ISC Economics 2019 Class-12 Previous Year Question Papers Solved

ISC Economics 2019 Class-12 Previous Year Question Papers Solved for practice. Step by step Solutions with Questions. By the practice of Economics 2019 Class-12 Solved Previous Year Question Paper you can get the idea of solving.

Try Also other year except ISC Economics 2019 Class-12 Solved Question Paper of Previous  Year for more practice. Because only ISC Economics 2019 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 2019 Class-12 Previous Year Question Papers Solved


-: Select Your Topics :-

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)

(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.

(x) An investment multiplier refers to the fact that an increase in private or public investment expenditure leads to a more than proportionate increase in the level of national output. The investment multiplier is calculated as the ratio of change in income to the change in investment. Investment multiplier = ∆Y/∆I
where ∆Y = change in income
∆I = change in investment.


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

Previous Year Question Papers Solved Economics 2019 for ISC Class-12 

Question 2.
(a) How does an increase in income affect the demand for the following: [3] (i) A normal good
(ii) An inferior good
(b) Discuss any three reasons for the leftward shift of a supply curve. [3] (c) Explain how a consumer attains equilibrium using indifference curve analysis. [6] Answer 2:  (ISC Economics 2019 Class-12)
(a)

(i) An increase in. income leads to a higher demand for a normal good. This is because there is a positive relationship between the income of a consumer and the quantity demanded of a normal good. Therefore, an increase in income will lead to a rightward shift in the demand curve of a normal good.
ISC Economics Question Paper 2019 Solved for Class 12 Q2
The original demand curve is depicted as D. However, when the income of the consumer increases, the quantity demanded of normal good increases and the demand curve shifts to D’. This implies that now a consumer will demand more of a commodity even at the same price.

(ii) An increase in income leads to lower demand for an inferior good. This is because there is a negative relation between the income of a consumer and the quantity demanded of an inferior good. Therefore, an increase in income will lead to a leftward shift of the demand curve of the inferior good.
ISC Economics Question Paper 2019 Solved for Class 12 Q2.1
The original demand curve is depicted as D. However, when the income of the consumer increases, the quantity demanded of inferior good decreases and the demand curve shifts to D’. This implies that consumer demand less of the commodity at the same price.

(b) Three reasons that can lead to a leftward shift of a supply curve are as follows:
(i) The prices of related goods: Sometimes producers produce more than one good. Suppose a producer produces butter. If the price of butter decreases, the supply of butter and buttermilk will decrease. This is because buttermilk is made from butter. Therefore, a decrease in price of butter will lead to a lower supply of buttermilk, which is depicted by a leftward shift of the supply curve of buttermilk.

(ii) The prices of factors of production: If the cost of any of the factors of production such as land, labour, capital or entrepreneurship rises, the cost of producing a good also rises. As a result, the supply of the good decreases. Thus, the supply curve of the goodwill shift to the left.

(iii) Use of obsolete technology: The use of obsolete technology increases the time, effort and labour needed to produce a good. Thus, the production cost may increase which can lower the supply of the good. As a result, the supply curve shifts to the left.

(c) According to the indifference curve analysis, consumer equilibrium can be attained under two conditions.
(i) MRSXY = PX/PY
(ii) MRS is continuously diminishing
If MRSXY > PX/PY, the consumer is willing to pay more for good X than the market price of good X. Thus, the consumer buys a higher amount of good X, and the MRS diminishes till it becomes equal to the ratio of price of good X and price of good Y. At this point, equilibrium is attained.

If MRSXY < PX/PY, the consumer is willing to pay less for good X than the market price of good X. Thus, the consumer buys a lesser amount of good X, and the MRS increases till it becomes equal to the ratio of price of good X and price of good Y. At this point, equilibrium is attained.

The second condition to attain consumer equilibrium is that the MRS must be diminishing at an equilibrium point. This implies that at the point of equilibrium IC is convex to the origin.
Let us see the diagram given below:
ISC Economics Question Paper 2019 Solved for Class 12 Q2.2
The indifference map depicts three indifference curves titled IC1, IC2 and IC3 respectively. Given the budget constraint of the consumer, the highest indifference curve that a consumer can reach is IC2. The budget line touches IC2 at point E, which is the equilibrium point. The points that lie to the left of point E lie on the lower indifference curve, i.e., IC2 and indicate lower satisfaction. The points to the right of point E lie on the higher indifference curve, i.e., IC3 which indicates the points that are outside the consumer’s budget. The budget line can be tangential to the Indifference Curve at a unique point where MRXXY = PX/PY and MRS is diminishing.

Question 3.  (ISC Economics 2019 Class-12)
(a) Discuss two differences between returns to scale and returns to a variable factor. [3] (b) With the help of a diagram, explain the relationship between AR and MR of a firm under imperfect competition. [3] (c) Discuss any four features of monopoly market. [6] Answer 3:
(a) Two differences between returns to scale and returns to a variable factor are as follows:

Returns to Scale Returns to Variable Factor
1. Returns to scale indicate the change in the level of output when all factors of production are changed in the same proportion simultaneously. 1. Returns to a variable factor indicate the change in the level of output when the amount of one variable factor used is changed without altering the level of other factors of production.
2. Returns to scale occur over the long run. 2. Returns to a variable factor can be experienced over the short run.
3. In returns to scale, the ratio of variable factors to fixed factors does not change. 3. In returns to a variable factor, the ratio of variable factors to fixed factors changes as the amount of a variable factor used is altered and the amount of fixed factors used remains constant.
4. The three stages of returns to scale are increasing returns to scale, constant returns to scale and diminishing returns to scale. 4. The three stages of returns to a variable factor are increasing returns to a variable factor, diminishing returns to a variable factor and negative returns to a variable factor.

