QUESTION BANK SUB – ECONOMICS CLASS – XII 2016-17 UNIT 1: INTRODUCTION Very Short Answer Type Questions (1 mark) 1. What is meant by economizing resources? 2. Why does the problem of choice arise? 3. What does a rightward shift of production possibility curve indicate? 4. Define microeconomics 5. Define opportunity cost. 6. Why does an economic problem arise? 7. Give meaning of ‘opportunity cost’. 8. Give two examples of microeconomic studies. 9. Give the meaning of opportunity cost. 10. Give the meaning of microeconomics. 11. Give the meaning of an economy. 12. Unemployment is reduced due to the measures taken by the government. State its economic value. 13. In the context of production possibilities frontier. 14. Give two examples of micro economic variables. 15. What is economics about? 16. What factor leads to rightward sift of the PPC? 17. Can there be an economy without economic problem? 18. Can PP curve be a straight line? 19. Why is there need for economizing problem? 20. What is the subject matter of economics? 21. What is meant by normative economics? 22. What are the problems of resources allocation? 23. State two characteristics of resources. 24. Define micro economics. 25. Give two examples of microeconomics. 26. What is PPC? Short Answer Type Questions (3/ 4 marks) 1. Explain the problem of ‘How to produce’ with the help of an example. 2. What does a production possibility curve show? When will it shift to the right? 3. Explain the central problem ‘what to produce’. 4. Explain the central problem ‘how to produce’. 5. Explain the central problem ‘for whom to produce’. 6. Why does an economic problem arise? Explain. 7. Explain how scarcity and choice go together. 8. Why is a production possibilities curve concave? Explain 9. What is opportunity cost? Explain with the help of a numerical example. 10. What is ‘Marginal Rate of Transformation’? Explain with the help of an example. 11. State reasons why does an economic problem arise? 12. Explain the central problem ‘for whom to produce’.
33
Embed
XII ECONOMICS QUESTION BANK 2016-17davrtcodisha2.org/questions/qns_1480535446.pdf · Give two examples of microeconomics. ... change in PPC when resources ... Explain with help of
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
QUESTION BANK
SUB – ECONOMICS
CLASS – XII 2016-17
UNIT 1: INTRODUCTION
Very Short Answer Type Questions (1 mark)
1. What is meant by economizing resources?
2. Why does the problem of choice arise?
3. What does a rightward shift of production possibility curve indicate?
4. Define microeconomics
5. Define opportunity cost.
6. Why does an economic problem arise?
7. Give meaning of ‘opportunity cost’.
8. Give two examples of microeconomic studies.
9. Give the meaning of opportunity cost.
10. Give the meaning of microeconomics.
11. Give the meaning of an economy.
12. Unemployment is reduced due to the measures taken by the government. State its economic
value.
13. In the context of production possibilities frontier.
14. Give two examples of micro economic variables.
15. What is economics about?
16. What factor leads to rightward sift of the PPC?
17. Can there be an economy without economic problem?
18. Can PP curve be a straight line?
19. Why is there need for economizing problem?
20. What is the subject matter of economics?
21. What is meant by normative economics?
22. What are the problems of resources allocation?
23. State two characteristics of resources.
24. Define micro economics.
25. Give two examples of microeconomics.
26. What is PPC?
Short Answer Type Questions (3/ 4 marks)
1. Explain the problem of ‘How to produce’ with the help of an example.
2. What does a production possibility curve show? When will it shift to the right?
3. Explain the central problem ‘what to produce’.
4. Explain the central problem ‘how to produce’.
5. Explain the central problem ‘for whom to produce’.
6. Why does an economic problem arise? Explain.
7. Explain how scarcity and choice go together.
8. Why is a production possibilities curve concave? Explain
9. What is opportunity cost? Explain with the help of a numerical example.
10. What is ‘Marginal Rate of Transformation’? Explain with the help of an example.
11. State reasons why does an economic problem arise?
12. Explain the central problem ‘for whom to produce’.
13. Explain the problem of ‘what to produce’ with the help of an example.
14. Explain ‘what to produce’ with the help of an example
15. Why does an economic problem arise? Explain the problem of ‘how to produce’.
16. Explain the problem of ‘what to produce’
17. Explain any two main features of a centrally planned economy.
18. Production in an economy is below its potential due to unemployment. Government starts
19. Employment generation schemes. Explain its effect using production possibilities curve.
20. Differentiate between positive economics and normative economics.
21. ’Make in India’ campaign would shift the PPC to the right. How?
22. What is the likely impact of ‘Sarva Shiksha Abhiyan’ and ‘Skill India Campaign’ on PPC of the
Indian Economy?
23. For those working under MGNREGA, the government has raised minimum employment from
24. 100 days during a year. How would it impact the actual and potential level of output in the
economy?
