Economics Semester-1 ISC Specimen Paper Solved Class-12 for 2021-22

Economics Semester-1 ISC Specimen Paper Solved Class-12 for 2021-22 session.  Step by step solutions of ISC Class-12 specimen model sample paper. During solutions of semester-1 Economics specimen paper we explain with figure , graph, table whenever necessary so that student can achieve their goal in next upcoming exam of council .

Solved Economics Semester-1 ISC Specimen Paper for Class-12

 Board ISC Class 12th (XII) Subject Economics Topic Semester-1 ISC Specimen Paper Solved Syllabus on bifurcated syllabus (after reduction) session 2021-22 Question Type MCQ/ Objective (as prescribe by council) Total question Total- 68 with all parts Max mark 80

Solved Council released Economics Semester-1 ISC Specimen Paper for Class-12

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Question-1 What is the formula for calculating M.U.?

(a) TUN + TUN +1

(b) TUN – TUN +1

(c) TUN – TUN +1

(d) TUN – TUN -1

Solution (d) TUN – TUN -1

Question-2 When a consumer consumes two goods, then he will be in equilibrium at:

(a) MU x = Px

(c) 𝑀𝑈𝑥/𝑃𝑥 = 𝑀 𝑈𝑦/𝑃𝑦

(d) None of these

Solution (c) 𝑀𝑈𝑥/𝑃𝑥 = 𝑀 𝑈𝑦/𝑃𝑦

Question-3 What relation do you notice between Price and Demand in the table given below:

(a) Increase in demand

(b) Decrease in demand

(c) Extension in demand

(d) Contraction in demand

Solution (c) Extension in demand

Question-4 When demand curve is parallel to X-axis, what would be its Elasticity of demand?

(a) E = α

(b) E = 1

(c) E = >1

(d) E = <1

Solution (a) E = α

Question-5  Which of the given options shows the effects of Elasticity of demand?

(a) Nature of good

(b) Level of Income

(c) Availability of substitutes

(d) All

Solution (d) All

Question-6 What is the nature of relationship between price and demand in case of Elasticity of demand?

(a) Qualitative

(b) Quantitative

(c) Competitive

(d) None of these

Solution (b) Quantitative

Question 7 How will you calculate the Total product?

(a) ∑AP

(b) ∑TP

(c) ∑MP

(d) Any of these

Solution (c) ∑MP

Question 8 Which of the given options shows the application of increasing returns?

(a) Specialization

(b) Efficiency of factors

(c) Indivisibility of factors

(d) All

Solution (d) All

Question 9 When supply increases due to improvement in technology, it is known as

(a) Extension in supply

(b) Increase in Supply

(c) Contraction in supply

(d) Decrease in supply

Solution (b) Increase in Supply

Question 10 The Elasticity of Supply is always positive because there is:

(a) Direct relation between supply and price

(b) Inverse relation between demand and price

(c) Both(a)and (b)

(d) Neither (a) nor (b)

Solution (d) Neither (a) nor (b)

Question 11 Cost of exertion, pains and sacrifices is known as:

(a) Opportunity costs

(b) Production costs

(c) Real costs

(d) Explicit Costs

Solution (c) Real costs

Question 12 What is the nature of the expenditure on raw material, power and labour?

(a) Fixed

(b) Variable

(c) Production costs

(d) Explicit

Solution (d) Explicit

Question 13 What is the correct formula for calculating the Total variable cost?

(a) TVC = ∑MC

(b) TVC = TC – TFC

(c) TVC = AVC x Q

(d) All

Solution (d) All

Question 14 What is the relationship between AR and MR under Perfect competition?

(a) AR > MR

(b) AR <MR

(c) AR = MR

(d) AR ≠ MR

Solution (c) AR = MR

Question 15 Which of the following statements is true?

(a) AR= 𝑀𝑅/𝑄

(b) TR= MR x Q

(c) TR = ∑MR

(d) All

Solution (c) TR = ∑MR

Question 16 A competitive firm will be in equilibrium when:

(a) MR= MC and MC cuts MR from below

(b) AR = AC; AC cuts AR from above

(c) TR= TC

(d) None of these

Solution (a) MR= MC and MC cuts MR from below

Question 17 In a Perfectly competitive market, who decides the price?

