changes when supply increases and demand remains unchanged. iii. With the rise in price by Rs 5, the quantity demanded changes from 100 units to 95 units. The price elasticity of demand is 1.2. Find out the price before change. iv. Differentiate between explicit cost and implicit cost. v. What is meant by high powered money? vi. Differentiate between price ceiling and floor price. vii. What does zero cross elasticity of demand between two goods imply? Give an example to explain. viii. When will a change in demand have no impact on the equilibrium price of a commodity? Show with the help of a diagram. ix. What is the significance of freedom of entry and exit under perfect competition? x. Define GNP at factor cost. How is it different from national income? i. Part II Answer any five questions Question 2 (a) Discuss the effect of elasticity of demand on: (i) A commodity which has many substitutes. (ii) A small part of individual s income spent on a commodity. This Paper consists of 3 printed pages Page- 1 [3] (b) (c) Discuss three factors that affect the supply of a commodity? Study the schedule given below and identify how much of a commodity A and commodity B will a utility maximising consumer buy: Units of A MU of A Units of B 10 1 30 2 8 2 24 3 6 3 20 4 4 4 16 5 2 5 14 6 1 6 [6] MU of B 1 [3] 8 Note: Price A = Rs 2, Price B = Rs 4, Income = Rs 20 Question 3 (a) (b) (c) Explain any two properties of an indifference curve with the help of diagrams. Explain the meaning of break-even point and shut down point in a firm. Indicate four differences between short-run and long-run production functions. [3] [3] [6] Question 4 (a) (b) (c) Mention TWO situations where a supply curve does not have a positive slope. [3] Discuss the relationship between Average Product and Marginal Product with the help of a diagram. [3] Explain how bank rate and open market operations can be used by the central bank to control credit [6] Question 5 (a) (b) (c) Explain any three features of an oligopoly market. Distinguish between pure competition and perfect competition. Using labelled diagram, explain three stages of the Law of Variable Proportions. [3] [3] [6] Question 6 (a) (b) (c) What is the relationship between AR and MR in imperfect competition? Explain with the help of a diagram. Write down any TWO relationships between MC and AC with the help of a diagram. From the following table, calculate TR and MR. Units Produced 1 2 3 4 5 6 7 8 Price (Rs) 20 18 16 14 12 10 8 6 This Paper consists of 3 printed pages Page- 2 [3] [3] [6] Question 7 (a) Explain the following functions of the central bank: (i) Bank of issue (ii) Bankers bank (b) Draw ATC, AVC and MC curves on a single diagram and write any two relationship between ATC and MC. (c) Discuss any four functions performed by money in an economy. [3] [3] [6] Question 8 (a) (b) (c) Distinguish between change in demand and change in quantity demanded. What are the different measures of money supply in India? Discuss four differences between monopolistic competition and monopoly. [2] [4] Question 9 (a) (b) How do commercial banks create credit? Explain with the help of an example. Mention the functions of a commercial bank. [6] [6] Question 10 (a) List down any three differences between intermediate goods and final goods. (b) Discuss three difficulties in calculating national income by income method. (c) Calculate national income and Gross Domestic Product at market price from the following data using the Value Added Method: Rs. in crores (i) Gross Value of Output in Primary Sector at factor cost 950 (ii) Gross Value of Output in Secondary Sector at factor cost 470 (iii) Gross Value of Output in Tertiary Sector at factor cost 500 (iv) Value of Intermediate Products in Primary Sector 360 (v) Value of Intermediate Secondary in Primary Sector 200 (vi) Value of Intermediate Tertiary in Primary Sector 175 (vii) Depreciation 20 (viii) Indirect taxes 35 (ix) Subsidy 10 (x) Net Factor Income from abroad This Paper consists of 3 printed pages 4 Page- 3 [3] [3] [6]
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