25. Does production possibility frontier indicate the actual level of output or potential level of
output?
26. Why is a production possibilities curve concave? Explain.
27. Explain properties of a production possibilities curve.
28. Explain the problem of ‘what to produce’.
29. What is ‘Marginal Rate of transformation’? Explain with the help of an example.
30. Explain the problem ‘How to produce’.
31. Define; economics is all about making choices in the presence of scarcity.
32. In the mixed economy, production decisions are guided only by the consideration of profit.
33. PPC is affected when resources are inefficiently employed in an economy. Defend or refute.
34. Does massive unemployment shift the PPC to the left?
35. What does increasing marginal opportunity cost along a PPC mean?
36. When does PPC shift to the right ?(3)
37. Explain the central problem for whom to produce ?(3)
HOTS
1. Draw a production possibility (PP) curve when MRT is constant. Give reason
2. Is the study of cotton textile industry a macro economic study o a micro economic study?
3. A doctor has a private clinic in New Delhi and his annual earnings are Rs10 lakhs. If he works in a
Government Hospital in New Delhi, his annual earnings is Rs 8 lakhs. What is the opportunity?
Cost of having a clinic in New Delhi?
4. If PPC relates to wheat and rice (on the X-axis and Y-axis respectively) draw diagram showing
change in PPC when resources remain constant and technology improves only for wheat.
5. If resources are scarce, how do you explain massive unemployment in India?
6. Unemployment is reduced due to the measures taken by the government. State its economic
value in the context of production possibilities frontier?
7. What will likely be the impact of large scale inflow of foreign capital in India on Production
possibilities curve and why?
8. Explain the concept of opportunity cost with the help of a numerical example.
9. Find marginal opportunity cost of Good-I when production of Good-I increase from 10 units 15
units while the production of Good -2 decreases from 500 units to 100 units.
10. Union Health Minister of India has recently launched “Mission Inradhanush”:Full Immunization
for All Children by 2020.State its impact on production possibility curve of the economy.
11. Explain with help of a diagram the situations of inefficient and efficient utilization of resources in
an economy.
12. State the economic problems relating to allocation of resources.
UNIT 2: CONSUMER’S EQUILIBRIUM AND DEMAND
Very Short Answer Questions (1 mark)
1. Define utility.
2. What is meant by consumer’s equilibrium?
3. Define marginal utility (MU).
4. Define an indifference curve.
5. Define Budget line.
6. Define budget set.
7. What are monotonic preferences?
8. Define an indifference map.
9. What is MRS?
10. Give the reason behind a convex indifference Curve.
11. What does a rightward shift in demand curve indicate?
12. When does a demand curve shift?
13. What is meant by inferior goods in economics?
14. What causes a movement along the demand curve of a commodity?
15. How wills an increase in the price of tea affects the demand for sugar?
16. Give the meaning of ‘inelastic demand’.
17. Why is demand for water inelastic?
18. Whether demand for luxurious goods is elastic or inelastic?
19. Why is demand for electric power elastic?
20. Why the indifference is Curve convex to the origin?
21. Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your
friend monotonic?
22. Explain why is the budget line downward sloping?
23. Give the formula for calculating slope of Budget Line?
24. What does the slope of indifference Curve indicate?
25. Does the convexity of IC curve indicate the operation of the law of diminishing marginal utility?
26. What happens to marginal utility when total utility is maximum?
27. What does the movement on same demand curve indicate?
28. A rise in the income of the consumer leads to a rise in demand for the good-X by the consumer.
What is good –X called?
29. What are giffen good?
30. What is cardinal utility?
31. Define a consumer.
32. What is Marginal utility?
Short Answer Type Questions (3/4 marks)
1. Explain the Diminishing Marginal Rate of Substitution with the help of a numerical example.
2. Define a budget line. When can it shift towards right?
3. Define Indifference Curve. Why is it convex to the origin?
4. A consumer consumes only two goods. Explain consumer’s equilibrium with the help of Utility
analysis.
5. A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of
good X rises, the consumer buys less of good X. Use utility analysis.
6. Explain the impact of fall in the price of good X on consumer’s equilibrium, when a consumer
consumes only two goods, i.e. X and Y, using Indifference Curve approach.
7. How a consumer will reach to the equilibrium point if market rate of exchange is not equal to
MRS? 18. As a consumer, would you equate price of a commodity with total utility or marginal
utility? Give reason in support of your answer. (Refer VK Pub.P-56)
8. Explain the economic value of the following equation, MUx/Px =MUm when X happens to be a
Domestic fuel (LPG) and Px is lowered by way of subsidy by the government. (Refer VK Pub.P-57)
9. When onion price hits hard, the poor man simply stops buying it. Explain the Economics of it,
using utility analysis. (Refer VK Pub.P-57)
10. Distinguish between ‘increase in demand’ and ‘increase in quantity demanded’ of a commodity.
11. Given price of a good, how does a consumer decide as to how much of that good to buy?
12. Comment on the elasticity of demand when 8% decrease in the price of a commodity causes 2%
increase in the expenditure of the commodity.
