ISC Economics 2019 Class-12 Previous Year Question Papers Solved

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ISC Economics 2019 Class-12 Previous Year Question Papers Solved


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Part-I

 Part-II


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 2019 Class-12 Previous Year Question Papers Solved 

Question 1.
Answer briefly each of the following questions (i) to (x). [10 × 2] (i) What is meant by product differentiation in monopolistic competition?
(ii) Explain an indifference map, with the help of a diagram.
(iii) Give two examples of each of the following:
(a) Revenue receipts of the government.
(b) Revenue expenditure of the government.
(iv) With the help of a diagram, state the behaviour of MP when:
(a) TP of the variable factor reaches a maximum.
(b) TP of the variable factor falls.
(v) What is meant by High Powered Money?
(vi) Distinguish between depreciation and devaluation.
(vii) Explain any two precautions to be taken while calculating national income by income method.

(viii) Differentiate between accounting cost and opportunity cost.
(ix) With the help of diagrams, show when the elasticity of supply is:
(a) greater than one
(b) equal to one
(x) What is meant by investment multiplier?
Answer-1: (ISC Economics 2019 Class-12)
(i) Product differentiation is a unique feature of monopolistic competition. Products of different firms are similar in nature but are differentiated in terms of brand name, shape, size, colour etc. For example, different brands of toothpaste vary on the basis of colour, taste, packaging etc. The essence of product differentiation is to create an image in the minds of buyer that the product sold by one seller is different from the product sold by another seller. It allows producers to determine the price policy for their goods independently.

(ii) An indifference map represents several indifference curves that can occur as a change in quantity or the type of good consumed changes the consumption pattern for consumers. A consumer receives same level of utility from different combination of goods that lie on the same indifference curve. An indifference curve that is further away from the origin indicates higher consumption and higher utility. An illustration of an indifference map is shown below:
ISC Economics Question Paper 2019 Solved for Class 12 Q1

(iii)

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(a) The revenue receipts of the government include taxes and the amount received from the sale of equity.
(b) The revenue expenditures of the government include interest payments and expenditure on subsidies.

(iv)

(a) When TP of a variable factor reaches the maximum, the MP of the variable factor becomes zero. It is shown in the diagram below. When TP of a variable factor becomes maximum at point A, the MP of the variable factor touches the X-axis at point B.
ISC Economics Question Paper 2019 Solved for Class 12 Q1.1
(b) When TP of a variable factor falls, the MP of the variable factors becomes negative and the negative returns to scale set in. The situation is shown in the diagram below. The TP falls between point A and A’, and MP becomes negative between point B and B’.
ISC Economics Question Paper 2019 Solved for Class 12 Q1.2

(v) High powered money refers to the total monetary liability of the authorities (RBI and Central Government in India) of the country. It consists of currency (notes and coins in circulation and cash reserve of a commercial bank) and deposits held by the government of India and commercial banks with RBI. These are the claims which general public, Government or banks have on RBI and hence are considered as a liability of RBI.
Thus H = C + R + OD
where H = High powered money
C = Currency held by the Public
R = Government and bank deposits with RBI.
OD = Other deposits.

(vi) The difference between depreciation and devaluation is as follows:

 

Depreciation Devaluation
1. Depreciation of currency occurs when the value of currency reduces in terms of another currency due to the market forces of demand and supply in the global market. 1. Devaluation of currency occurs when the government of a country reduces the value of its currency in terms of another currency by increasing the supply of domestic currency in the global market.
2. Depreciation of currency happens under the floating exchange rate system. 2. Devaluation of currency happens under the fixed exchange rate system.

 

(vii) Two precautions to be taken while calculating national income by income method are as follows:
(a) Transfer incomes such as pension and unemployment remittances should not be considered as income and should not be included in the calculation of national income. Only income earned by providing productive services must be included in the calculation of national income.

(b) The sale and purchase of second-hand goods should not be included in the calculation of national income by income method. This is because such goods are not a part of production in the current year. However, the commission earned through a trade of such goods is included in national income as the commission is income earned through productive services rendered in the current year.

(viii) The difference between accounting cost and opportunity cost is as follows:

Accounting Cost Opportunity Cost
1. Accounting costs refer to the costs recorded in the books of account of a firm. These are the expenditures incurred by a firm in the production process. For example, if a firm manufactures tables, the cost of labour used in the production of the table is accounting cost. 1. Opportunity cost refers to the value of the next best alternative selected over another. For example, the producer can use the building for either manufacturing tables or producing gloves. The producer decides to use the building for manufacturing tables, then the income that the producer could have earned from using the building by producing gloves is the opportunity cost of producing tables.
2. Accounting costs are explicit costs. 2. Opportunity cost is the sum of explicit cost and implicit costs.

 

(ix)

(a) When the elasticity of supply is greater than one, the percentage change in quantity supplied is greater than the percentage change in price.
ISC Economics Question Paper 2019 Solved for Class 12 Q1.3

ISC Economics Question Paper 2019 Solved for Class 12 Q1.4
(b) When the elasticity of supply is equal to one, the percentage change in quantity supplied is equal to the percentage change in price.

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