(b) The relationship between AR and MR of a firm under imperfect competition is given below:
Both Monopoly and Monopolistic Competition fall under the category of Imperfect Competition. Therefore, AR and MR curves slope downwards as more units can be sold only by reducing the price. However, there is one major difference between AR and MR curves of monopoly and monopolistic competition.

Under monopolistic competition, the AR and MR curves are more elastic as compared to those of Monopoly. It happens because of the presence of close substitutes under monopolistic competition and the absence of close substitutes under monopoly. So, when the price of a commodity is increased in both the markets, then proportionate fall in demand under monopoly is less than proportionate fall in demand under monopolistic competition.
ISC Economics Question Paper 2019 Solved for Class 12 Q3
ISC Economics Question Paper 2019 Solved for Class 12 Q3.1
(c) The features of monopoly market are as follows:
(i) Single seller and a large number of buyers: A monopoly has a single seller or a group of sellers that together sell a good. Therefore, a monopoly has a single firm. However, there are a large number of buyers in a monopoly market. The buyers cannot influence the price of the product.

(ii) Barriers to entry: A monopoly market has high barriers or restrictions on the entry of the new firm. This is because monopolies tend to have exclusive rights over certain resources or patent rights.

(iii) Unique goods: The goods supplied by a monopolist are unique, and there are no close substitutes of these goods.

(iv) High control over prices: As a monopoly market has a single seller, the seller has a high degree of control over the price.

(v) Price discrimination: A monopolist can undertake price discrimination to earn higher profits. Price discrimination refers to charging different price from different consumers for the same good. For example, the price of an amusement park’s ticket can be different for children, adults and elderly people.

Question 4.  (ISC Economics 2019 Class-12)
(a) Explain the various degrees of price elasticity of demand at different points on a straight-line demand curve. [3] (b) Show with the help of a diagram, how a perfectly competitive firm earns normal profit in short-run equilibrium. [3] (c) Explain with the help of diagrams how equilibrium price changes when there is a simultaneous increase of both, demand and supply. [6] Answer 4:
(a) The elasticity of demand varies across a straight-line demand curve. To measure the elasticity of demand along a straight-line demand curve, the following formula is used.
Ed = Lower segment of the demand curve/Upper segment of the demand curve.
Let us see the diagram below.
ISC Economics Question Paper 2019 Solved for Class 12 Q4
In this diagram, point C divides the demand curve into two equal halves, therefore, the elasticity of demand at point C is 1.
Ed = CE/AC, where CE = AC.
At point A, Ed = infinity. At point A, the demand curve touches the Y-axis, so Ed = AE/0.
At point E, Ed = 0. At point A, the demand curve touches the X-axis, so Ed = 0/AE.
At point B, Ed > 1. This is because the lower segment BE is greater than the upper segment AB. Ed = BE/AB.
At point D, Ed < 1. This is because the lower segment DE is smaller than the upper segment AB. Ed = DE/AD.

(b) A perfectly competitive firm can incur normal profits in short-run at a point where MR = MC and short-run MC is rising. At the point of equilibrium, AR = AC implying a situation of normal profits. Let us see the diagram below.
ISC Economics Question Paper 2019 Solved for Class 12 Q4.1
The normal profits are attained at point Q, where short-run AR = short-run AC and short-run AC is rising.

(c) There can be three scenarios when the demand and supply increase simultaneously. The first scenario is when the increase in demand is more than the increase in supply. The second case is when an increase in demand is equal to the increase in supply. The third case is when an increase in demand is less than the increase in supply.

Case 1: Increase in demand is more than the increase in supply:
When the increase in demand is greater than the increase in supply, there is a simultaneous increase in both the equilibrium quantity and equilibrium supply. In the diagram given below, the original equilibrium is attained at point E where the demand curve D intersects with supply curve S. When the demand increases from D to D’ and the supply increases from S to S’, the new equilibrium is attained at E’ with higher equilibrium price and higher equilibrium quantity.
ISC Economics Question Paper 2019 Solved for Class 12 Q4.2

Case 2: Increase in demand is equal to the increase in supply:
When the increase in demand is equal to the increase in supply, there is an increase in quantity exchanged at the new equilibrium. However, the price remains the same. In the diagram given below, the original equilibrium is attained at point E where the demand curve D intersects with supply curve S. When the demand increases from D to D’ and the supply increases from S to S’, the new equilibrium is attained at E’ with higher equilibrium quantity and same equilibrium price.
ISC Economics Question Paper 2019 Solved for Class 12 Q4.3

Read Next 👇 Click on Page Number Given Below 👇

You might also like
Leave a comment