(a) A firm

(b) An Industry

(c) Both A and B

(d) None of these

Solution (b) An Industry

Question 18 What is determined at the point where market demand and market supply curves intersect each other?

(a) Equilibrium Price

(b) Equilibrium Quantity

(c) Both of these

(d) None of these

Solution (c) Both of these

Question 19 What will be the effect upon equilibrium price, when an increase in demand is more than
increase in supply?

(a) Equilibrium Price remains constant

(b) Equilibrium price rises

(c) Equilibrium price falls

(d) None of these

Solution (b) Equilibrium price rises

Question 20 What does Floor Price refer to?

(a) Controlled Price

(b) Maximum Ceiling Price

(c) Minimum Support Price

(d) Any of these

Solution (a) Controlled Price

Question 21 An Indifference curve is convex to the origin because of:

(a) Increasing MRS

(b) Law of DMU

(c) Diminishing MRS

(d) Constant MRS

Solution (c) Diminishing MRS

Question 22 AVC and AC curves cannot intersect each other because:

(a) MC starts falling

(b) TC- TVC =TFC which is constant

(c) TC does not increase

(d) None of the above

Solution (b) TC- TVC =TFC which is constant

Question 23 Which of the given options is a reason of change in demand ?

(a) Change in Consumer’s Income

(b) Change in Prices of Related Goods

(c) Population increase

(d) All the above

Solution (d) All the above

Question 24 What is the basic reason for operation of the Law of Diminishing return?

(a) Scarcity of factors

(b) Imperfect substitution between factors

(c) Both (a) and ( b)

(d) None of the above

Solution (c) Both (a) and ( b)

Question 25 What is the reason for the U shape of short run average cost curves?

(a) Law of Demand

(b) Law of DMU

(c) Law of variable proportions

(d) Law of supply

Solution (c) Law of variable proportions

Question 26 The reason for decrease in demand is:

(a) Rise in price

(b) Increase in the price of substitute goods

(c) Increase in the price of complementary goods

(d) Decrease in income in case of inferior goods

Solution (c) Increase in the price of complementary goods

Question 27 The demand for a certain brand of fruit juice is elastic because:

(a) It falls under luxuries

(b) Its consumption can be postponed

(c) Its substitutes are available in the market.

(d) It is a multiple use product.

Solution (c) Its substitutes are available in the market.

Question 28 The reason for downward sloping demand curve is:

(a) Inverse relation between price and demand

(b) Inverse relation between income and demand

(c) Direct relation between price and demand

(d) Both (a) and (b)

Solution (a) Inverse relation between price and demand

Question 29 Which of the given options is the correct reason for a backward bending supply curve?

(a) Labour first prefers work over leisure and then leisure over work

(b) Labour first prefers leisure over work and then work over leisure

(c) Both (a) and (b)

(d) Neither (a) nor (b)

Solution (a) Labour first prefers work over leisure and then leisure over work

Question 30 What is the reason for the upward sloping supply curve?

(a) Direct relation between price and quantity

(b) Number of producers

(c) Profit maximisation

(d) All the above.

Solution (d) All the above.

Question 31 Cross elasticity of demand is ……. for substitute goods. An increase in the price of one commodity leads to ……… in the demand for another commodity.

(a) positive, increase

(b) negative, increase

(c) positive, decrease

(d) negative, increase

Solution (a) positive, increase

Question 32 Opportunity cost of a good is the……….

(a) Anticipated cost

(b) Next best alternative

(c) Upcoming cost

(d) Real cost

Solution (b) Next best alternative

Question 33 If the price of petrol increases, the demand for cars will:

(a) Increase

(b) Decrease

(c) Expand

(d) Vary

Solution (b) Decrease

Question 34 What is Ex-ante demand also known as?

(a) Intended demand

(b) Actual demand.

(c) Effective demand.

(d) Unplanned demand.

Solution (b) Actual demand.

Question 35 The slope of the indifference curve is equal to:

(a) One.

(b) Marginal utility.

(c) Marginal rate of substitution

(d) None of these.