13. A consumer consumers only two goods X and Y. State & explain the conditions of consumer’s
equilibrium with the help of utility analysis.
14. Explain how the demand for a good is affected by the price of its related goods. Give examples.
15. Distinguish between normal goods and inferior goods. Give example also.
16. Explain any four factors that affect price elasticity of demand.
17. Explain relationship between total utility and marginal utility with the help of a schedule.
18. Do you agree with the view that law of demand need not necessarily fall in case of inferior
goods?
19. Define marginal utility. State the law of diminishing marginal utility.
20. How does income of the consumer affect the demand for a commodity?(3)
21. Distinguish between inferior good and normal good.(4)
22. State and explain the Law of Demand with a diagram.(4)
23. Distinguish between increase in demand and increase in quantity demanded.(4)
24. Explain the degrees of elasticity of demand.(3)
25. Explain the graphic method of measuring Ep.(4)
26. When price of a good rises from Rs4 to Rs5 its demand falls by 25 units. Calculate Ep if the
consumer was buying 70 units before the fall in price.(3)
27. Explain the factors affecting price elasticity of demand. (4)
28. Explain consumer’s equilibrium in one commodity case.(4)
29. What is market demand for a good? Name the factors determining market demand.
30. Explain the meaning of change in quantity demanded. How does it affect demand curve?
31. Distinguish between decrease in demand and decrease in quantity demanded.
32. How does change in price of a substitute good affect the demand of the given good? Explain with
the help of an example.
33. What are conspicuous necessities and how it is different from conspicuous good?
34. Explain any two factors that affect the Price Elasticity of Demand? Give Suitable examples.
35. Explain the geometric method of measuring Price Elasticity of Demand.
36. Explain the relationship between Price Elasticity of Demand and Total Expenditure.
Long Answer Type Questions (6 marks)
1. Explain the three properties of the Indifference Curves.
2. Explain the conditions of consumer’s equilibrium with the help of Indifference Curve analysis.
3. Explain the difference between cardinal utility and ordinal utility. Give example.
4. Explain why an indifference curve is (a) downward slope and (b) convex.
5. Explain the conditions of consumer’s equilibrium using indifference curve analysis. Use
diagram.
6. Determine how the following changes (or shifts) will affect market demand curve for a
product.
a) A new steel plant comes up in Jharkhand people who were previously
unemployed in the area are now employed. How will this affect the demand for colour T.V.
and Black and White T.V. in the region?
b) In order to encourage tourism in Goa. The Government of India suggests Indian
Airlines to reduce air fare to Goa from the four major cities of Chennai, Kolkata, Mumbai
and New Delhi. If the Indian Airlines reduces the fare to Goa, How will this affect the
market demand curve for air travel to Goa?
c) There are train and bus services between New Delhi and Jaipur. Suppose that the
train fare between the two cities comes down. How will this affect demand curve for bus
travel between the two cities?
7. Given eD= - 0.02, and percentage increase in price = 20%, find change in expenditure on the
commodity.
8. Explain the factors that affect the price elasticity of demand.
9. Give four causes of a left ward shift in demand curve of a commodity.
10. Distinguish between substitute and complementary goods with example.
11. State the domestic method of measuring price elasticity of demand.
12. How does the availability of close substitutes of a good affect the price elasticity of demand
of that good? Explain.
13. State the relationship between total expenditure and price elasticity of demand.
14. Why is the slope of the demand curve of the commodity negative?
15. Explain the causes of a leftward shift in demand curve of a commodity.
16. Explain the causes of a rightward shift in demand curve of a commodity of an individual
consumer.
17. A consumer consumes 2 goods and is in equilibrium. Price of good X rises. Explain the
reaction of the consumer using utility approach.
18. Explain Indifference curve approach to consumer’s equilibrium.
HOTS
1. The elasticity of demand for X is twice the elasticity of demand for Y. Price of X falls by 5%
and Price of Y rises by 5%. What will be the % change in the quantity demanded of X and Y?
2. If prices of salt and cigarettes, both rises by10%, will the qt. demanded of both goods
affected in an equal manner?
3. If prices of salt and cigarettes, both rises by10%, will the qt. demanded of both goods
affected in an equal manner?
4. If a good can be used for many purposes, the demand for it will be elastic. Why?
5. A dentist was charging Rs. 300 For a standard cleaning job and per month it used to generate
TR is equal to Rs. 30,000. She has since last month increased the price of dental cleaning to
Rs.350. As a result fewer customers are now coming for dental cleaning, but the TR is now Rs.
