CBSE 12 Economics Question Paper-2016 Set-1 - Practice Test
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  2. Practice Tests
  3. CBSE 12 Economics Question Paper-2016 Set-1
CBSE 12 Economics Question Paper-2016 Set-1

CBSE 12 Economics Question Paper-2016 Set-1 - Practice Test

This mock test includes actual CBSE Class 12 Econimics board exam questions from the year 2016 Set 1, helping students understand exam trends and practice real paper format

2025-08-01
Pavan Pavan
CBSE Class 12 Economics 2016 Grade 12

Duration

30 min

Questions

26

Marking

Negative

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Questions Preview

What is the relation between marginal cost and average variable cost when marginal cost is rising and average variable cost is falling?

A
Marginal cost is greater than average variable cost
B
Marginal cost is equal to average variable cost
C
Marginal cost is less than average variable cost
D
There is no relationship

Suppose total revenue is rising at a constant rate as more and more units of a commodity are sold, marginal revenue would be:

A
Greater than average revenue
B
Equal to average revenue
C
Less than average revenue
D
Rising

When does ‘increase’ in demand take place?

A
When income of consumers rises
B
When the price of the good falls
C
When the price of substitutes rises
D
All of the above

‘Homogenous products’ is a characteristic of:

A
Perfect competition only
B
Perfect oligopoly only
C
Both (A) and (B)
D
None of the above

There is inverse relation between price and demand for the product of a firm under:

A
Monopoly only
B
Monopolistic competition only
C
Both under monopoly and monopolistic competition
D
Perfect competition only

A consumer consumes only two goods X and Y. Marginal utilities of X and Y are 5 and 4 respectively. The prices of X and Y are Rs. 4 per unit and Rs. 5 per unit respectively. Is the consumer in equilibrium? What will be the further reaction of the consumer?

A
Yes, the consumer is in equilibrium
B
No, the consumer should consume more of X
C
No, the consumer should consume more of Y
D
No, the consumer should reduce consumption of both

Price elasticity of demand of good X is −2 and of good Y is −3. Which of the two goods is more price elastic and why?

A
Good X, because it has a higher absolute value of elasticity
B
Good Y, because it has a lower absolute value of elasticity
C
Good X, because price elasticity of demand is negative
D
Good Y, because price elasticity of demand is less than 1

What is maximum price ceiling? Explain its implications.

A
A limit set by the government on how high a price can go, typically causing shortages
B
A price below equilibrium price, leading to surplus of goods
C
A market-driven price determined by supply and demand forces
D
A government set price above equilibrium price to ensure producers’ profit

Explain the effect of change in prices of the related goods on demand for the given good.

A
Increase in price of substitute increases demand for the good
B
Decrease in price of complement increases demand for the good
C
Both A and B are correct
D
Neither A nor B is correct

Define production function. Distinguish between short run and long run production functions.

A
Short run production function includes fixed factors, long run production function involves variable factors
B
Short run involves all factors being variable, long run has only fixed factors
C
Short run production function is always decreasing, long run is always increasing
D
Short run and long run production functions are the same

A producer supplies 80 units of a good at a price of Rs. 10 per unit. Price elasticity of supply is 4. How much will he supply at Rs. 9 per unit?

A
90 units
B
85 units
C
70 units
D
100 units

Explain the implications of the following in a perfectly competitive market: (a) Large number of buyers (b) Freedom of entry and exit to firms.

A
Large number of buyers increases competition, and freedom of entry and exit ensures long-term efficiency
B
Large number of buyers decreases competition, and freedom of entry and exit leads to market instability
C
Large number of buyers decreases competition, and freedom of entry and exit does not affect market efficiency
D
Large number of buyers increases monopoly power, and freedom of entry and exit disrupts market stability

Explain the conditions of consumer’s equilibrium using indifference curve analysis.