Solution (c) Marginal rate of substitution

Question 36 Price effect is:

(a) Income effect – Substitution effect

(b) Substitution effect – Income effect

(c) Income effect + Substitution effect

(d) Income effect + Substitution effect – Negative effect

Solution (c) Income effect + Substitution effect.

Question 37 Social cost is:

(a) Implicit cost + Explicit cost

(b) Explicit cost+ Opportunity cost

(c) Private cost + External cost

(d) Private cost + Real cost

Solution (c) Private cost + External cost

Question 38   _______ is an example of goods of Snob Appeal.

(d) Opening a bank account.

Question 39  The short run refers to the period of time when output can be increased by increasing ____ while keeping _____ constant.

(a) Capital, land

(b) Labour, capital

(c) Labour, land

(d) Land, entrepreneur

Solution (b) Labour, capital

Question 40 When a fall in the price of the commodity results in increase in total expenditure, the elasticity of demand will be………….

(a) Ep = 1

(b) Ep = 0

(c) Ep ˂ 1

(d) Ep>1

Solution (d) Ep>1

Question 41 The demand for a commodity refers to:

(a) desire for a commodity.

(b) need for a commodity.

(c) quantity demanded at the lowest prices during a particular period of time.

(d) quantity demanded at various possible prices during a particular period of time.

Solution (d) quantity demanded at various possible prices during a particular period of time.

Question 42 The demand for labour is:

(a) independent of the demand for other inputs or resources.

(b) independent of the demand for the products produced by labour.

(c) independent of the availability of other inputs or resources.

(d) derived from the demand for the products produced by labour.

Solution (d) derived from the demand for the products produced by labour.

Question 43 Giffen goods are:

(a) Normal goods, whose demand falls with a rise in their price.

(b) Inferior goods, whose demand falls with a rise in their real income.

(c) Inferior goods, whose demand falls with a fall in their price.

(d) Superior goods, whose demand falls with a rise in their real income.

Solution (c) Inferior goods, whose demand falls with a fall in their price.

Question 44 Total utility refers to the total satisfaction derived by the consumer from the consumption of:

(a) An additional quantity of a commodity.

(b) A minimum quantity of a commodity

(c) A maximum quantity of a commodity.

(d) A specific quantity of a commodity.

Solution (d) A specific quantity of a commodity.

Question 45 Returns to a factor means:

(a) Quantity of only one factor is changed.

(b) Quantity of all factor inputs is changed.

(c) Fixed factors are changed but variable factors are kept constant.

(d) Fixed and Variable both factors are changed in equal proportion.

Solution (d) Fixed and Variable both factors are changed in equal proportion.

Question 46 Economic cost refers to the sum of both explicit cost and implicit cost:

(a) Including excess profit.

(b) Including normal profit.

(c) Including net profit.

(d) Including abnormal profit.

Solution (b) Including normal profit.

Question 47 Monopolistic Competition is a form of market in which there are large number of sellers of a particular product, with each seller selling:

(a) Homogenous products.

(b) Differentiated products which are entirely distinct from each other.

(c) Perfect substitutes.

(d) Differentiated products which are close substitutes to the product.

Solution (d) Differentiated products which are close substitutes to the product.

Question 48 Normal profit is defined as that amount of profit that is high enough so that firms in the industry are induced to remain in the industry, yet low enough so that:

(a) New firms will want to enter the industry.

(b) New firms will not want to enter the industry.

(c) Old firms will want to expand their operations.

(d) Old firms will not want to expand their operations.

Solution (c) Old firms will want to expand their operations.

Question 49 Firms maximise their profits by producing a level of output at which:

(a) MC = AFC

(b) MC = MR

(c) P= ATC

(d) MR =AVC

Solution (b) MC = MR

Question 50 The demand curve for the firm operating under perfect competition is:

(a) Upward sloping to the right

(b) Downward sloping to the right

(c) Perfectly horizontal line

(d) Perfectly vertical line

Solution (c) Perfectly horizontal line

Study the given figures carefully and answer the following questions by choosing the correct option.

Question 51

I. In figure 1, the:

(a) Movement from A to B is contraction of demand.