33,250. From this, what can we conclude about the elasticity of demand for such a dental
service?
6. Which of the following commodities have inelastic demand:
1. Salt 2. A particular brand of lipstick 3. Medicines 4. Mobile phone
5. School uniform
UNIT 3: PRODUCER’S BEHAVIOUR AND SUPPLY
Very Short Answer Questions (1 mark)
1. Define production function.
2. Define Marginal Product.
3. How does fall in Marginal Product affect Total Product?
4. Give meaning of ‘return to a factor’
5. Should both TP and MP be declining in a situation of diminishing returns?
6. What do you understand by the term ‘point of inflexion’?
7. Define marginal cost.
8. Do ATC and AVC curves intersect? Give reason.
9. Fixed cost exists in the long-run. Do you agree?
10. What is meant by cost in economics?
11. Define variable cost.
12. What is the behavior of Average Fixed Cost as output increases?
13. Define marginal revenue.
14. Give the meaning of revenue in microeconomics.
15. What is other name of AR?
16. Under which market form, a firm’s Marginal Revenue is always equal to price?
17. What is meant by producer’s equilibrium?
18. State two conditions of a producer’s equilibrium.
19. Define Supply.
20. What does the upward sloping supply curve indicate?
21. State the law of supply.
22. What is the Price Elasticity of supply associated with a straight line supply curve passing?
Through origin?
23. What is production function.(1)
24. Define marginal product.(1)
25. State the relationship between AP and MP.(1)
26. As the variable input is increased by one unit total output falls. What would you say about of
marginal productivity labour?
27. Why MC curve is in short run U-shaped?
28. What leads to diminishing returns to a factor?
29. When a seller sells his entire output at a fixed price, what will be the shape of AR & MR curves?
30. What effect does a cost saving technical progress have on the supply curve?
31. What effect does an increase in excise tax have on the supply curve?
32. Define sub normal profit.
33. State two conditions of producer’s equilibrium for a competitive firm.
34. What is meant by producer’s equilibrium?
35. What is meant by market supply?
Short Answer Type Questions (3/ 4 marks)
1. Explain the relationship between TP and MP of an input.
2. State giving reasons, whether the following statements are true or false:
(I)Increase in Total Product always indicates that there are increasing returns to a factor.
(ii) When there are diminishing returns to a factor, Marginal and Total product both fall.
3. Explain the relation between Marginal Cost and Average Cost.
4. As output increases, AC tends to be closer to AVC. Why?
5. Why is AC curve ‘U’ shaped?
6. Explain the relationship between Total Cost and Marginal Cost.
7. What are the implicit cost and explicit cost?
8. 25. Why is Average Revenue always equal to price.
9. Explain the relationship between Marginal Revenue (MR) and Average Revenue (AR).
10. ‘Average Revenue curve represents Law of Demand’. Discuss.
11. Draw a single diagram of the Average Revenue and Marginal Revenue curves of a firm which can
sell any quantity of the good at a given price. Explain.
12. Draw Average Revenue and Marginal Revenue curves in a single diagram of a firm which can sell
more only by lowering the price of that good. Explain.
13. Explain producer’s equilibrium with the help of a diagram.
14. Why should MC be rising at the point of equilibrium
15. Explain how technological progress is a determinant of supply of a good by a firm.
16. Explain how input prices are a determinant of supply of a good by a firm.
17. State any three causes of rightward shift in supply curve.
18. State any three causes of leftward shift in supply curve.
19. Can supply increase at the same price?
20. Distinguish between change in supply and change in quantity supplied. Which of these causes a
shift of supply curve?
21. Explain the situation of zero elasticity of supply with the help of a diagram.
22. ‘A loss- making firm has inelastic supply.’ Do you agree? If yes, why?
23. What do you understand by returns to factor? Why do diminishing returns to a factor operate?
24. Explain the relationship between AC & MC with diagram.
25. What will be the price elasticity of supply if the supply curve is a positively sloped straight line?
26. Explain how do the following determine price elasticity of supply:
(i) Nature of the good (ii) Time period.
27. Define marginal revenue. State the relation between marginal revenue and average revenue
when a firm:
a. is able to sell more quantity of output at the same price.
b. is able to sell more quantity of output only by lowering the price.
28. Explain 3 factors affecting supply of a commodity.(3)
29. Distinguish between change in supply and change in quantity supplied.(4)
30. Explain the stage of operation of a rational producer.(4)
31. Distinguish between Fixed cost and Variable cost.(4)
32. Explain the cost curves of a firm in the short run.(4)
33. Explain the relationship between AR and MR under perfect competition.(4)
Long Answer Type Questions (6 marks)
1. What does the law of variable proportion show? State the behavior of Total Product according to
this law.
