INDIAN SCHOOL CERTIFICATE BOARD EXAMINATION

ISC 2008 Class XII Question Paper

ECONOMICS

(Three Hours)

 

 

PART I  (30 MARKS)

(Compulsory)

 

Question 1  Answer briefly each of the questions (i) to (xv).         [15 x 2]

 

(i) Differentiate between Micro and Macro economics.  Give two examples of each.

 

(ii) Define income effect.

 

(iii) What is the price elasticity of demand when :

(a) the change in price and total expenditure move in the opposite direction?

(b) the change in price and total expenditure move in the same direction?

 

(iv) Distinguish between autonomous and accommodating capital flow in Balance of Payment.

 

(v) What is the price elasticity associated with a straight line supply curve passing through the origin?  Explain with a diagram.

 

(vi) Differentiate between private income and personal income.

 

(vii) Why is the MR curve below the AR curve under imperfect competition?

 

(viii) Draw a diagram to show the effect of total product on marginal product of a variable factor when total product reaches its maximum.

 

(ix) Differentiate between break-even and shut-down point.

 

(x) State two similarities between perfect competition and monopolistic competition.

 

(xi) Define transfer earnings.

 

(xii) When is the national product of a country higher than domestic product?

 

(xiii) Is it possible to measure profits earned by a firm in the following diagram?  Explain why.

 

(xiv) Distinguish between gross profit and net profit.

 

(xv) What is fiscal deficit?

 

 

PART II  (70 MARKS)

Answer any five questions.

 

Question 2

(a) Discuss any four degrees or magnitudes of elasticity of demand.       [6]

 

(b) Explain graphically, the impact on equilibrium price and on quantity in the following situations:

(i) An increase in the consumer's income.   [2]

 

(ii)  A decrease in the price of inputs.          [2]

 

(iii) An improvement in technology.            [2]

 

(iv) An increase in the price of complementary goods.      [2]

 

Question 3

(a) Explain the properties of an indifference curve using diagrams.       [6]

 

(b) Give one difference between increasing returns to scale and diminishing returns to scale.  Discuss two reasons each for increasing returns and diminishing returns to scale.     [8]

 

Question 4

(a) Explain with the help of a diagram, the relationship between average cost and marginal cost.      [6]

 

(b) Define monopoly market.  Discuss four main features of monopoly market.           [8]

 

Question 5

(a) Discuss four differences between the Ricardian and Modern theory of rent.           [6]

 

(b) 'The wages of a labourer are determined according to marginal productivity'.  Explain.   [8]

 

Question 6

(a)  Mention the components of domestic factor income.  [2]

 

(b) Calculate the operating surplus from the following data :

                        Rs. (in crores)

 (i)           Gross value added at market price            5550

 (ii)          Wages and Salaries             1200

 (iii)         Employer's contribution to Social Security           250

 (iv)         Net indirect taxes     100

 (v)          Consumption of fixed capital         75

 (vi)         Mixed income          300

            [4]

 

(c) Explain the income method of measuring National Income.  State two precautions taken while calculating national income by the income method.      [8]

 

Question 7

(a) Discuss four differences between Balance of current account and Balance of capital account.      [6]

 

(b) Explain the Ricardian Theory of International Trade, using production possibility curve.            [8]

 

Question 8

(a) Discuss four reasons for internal borrowing by the Government.      [6]

 

(b) Define Fiscal Policy.  Explain how inflation can be controlled through fiscal measures.     [8]

 

Question 9

(a) Discuss briefly how the parliament controls budget finances. [6]

 

(b) Define 'tax'.  Explain four differences between direct and indirect tax.        [8]