ISC Economics 2014 Class-12 Previous Year Question Papers Solved

ISC Economics 2014 Class-12 Previous Year Question Papers Solved for practice. Step by step Solutions with Questions of Part-1 and 2. By the practice of Economics 2014 Class-12 Solved Previous Year Question Paper you can get the idea of solving.

Try Also other year except ISC Economics 2014 Class-12 Solved Question Paper of Previous  Year for more practice. Because only ISC Economics 2014 Class-12 is not enough for complete preparation of next council exam. Visit official website CISCE for detail information about ISC Class-12 Economics.

ISC Economics 2014 Class-12 Previous Year Question Papers Solved

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Maximum Marks: 80
Time allowed: 3 hours

  • Candidates are allowed additional 15 minutes for only reading the paper.
  • They must NOT start writing during this time.
  • Answer Question 1 (Compulsory) from Part I and five questions from Part II.
  • The intended marks for questions or parts of questions are given in brackets [ ].

Part – I (20 Marks)

Answer all questions.

ISC Economics 2014 Class-12 Previous Year Question Papers Solved 

Question 1.
Answer briefly each of the following questions (i) to (x).
(i) State the components of compensation of employees.
(ii) Explain the shape of the Average Cost Curve.
(iii) Explain the demand curve for a necessary commodity.
(iv) Explain any two causes of disequilibrium in the balance of payment in an economy.
(v) What is meant by high powered money?
(vi) The demand for a commodity at 4 per unit is 100 units. The price of the commodity rises and as a result, its demand falls to 75 units. Find the new price if the price elasticity of demand for that commodity is I.
(vii) Justify the following as price-takers/price-makers:
(a) An oligopoly market.
(b) A perfectly competitive e-market.
(viii) If the value of the multiplier is 4, what will be the value of MPC and MPS?
(ix) Distinguish between intended supply and actual supply.
(x) What is meant by deficit financing?
Answer 1:
(i) It includes all payments and benefits made by employers to their employees both in cash and kind in lieu of their production services. It is also known as income from work. It includes:

  • Wages and salaries paid in cash or kind.
  • Employer’s contribution to social security schemes.
  • Payment of pension to retired persons.

(ii) AC curve is ‘U’ shaped because:
(a) In the initial stage, because of the increasing returns to a factor, MP tends to rise and (its inverse) MC tends to fall. Falling MC causes fall in AC as well.
ISC Economics Question Paper 2014 Solved for Class 12 Q1
(b) When there is a constant return to a factor this will imply a situation of constant MP and constant MC. Because of stable MC, AC also tends to stabilise.
(c) When there are diminishing returns to a factor MP starts declining (and its inverse) MC starts rising. Rising MC causes AC to rise. In brief, AC assumes its ‘U’ shape in accordance with the law of variable proportions.

(iii) Demand Curve for a Necessity good:
It is a perfectly inelastic demand curve. When quantity demanded does not change at all in response to change in price of the commodity, demand for that commodity is said to be perfectly inelastic. The Demand curve is a straight line parallel to Y-axis.
ISC Economics Question Paper 2014 Solved for Class 12 Q1.1

(iv) (a) The imbalance between exports and imports because of large scale development expenditure which causes large imports, high domestic prices which leads to imports and cyclical fluctuations like recession or depression.
(b) Political instability and disturbances cause large capital outflows and hinder inflows of foreign capital.

(v) High powered money: It refers to the money produced by RBI and Government of India. The total liability of monetary authority of the Country and RBI is called High Powered Money (H) or monetary base. It consists of (a) currency (notes and coins) in the hands of the public (C), (b) Cash reserves of commercial bank (R), (c) Other deposits of RBI (OD).
Symbolically: H = C + R + OD

(vi) Q = 100, P1 = X
P = 4, Q1 = 75
Ed = 1
ISC Economics Question Paper 2014 Solved for Class 12 Q1.2

(a) An oligopoly market-Price maker.
Justification: An oligopoly is a market structure dominated by the small number of large firms and several of these firms are large enough to influence the market price, hence they are Price Maker.

(b) A perfectly competitive market-Price taker.
Justification: Every firm in perfect competition is very small compared to the overall size of the market. Only those firms which can cover their cost can survive. The market price will allow only for normal profits, which means that the individual firms cannot lower its prices to attract the customers. The individual firms also cannot raise their prices, because it will lose its customers to the competition. With each firm selling identical products, there is no customer loyalty. The customers will migrate to firms with lower price. Hence, all the firms in a perfectly competitive market are a price taker.
ISC Economics Question Paper 2014 Solved for Class 12 Q1.3

Intended Saving Actual Saving
(a) The saving which is intended (planned) to be made by all the household in an economy during a period or at the beginning of the period is called intended (planned ) saving. (a) It is the actual amount of saving that took place measured after the fact.
(b) It is also called ex-ante saving. (b) It is also called ex-post saving.
(c) The amount of intended (planned) saving is given by saving function. (c) Realised saving of a period (say, a year) is called actual saving.

(x) Deficit financing: When a government spends more than what it currently receives in the form of taxes and fees during a fiscal year, it runs into a deficit budget. When the budget deficit is financed by borrowing from the public and banks, it is called deficit financing.

Part – II (60 Marks)
Answer any five questions.

Previous Year Question Papers Solved Economics 2014 for ISC Class-12 

Question 2.
(a) Study the diagram given below and answer the questions that Y follow:
ISC Economics Question Paper 2014 Solved for Class 12 Q2
(i) Pe is the equilibrium price. What would prompt the government to fix the price at P1?
(ii) What would be the effect of fixing the price at P1?
(b) Discuss the effect of elasticity of demand on:
(i) a commodity which has many substitutes.
(ii) a small part of the individual’s income spent on a commodity.

(i) Study the schedule given below and identify how much of commodity A and commodity B will a utility-maximizing consumer buy:

Units of A M.U. of A Units of B M.U. of B
1 10 1 30
2 8 2 24
3 6 3 20
4 4 4 16
5 2 5 14
6 1 6 8

(ii) Explain the Law of Equi Marginal Utility, using the above schedule.
Answer 2:

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