2. Explain the condition of a producer’s equilibrium in terms of Marginal Cost and Marginal
Revenue. Use diagram and schedule.
3. Using diagrams, explain various degrees of Price Elasticity of Supply.
4. Explain the geometric method of measuring Price Elasticity of supply.
5. State and explain the law of variable proportions in a diagram(6).
6. Explain the MR-MC approach to p[producer’s equilibrium.(6)
7. Explain the likely behavior of total product under the stage of increasing return to a factor with
the help of numerical example.
8. Explain the relation between average revenue and marginal revenue when a firm can sell an
additional unit or a good by lowering the price.
9. Explain how does change in price of input affect the supply of a good
10. What is the likely behavior of total product/marginal product when only one input is increased
for increasing production? Use diagram/ schedule.
11. What is producer’s equilibrium? Explain the conditions of produce’s equilibrium through the
‘marginal cast and marginal revenue’ approach. use diagram/schedule.
HOTS
1. Because of cyclone in a coastal area, the sea water covers a lot of rice fields. This reduces the
productivity of land. How will it affect the supply curve of that region?
2. Due to improvement of technology, the marginal costs of televisions have gone down. How will it
affect the supply curve of television?
3. If a farmer grows rice and wheat, how will an increase in the price of wheat affect the supply
curve of rice?
UNIT: 4 FORMS OF MARKET AND PRICE DETERMINATION UNDER PERFECT COMPETITION
Very Short Answer Type Questions (1 mark)
1. Define Market.
2. When is a firm called price maker?
3. Under which market form, firm is a price maker?
4. What is perfect oligopoly?
5. Define monopoly.
6. What is product differentiation?
7. What is cartel?
8. Define perfect competition.(1)
9. What is monopoly?(1)
10. What is patent right?
11. In which market form, there is a need for selling/advertising costs?
12. What is that market called wherein there are a only two sellers (firms)?
13. When do we say there is excess demand for a commodity in market? When do we say there is
excess supply for the commodity in the market?
14. What is cartel?
15. What is the shape of marginal curve under monopoly?
16. What do you mean by price discrimination?
17. Price discrimination is a characteristic feature of which form of market?
18. What is the basic profit maximizing condition for a monopoly firm?
19. What is product differentiation?
Short Answer Type Questions (3/ 4 marks)
1. Explain the implications of large number of sellers in a perfectly competitive market.
2. Explain any two features of monopoly.
3. Explain why there are only a few firms in an oligopoly market?
4. Explain the implications of freedom of entry and exit of the firms under perfect completion.
5. Giving reasons, distinguish the behavior of demand curves of firms under perfect completion,
Monopoly and monopolistic competition.
6. Firms under oligopoly are involved in non-price competition. Why?
7. Why a firm’s demands curve indeterminate under oligopoly?
8. Equilibrium price of an essential medicine is too high. Explain what possible steps can be taken to
Bring down the equilibrium price, but only through the market forces. Also explain the change
that will occur in the market.
8. State the implication of homogenous product under perfect competition (3).
9. Explain the concept of non price competition.(4)
10. Why is the demand curve under oligopoly indeterminate?(3)
11. Explain the concept of price ceiling. Use diagram.(4)
12. Explain the implication of large number of buyers in a perfectly competitive market.
13. Explain why firms are mutually interdependent in an oligopoly market.
14. Explain the implication of ‘freedom of entry and exit to the firms’ under perfect competition.
15. Explain the implication of ‘perfect knowledge about market’ under perfect competition.
16. Why is the demand curve more elastic under monopolistic competition than under monopoly
17. Why is a firm under perfect competition a price taken while under monopoly a price maker?
Explain in brief.
18. Differentiate between price discrimination and product differentiation.
19. Distinguish between perfect competition and monopoly.
20. Differentiate between monopoly & monopolistic competition
Long Answer Type Questions (6 marks)
1. 16. Explain the implications of the following features of monopolistic competition.
[i]Product differentiation
[ii] Free entry or exit of firms
2. Market of a commodity is in equilibrium, demand for the commodity increases,. Explain the chain
of effects of this change till the market again reaches equilibrium. Use diagram.
3. Market of a commodity is in equilibrium, demand for the commodity decreases. Explain the
chain of effects of this change till the market again reaches equilibrium. Use diagram.
4. Market for a good is in equilibrium. There is simultaneous increase in both demand and supply of
the good. Explain its effect on market price.
5. Market for a good in is in equilibrium. There is simultaneous decrease in both demand and
supply of the good. Explain it effect on market price.
6. X and Y are complementary goods. Explain the sequence of a fall in the price of X on the
equilibrium price and quantity of Y.