(b) Movement from B to C is extension of demand.

(c) Movement from A to C is contraction of demand.

(d) Movement from C to B is extension of demand.

Solution (b) Movement from B to C is extension of demand.

II. In figure 1, the movement from B to K

(a) is increase in demand.

(b) indicates that demand rises at constant price.

(c) takes place due to rise in demand caused by rise in money income of the consumer.

(d) All of the above.

Solution (d) All of the above.

Question 52

I. In figure 2, the Floor price is:

(a) OP1

(b) OP2

(c) OP3

(d) None of the above.

Solution (a) OP1

II.In figure 2, Ceiling price is:

(a)OP1

(b)OP2

(c)OP3

(d)None of the above.

Solution (c)OP3

Question 53 In figure 3, the demand is:

(a) Perfectly elastic at A, unit elastic at B and relatively inelastic at E.

(b) Relatively elastic at D, perfectly elastic at C and unit elastic at E.

(c) Unit elastic at C, relatively inelastic at E and perfectly inelastic at B.

(d )Relatively inelastic at D, unit elastic at C and perfectly elastic at B

Solution (c) Unit elastic at C, relatively inelastic at E and perfectly inelastic at B.

Question 54 In figure 4:

(a) S1 supply curve indicates higher price elasticity of supply than S2.

(b) S1 indicates relatively elastic supply and S2 is for inelastic supply.

(c) S1 is for elastic supply and S2 indicates relatively inelastic supply.

(d) All of the above.

Solution (d) All of the above.

Question 55

Choose the correct statements:

I. In figure 5:

(a) C is an equilibrium point, but D is not.

(b) C is shut down point, D is break-even point.

(c) C is break-even point, D is shut down point.

(d) None of the above.

Solution (c) C is break-even point, D is shut down point.

II. In figure 5:

(a) Firm enjoys normal profit at point C.

(b) Firm enjoys normal profit at point D.

(c) Firm enjoys supernormal profit at B

(d) Firm enjoys supernormal profit at K

Solution (a) Firm enjoys normal profit at point C.

III. In figure 5:

(a) Area ABDP3 represents loss.

(b) Area P3DBA represents total fixed cost.

(c) Area OP3DQ represents total variable cost.

(d) All of the above.

Solution (a) Area ABDP3 represents loss.

Question 56

In figure 6, what is the slope of AR curve and MR curve?

(a) AR = 2MR

(b) MR = 2AR

(c) Slope of AR = 2 × Slope of MR

(d) Slope of MR = 2× slope of AR

Solution (b) MR = 2AR

Question 57

In figure 7, what is the condition of equilibrium?

(a) Necessary condition of equilibrium has been satisfied at E2 only.

(b) Necessary and sufficient conditions of equilibrium have been satisfied at E2 only.

(c) Sufficient condition has been satisfied at E1 only.

(d) Necessary and sufficient conditions have been satisfied at E1 only.

Solution (b) Necessary and sufficient conditions of equilibrium have been satisfied at E2 only.

Question 58 When the price of a good falls by 7%, its quantity demanded rises from 40 units to 50 units. What will be the Price elasticity of demand for this good?

(a) 2.84

(b) 2.85

(c) 2.86

(d) 2.87

Solution (d) 2.87

Question 59 When the price of a commodity falls by ` 2 per unit, its quantity demanded increases by 10 units. Its price elasticity of demand is (-) 1. Initial quantity demanded at previous price, `10, was –

(a) 49 units

(b) 50 units

(c) 51units

(d) 52 units

Solution (b) 50 units

Question 60 The price elasticity of demand for a commodity is (-) 1.5. When its price falls by `1, its quantity demanded rises from 30 units to 33 units. What was its previous price?

(a) Rs 15.25

(b) Rs  15.50

(c) Rs 15.75

(d) None of the above

Solution (d) None of the above

Question 61 A consumer buys 200 units of a good at a price of ` 5 per unit. When the price changes, he buys only 100 units. If price elasticity of demand is 2, the changed price will be:

(a) Rs 5.75

(b) Rs 6.25

(c) Rs 6.75

(d) Rs 7.25

Solution (b) Rs 6.25

Question 62 A consumer buys 80 units of a good at a price of ` 8 per unit. Price falls to ` 6 per unit. How much quantity will the consumer buy at a new price if ep = (-) 2?