A
Consumer is in equilibrium when the budget line is tangent to the highest indifference curve
B
Consumer is in equilibrium when the indifference curve intersects the budget line
C
Consumer is in equilibrium when the marginal rate of substitution is equal to the price ratio
D
Both A and C are correct

Explain the distinction between 'change in quantity supplied' and 'change in supply'. Use diagram.

A
'Change in quantity supplied' refers to a movement along the supply curve, and 'change in supply' refers to a shift in the supply curve
B
'Change in quantity supplied' refers to a shift in the supply curve, and 'change in supply' refers to a movement along the supply curve
C
'Change in quantity supplied' and 'change in supply' refer to the same thing
D
'Change in quantity supplied' refers to changes in demand, and 'change in supply' refers to changes in supply only

Explain the implications of the following in a perfectly competitive market: (a) Large number of buyers (b) Freedom of entry and exit to firms.

A
Both large number of buyers and freedom of entry and exit help achieve perfect competition.
B
Large number of buyers prevents monopolistic practices, but entry and exit restrictions can distort market.
C
Only a large number of buyers contributes to perfect competition.
D
Freedom of entry and exit ensures market efficiency, but large buyers result in oligopolistic behavior.

Define stocks.

A
Stocks are a type of financial asset that represent ownership in a company.
B
Stocks refer to goods that are stored in warehouses.
C
Stocks are only short-term financial instruments.
D
Stocks are a type of government-issued bond.

Depreciation of fixed capital assets refers to:

A
Normal wear and tear
B
Foreseen obsolescence
C
Both A and B
D
Unforeseen obsolescence

What is revenue expenditure?

A
Expenditure incurred for the acquisition of fixed assets
B
Expenditure related to the production of goods and services
C
Expenditure incurred for maintaining the production capacity
D
Expenditure that does not result in the creation of assets

Fiscal deficit equals:

A
Interest payments
B
Borrowings
C
Interest payments less borrowing
D
Borrowings less interest payments

Foreign exchange transactions dependent on other foreign exchange transactions are called:

A
Current account transactions
B
Capital account transactions
C
Autonomous transactions
D
Accommodating transactions

Find net value added at factor cost: (Rs. Lakh)

A
Rs. 10 lakh
B
Rs. 50 lakh
C
Rs. 20 lakh
D
Rs. 100 lakh

Distinguish between marginal propensity to consume and average propensity to consume. Give a numerical example.

A
Marginal propensity to consume is the change in consumption due to a change in income, and average propensity to consume is the total consumption divided by total income.
B
Both marginal and average propensities to consume are the same.
C
Marginal propensity to consume refers to income elasticity of demand, and average propensity to consume refers to consumption growth rate.
D
Marginal propensity to consume is the percentage change in income, and average propensity to consume is the percentage change in consumption.

In an economy, investment is increased by Rs. 300 crore. If marginal propensity to consume is 2/3, calculate increase in national income.

A
Rs. 600 crore
B
Rs. 900 crore
C
Rs. 500 crore
D
Rs. 400 crore

Government incurs expenditure to popularize yoga among the masses. Analyse its impact on gross domestic product and welfare of the people.

A
It leads to an increase in GDP due to higher demand for health-related goods and services
B
It increases GDP by creating job opportunities in the health sector
C
It improves welfare by enhancing public health and reducing future healthcare costs
D
All of the above

Explain the ‘store of value’ function of money. How has it solved the related problem created by barter?

A
Money serves as a store of value by retaining its purchasing power over time, unlike barter where goods depreciate
B
Money serves as a medium of exchange, which allows goods to be stored for future use
C
Money solves the problem of storing goods for later trade, unlike barter where goods are perishable
D
Money has no role in solving the problem of storing value, unlike barter systems

Explain how open market operations are helpful in controlling credit creation.

A
By selling government securities, the central bank reduces the amount of money in circulation, curbing inflation
B
By buying government securities, the central bank injects money into the economy, increasing credit creation
C
Both A and B are correct
D
Open market operations have no impact on credit creation