7. Market for a good was in equilibrium. Demand in the market rises. Explain the chain of effects
that occurs in the market.(6)
8. Distinguish between perfect competition and monopoly.(6)
9. All the inputs used in production of a good are increased simultaneously and in the same
proportion.
What are its possible effects on Total Product? Explain with the help of a numerical example.
10. If price elasticity of supply of a commodity is 5. A producer supplies 500 units of this product at a
price
of Rs 5 per unit. How much quantity of this product will be supplied, at the price of Rs. 6 per unit?
11. Due to a 10 per cent rise in the price of a commodity, its quantity supplied rises from 400 units to
450
units. Calculate its price elasticity of supply. Is the supply elastic?
12. Calculate the TVC, AFC,AVC, and MC
Output 0 1 2 3 4 5 6
Price 60 80 100 111 116 130 150
13. Complete the following table:
Output 1 2 3 4
Price 9
MR 10 4
TR 24
14. Distinguish between collusive and non-collusive oligopoly. Explain how the oligopoly firms are
interdependent in taking price and output decisions.
15. Market for a good is in equilibrium. There is an ‘increase’ in demand for this good. Explain the
chain of effects of this change. Use diagram.
16. Market for a good is in equilibrium. There is simultaneous ‘decrease’ both in demand and supply
of the good. Explain its effect on market price.
17. Explain why the equilibrium price of commodity is determined at that level of output at which its
Demand equals its supply.
HOTS & VBQs
1. Why is an industry under perfect competition a price maker?
2. What is price floor? What may be the consequences of price floor?
3. What is price ceiling? What may be the consequences of price ceiling?
4. Write your opinion on the formation of cartels is an oligopolistic market structure.
5. Explain the economic value of support price policy in India?
6. Despite the fact that perfect competition offers maximum output at minimum price, it is not a
perfect from of the market. Do you agree?
UNIT: 5 NATIONAL INCOME AND RELATED AGGREGATES
Very Short Answer Type Questions (1 mark)
1. Define current transfers. [1]
2. Is the study of cotton textile industry a macroeconomic study or a microeconomic study? [1]
3. Give two examples of macroeconomic studies. [1]
4. Define macroeconomics. [1]
5. Give two examples of microeconomic studies. [1]
6. Why is the study of the problem of unemployment in India considered a macroeconomic study?
7. What is nominal gross domestic product? [1]
8. Define flow variables. [1]
9. Define stock variable. [1]
10. Define capital goods. [1]
11. Give one example of “externality” which reduces welfare of the people. [1]
12. Define macroeconomics.(1)
13. 40. Wh Define stock variable.
14. Define ‘real’ gross domestic product.
15. Define flow variables.
16. What is nominal gross domestic product?
17. When will be NDP MP be less than NDP FC?
18. State the meaning of consumption of fixed capital?
19. State the meaning of injection in income flow, with the help of an example.
20. What do you mean by leakage in income flow?
21. State whether the following are stock or flow :
i. Losses (ii) Capital (iii) Production (iv) Wealth
22. Define Nominal GNP. at is real flow?(1)
Short Answer Type Questions (3/ 4 marks)
1. Distinguish between a factor income and transfer receipt.
2. Explain the problem of double counting in the estimation of national income by the value added
method. [3]
3. What is meant by circular flow of income? Distinguish between real flow and money flow.
4. From the following data about a firm ‘x’ for the year 2000-01.calculate the net value added at market
price during that year:
