CBSE 12 Economics Question Paper-2016 Set-3 by Pavan | Practice Test to Test Your Knowledge
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  3. CBSE 12 Economics Question Paper-2016 Set-3
CBSE 12 Economics Question Paper-2016 Set-3

CBSE 12 Economics Question Paper-2016 Set-3

This mock test includes actual CBSE Class 12 Economics board exam questions from the year 2016 set 3, helping students understand exam trends and practice real paper format

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

Duration

30 min

Questions

27

Marking

Negative

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Questions Preview

What is a characteristic of homogeneous products?

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

There is an 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

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

A
Marginal cost is less than average cost
B
Marginal cost is greater than average cost
C
Marginal cost equals average cost
D
Marginal cost is not related to average cost

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 'decrease' in supply take place?

A
When there is a fall in demand
B
When production costs decrease
C
When the price of inputs increases
D
When government imposes higher taxes

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 is more elastic because the elasticity is smaller
B
Good Y is more elastic because the elasticity is greater
C
Both goods are equally elastic
D
Elasticity does not depend on the value

What is maximum price ceiling? Explain its implications.

A
A price ceiling above the equilibrium price
B
A price ceiling below the equilibrium price
C
A price floor below the equilibrium price
D
A price floor above the equilibrium price

A consumer consumes only two goods X and Y. Marginal utility of each is 2. The price per unit of X and Y is Re. 1 and Rs. 2 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 will increase consumption of X
C
No, the consumer will increase consumption of Y
D
Yes, but the consumer will change consumption depending on marginal utility

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

A
Production function describes the relationship between output and inputs. In the short run, some factors are fixed, while in the long run all factors are variable.
B
Production function defines the relationship between prices and wages. In the short run, wages are fixed, while in the long run, they are variable.
C
Production function measures only output. Short-run functions are more complex.
D
Production function is only applicable in perfect competition.

When price of a good rises from Rs. 12 per unit to Rs. 15 per unit, the producer supplies 50 per cent more output. What is the price elasticity of supply?

A
0.5
B
1.0
C
2.0
D
0.2

Explain the effect of (a) change in own price and (b) change in price of substitute on demand of a good.

A
Own price increase causes demand to fall; substitute price increase causes demand to rise.
B
Own price decrease causes demand to increase; substitute price decrease causes demand to fall.
C
Both factors lead to an increase in demand.
D
Both factors lead to a decrease in demand.

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

A
Consumer equilibrium is achieved when the budget line is tangent to an indifference curve.
B
Consumer equilibrium occurs when total utility is maximized, regardless of the budget line.
C
Consumer equilibrium is reached when marginal utility of each good is equal.
D
Equilibrium is achieved when income is maximized.

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
A large number of buyers and freedom of entry/exit ensure no firm can influence market price.
B
They ensure that only the most efficient firms survive.
C
They lead to monopolistic competition.
D
They result in market failure.

Assuming that no resource is equally efficient in production of all goods, name the curve which shows production potential of the economy. Explain, giving reasons, its properties.

A
The production possibilities curve (PPC) shows the maximum feasible production combinations of two goods.
B
The demand curve shows production potential.
C
The supply curve shows production potential.
D
The equilibrium curve shows production potential.

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

A
A change in quantity supplied occurs due to price changes, while a change in supply occurs due to factors like production cost.
B
Change in supply is caused by price changes, while change in quantity supplied is caused by external factors.
C
Both terms are interchangeable.
D
A change in quantity supplied refers to shifts in demand, while a change in supply refers to shifts in price.

Fiscal deficit equals?

A
Interest payments
B
Borrowings
C
Interest payments less borrowings
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 transaction

Define stocks.

A
Stocks represent a flow of goods.
B
Stocks represent a stock of assets or resources.
C
Stocks refer to government bonds.
D
Stocks are short-term savings.

Depreciation of fixed capital assets refers to?

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

What is revenue deficit in government budget?

A
The difference between total revenue and total expenditure
B
The difference between government expenditure and borrowings
C
The difference between fiscal deficit and borrowings
D
The difference between capital receipts and revenue receipts

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

A
Marginal propensity to consume refers to the change in consumption due to a change in income, while average propensity to consume is the ratio of total consumption to total income.
B
Marginal propensity to consume is the total consumption, and average propensity to consume is the change in income.
C
Both are equal in a perfectly competitive market.
D
Average propensity to consume is related to price, while marginal propensity is related to income.

In an economy, an increase in investment by Rs. 100 crore led to ‘increase’ in national income by Rs. 1000 crore. Find marginal propensity to consume.

A
0.1
B
0.9
C
1.0
D
0.5

Find gross value added at market price from the following data: Depreciation Rs. 20, Domestic sales Rs. 200, Net change in stocks Rs. -10, Exports Rs. 10, Single-use producer goods Rs. 120.

A
Rs. 320
B
Rs. 250
C
Rs. 200
D
Rs. 300

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

A
Money allows people to store purchasing power for the future, addressing the problem of perishable goods in barter systems.
B
Money provides a method for valuing goods, eliminating the need for barter.
C
Money solves the problem of excessive taxation in barter systems.
D
Money functions as a credit tool, avoiding the need for barter.

Explain how ‘margin requirements’ are helpful in controlling credit creation?

A
Margin requirements ensure that banks maintain a minimum amount of capital, thus preventing excessive credit creation.
B
Margin requirements increase the interest rates charged by banks.
C
Margin requirements control the flow of foreign currency.
D
Margin requirements prevent the formation of monopolies in the banking sector.

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

A
The expenditure increases GDP by enhancing public health, leading to higher productivity.
B
It decreases GDP by diverting resources away from productive sectors.
C
It has no significant impact on GDP but improves welfare by enhancing well-being.
D
It has a negative impact on both GDP and welfare due to misallocation of resources.

In which sub-account and on which side of balance of payments account will foreign investments in India be recorded? Give reasons.

A
Foreign investments will be recorded under the capital account on the credit side.
B
Foreign investments will be recorded under the current account on the debit side.
C
Foreign investments are recorded under the financial account on the credit side.
D
Foreign investments will be recorded under the current account on the credit side.