(a) 100 units

(b) 110 units

(c) 120 units

(d) 130 units.

Solution (c) 120 units

Question 63 Based on the data given in the table, calculate the AFC and AVC

I. AFC for 0, 3 & 5 units will be –

(a) 0, 16.67, 10.00

(b) ∞, 16.00, 10.67,

(c) 0, 16.00, 10.67

(d) ∞, 16.67, 10.00

Solution (d) ∞, 16.67, 10.00

II. AVC for 0, 3 & 5 units will be –

(a) ∞, 10, 14

(b) 0, 10.1, 14.01

(c) ∞, 10.1, 14,01

(d) 0, 10, 14

Solution (a) ∞, 10, 14

Question 64 Based on the data given in the table, calculate the TC and MC.

I. TC will be –

(a) 40, 60, 90 respectively.

(b) 80, 60, 90 respectively.

(c) 20, 30, 60 respectively.

(d) 40, 60, 120 respectively.

Solution (c) 20, 30, 60 respectively.

II.MC will be –

(a) 0, 10, 20 respectively.

(b) 20, 10, 30 respectively.

(c) 10, 20, 30 respectively.

(d) ∞, 10, 20 respectively.

Solution (b) 20, 10, 30 respectively.

Question 65 Based on the data given in the table below, find the product pricing

The product price facing the firm is –

(a) Rs 6

(b) Rs 8

(c) Rs 10

(d) None of the above.

Solution (d) None of the above.

Question 66 Ramu is a sole producer and a seller of AC. He sells the product at a high price in Delhi and at a low price in Mussoorie.

A. What kind of a market structure is this?

(a) Monopolistic competition

(b) Oligopoly

(c) Monopoly

(d) Monopsony

Solution (c) Monopoly

B. He is able to sell the product at a higher price in Delhi because:

(a) Demand is elastic

(a) Demand is inelastic

(b) Unit elastic

(c) None of the above

Solution (a) Demand is elastic

C. The characteristic of this market is:

(a) Price discrimination

(b) Product differentiation

(c) None of the above

(d) Both 1 and 2

Solution (a) Price discrimination

Question 67 A famous English economist believed that agricultural output would eventually stop growing, as more labour is added added to land that was fixed in quantity.

A) Which law is applicable in the given context?

(a) Law of Variable proportion

(b) Law of Diminishing marginal utility

(c) Say’s law.

(d) None of the above

Solution (a) Law of Variable proportion

B) Which of the following statements is Correct in the given context?

(a) This law is applicable when the state of technology is given and remains unchanged.

(b) This law is applicable in long run.

(c) Variable factors are not equally efficient.

(d) All inputs can vary.

Solution (a) This law is applicable when the state of technology is given and remains unchanged.

C) Which of the following is a variable factor in the context of the statement given above?

(a) Land

(b) Labour

(c) Capital

(d) Entrepreneur

Solution (b) Labour

Question 68 Due to the pandemic the prices of vegetables and fruits have increased but the demand for quantity has not fallen.

A) What is the reason for the demand remaining the same?

(a) Demand for food is inelastic since food is a necessity.

(b) Demand for food is elastic

(c) Demand is for the inferior goods.

(d) Demand is for the luxury goods.

Solution (a) Demand for food is inelastic since food is a necessity.

B) What are the exceptions to the Law of Demand?

(a) Emergences

(b) Quality-Price relationship

(c) Veblen goods

(d) All of the above

Solution (a) Emergences

C) Which of the following statements pertains to Law of Demand?

(a) There is a direct relationship between price and quantity demanded.

(b) There is an inverse relationship between price and quantity demanded.

(c) There is a direct relationship between price and quantity demanded, other things remain the same.

(d) There is an inverse relationship between price and quantity demanded, other things remain the same.

Solution (d) There is an inverse relationship between price and quantity demanded, other things remain the same.

— ; End of Economics Semester-1 ISC Specimen Paper Solutions :–

-: Also visit :-

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