Particulars Rs In crores
(i) Sales 90
(ii) Closing stock 25
(iii) Opening stock 15
(iv) Indirect taxes 10
(v) Depreciation 20
(vi) Intermediate consumption 40
(vii) Purchase of raw materials 15
(viii) Rent 5
5. Calculate Gross National Disposable Income from following data
Particulars Rs In crores
(i) National income 2000
(ii) Net current transfer from rest of the world 200
(iii) Consumption of fixed capital 100
(iv) Net factor income abroad (-)50
(v) Net indirect taxes 250
6. Calculate Gross National Disposable income from the following data:
Particulars Rs In crores
(i) Net national product at factor cost 3000
(ii) Net factor income from abroad (-)50
(iii) Consumption of fixed capital 150
(iv) Net indirect taxes 250
(v) Net current transfers from rest of the world 300
7. Calculate Gross National Disposable income from the following data:
Particulars Rs In crores
(i) Net factor income from abroad (-)10
(ii) National income 1000
(iii) Net indirect taxes 80
(iv) Net current transfer from rest of the world 150
(v) Consumption of fixed capital 100
8. From the following data about firm ‘x’ calculate gross value added at factor cost by it.
Particulars Rs In
thousands
(i) Sales 500
(ii) Opening Stock 30
(iii) Closing Stock 20
(iv) Purchase of intermediate products 300
(v) Purchase of machinery 150
(vi) Subsidy 40
(Rs. 230 thousands)
9. From the following data about firm ‘x’ calculate gross value added at factor cost by it. [3]
Particulars Rs In
thousands
(i) Opening stock 50
(ii) Closing stock 40
(iii) Subsidy 60
(iv) Purchase of intermediate products 450
(v) Sales 750
(vi) Purchase of machinery 200
(Rs. 350 thousands)
10. From the following data about firm ‘x’ calculate gross value added at factor cost.
Particulars Rs In
thousands
(i) Sales 800
(ii) opening stock 40
(iii) Closing stock 30
(iv) Subsidy 50
(v) Purchase of intermediate products 400
(vi) Purchase of machinery 200
(Rs. 440 thousands)
11. From the following data about firm ‘x’ calculate gross value added at factor cost.
Particulars Rs In crores
(i) Sales 180
(ii) Rent 5
(iii) Subsidy 10
(iv) Change in stock 15
(v) Purchase of raw materials 100
(vi) Profit 25
(Rs. 105 crores)
12. Calculate ‘private income’ from the following data. [3]
Particulars Rs In crores
(i) National debt interest 30
(ii) Gross national product at market price 400
(iii) Current transfers from government 20
(iv) Net indirect taxes 40
(v) Net current transfers from the ROW ( - ) 10
(vi) Net domestic product at factor cost accruing
to govt.
50
(vii) Consumption of fixed capital 70
(Rs. 280 crores)
13. Calculate Gross Value Added at factor cost:
Particulars Amt.Rs
(i) Units of output sold (units) 1000
(ii) Price per unit of output (Rs) 30
(iii) Depreciation(Rs) 1000
(iv) Intermediate cost(Rs) 12000
(v) Closing Stock(Rs) 3000
(vi) Opening Stock(Rs) 2000
(vii) Excise(Rs) 2500
(viii) Sales tax(Rs) 3500
(Rs13000)
14. Calculate Net Value Added at factor cost:
Particulars Amt.Rs
(i) Consumption of Fixed Capital(Rs) 600
(ii) Import duty(Rs) 400
(iii) Output sold(Units) 2000
(iv) Price per unit of output(Rs) 10
(v) Net change in stock(Rs) (-50)
(vi) Intermediate cost(Rs) 10,000
(vii) Subsidy(Rs) 500
(Rs. 9450)
15. Calculate Net Value Added at Market Price:
Particulars Amt.Rs
(i) Output sold (units) 800
(ii) Price per unit of output(Rs) 20
(iii) Excise (Rs) 1600
(iv) Import duty(Rs) 400
(v) Net Change In stocks(Rs) (-)500
(vi) Depreciation(Rs) 1000
(vii) Intermediate cost(Rs) 8000
(Rs. 6500)
16. Calculate ‘value of output’ from the following data(3)
Particulars Rs In crores
(i) Net value added at factor cost 100
(ii) Intermediate consumption 75
(iii) Excise duty 20
(iv) Subsidy 5
(v) Depreciation 10
(Rs. 200lakh)
17. Calculate ‘intermediate consumption’ from, the following data:
Particulars Rs In crores
(i) Value of output 200
(ii) Net Value of output at factor cost 80
(iii) Sales tax 15
(iv) Subsidy 5
(v) Depreciation 20
(Rs.90 lakhs)
18. . Calculate ‘sales’ from the following data:
Particulars Rs In crores
(i) Net Value of output at factor cost 300
(ii) Intermediate consumption 200
(iii) Indirect Taxes 20
(iv) Depreciation 30
(v) Change in stock (-)50
(Rs600 lakh)
19. Define operating Surplus. State its components.
20. From the following data, calculate national income by (a) Income Method (b) Expenditure Method
Particulars Rs In crores
(i) Private final consumption expenditure 2,000
(ii) Net capital formation 400
(iii) Change in stock 50
(iv) Compensation of employees 1900
(v) Rent 200
(vi) Interest 150
(vii) Operating surplus 720
(viii) Net indirect taxes 400
(ix) Employers’ contribution to social security
schemes
100
(x) Net exports 20
(xi) Net factor income from abroad (- ) 20
(xii) Govt. final consumption expenditure 600
(xiii) Consumption of fixed capital 100
(Rs. 2600 crore)
21. Calculate “sales” from the following data
Particulars Rs In lakhs
(i) Net value added at factor cost 560
(ii) Depreciation 60
(iii) Change in stock ( - ) 30
(iv) Intermediate cost 1000
(v) Exports 200
(vi) Indirect taxes 60
(Rs. 1710 lakhs)
22. Calculate “sales” from the following data:
Particulars Rs In lakhs
(i) Intermediate cost 700
(ii) Consumption of fixed capital 80
(iii) Change in stock ( - ) 30
(iv) Subsidy 60
(v) Net value added at factor cost 1300
(vi) Exports 50
(Rs. 2070 lakhs)
23. Giving reasons classify the following into intermediate products and final products.
(i) Furniture purchases by a school
(ii) Chalks, dusters, etc, purchased by a school
24. Giving reasons classify the following into intermediate products and final products.
(i) Computers installed in an office.
(ii) Mobile sets purchased by a mobile dealer.
25. Giving reason identify whether the following are final expenditures or intermediate expenditure:
(i) Expenditure on maintenance of an office building.
(ii) Expenditure on improvement of a machine in a factory.
26. Giving reason explain how should the following be treated in estimating national income
(i) Expenditure on fertilizers by a farmer.
(ii) Purchase of tractor by a farmer.
27. Giving reason explain how should the following be treated in estimating national income:
(i) Payment of bonus by a form.
(ii) Payment of interest on a loan taken by an employee from the employer
28. Giving reason explain how should the following be treated in estimating national income:
(i) Interest paid by banks on deposits by individuals.
(ii) National Debt interest.
29. Giving reasons categories the following into stock and flow: (i) Capital (ii) Saving
(iii)Gross domestic product (iv) Wealth.
30. Define externalities. Give an example of negative externality. What is its impact on welfare? (3)
31. Explain how ‘distribution of gross domestic product’ is a limitation in taking gross domestic product
as an index of welfare.(3)
32. Explain the basis of classifying goods into intermediate and final goods. Give suitable examples.(3)
33. Explain circular flow of income.(3)
34. Distinguish between factor income and transfer income.(3)
35. State the precautions of expenditure method. (4)
36. Explain the limitation of GDP as an index of welfare.(4)
37.Calculate gross value added of factor cost :
(i) Units of output gold (units) 1000
(ii) Price per unit of output (Rs.) 30
(iii) Depreciation (Rs.) 1000
(iv) Intermediate cost (Rs.) 12000
(v) Closing stock (Rs.) 3000
(vi) Opening stock (Rs.) 2000
(vii) Excise (Rs.) 2500
(viii) Sales Tax 3500
38. Calculate Net Value added at factor cost :
(i) Consumption of Fixed capital (Rs.) 600
(ii) Import duty (Rs.) 400
(iii) Output sold (units) 2000
(iv) Price per unit of output (Rs.) 10
(v) Net change in stock (Rs.) (–) 50
(vi) Intermediate cost (Rs.) 10000
(vii) Subsidy (Rs.) 500
39. Find Net Value added at market price :
(i) Output sold (units) 800
(ii) Price per unit of output (Rs.) 20
(iii) Excise (Rs.) 1600
(iv) Import duty (Rs.) 400
(v) Net change in stock (Rs.) (–) 500
(vi) Depreciation (Rs.) 1000
(vii) Intermediate cost (Rs.) 8000
40. Giving reasons classify the following into intermediate products and final products
(i) Furniture purchased by a school.
(ii) Chalk, duster, etc, purchased by a school.
41. Giving reasons, explain the treatment assigned to the following which estimating national income.
(i) Family members working free on the farm owned by the family.
(ii) Payment of interest on borrowings by general government.
42. Giving reasons, explain the treatment assigned to the following which estimating national income.
(i) Payment of income tax by a firm
(ii) Festival gifts to employees
43. Explain the basis of classifying goods into intermediate and final goods. Give suitable examples.
44. Calculate ‘National Income” and ‘Gross National Disposable Income’ from the following:
(i) Net imports 60
(ii) Net current transfer to abroad (-)10
(iii) Net domestic fixed capital formation 300
(iv) Government final consumption expenditure 200
(v) Private final consumption expenditure 700
(vi) Consumption of fixed capital 70
(vii) Net change in stocks 30
(viii) Net factor income to abroad 20
(ix) Net indirect tax 100
45. Giving reason classify the following into intermediate and final goods.
a. Machine purchased by a dealer of machine.
b. A car purchased by a house hold.
46. How will you treat the following in estimating rational income of India? Give reasons for your
answer.
(i) Value of bonus shares received by shareholders of a company.
(ii) Interest received on loan given to a foreign company in India.
47. Calculate “Net Domestic Product at Market Price “and “Private Income” from the following:
(i) Income from domestic Product accruing to government 120
(ii) Wages and salaries 400
(iii) National debt interest 60
(iv) Profit 200
(v) Net factor income to abroad (-)20
(vi) Rent 100
(vii) Current Transfers from government 30
(viii) Interest 150
(ix) Social security contribution by employers 50
(x) Net indirect tax 70
(xi) Net current transfer to abroad (-)10
Long Answer Type Questions (6 marks)
1. Explain the income method of measuring national income.(6)
2. Calculate from the following data: (a) Net National Disposable Income. (b) Private Income. (c) Personal