CBSE 12 Economics Question Paper-2017 by Pavan | Practice Test to Test Your Knowledge
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CBSE 12 Economics Question Paper-2017

CBSE 12 Economics Question Paper-2017

This mock test includes actual CBSE Class 12 Economics board exam questions from the year 2017, helping students understand exam trends and practice real paper format

2025-08-05
Pavan Pavan
CBSE Class 12 Economics 2017 Grade 12

Duration

50 min

Questions

50

Marking

Negative

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Questions Preview

Define market demand.

A
The willingness of producers to supply a product at different prices.
B
Total quantity of a good or service that consumers are willing to purchase at a given price.
C
The number of consumers in a market.
D
The total income of consumers.

The demand of a commodity when measured through the expenditure approach is inelastic. A fall in its price will result in:

A
No change in expenditure on it.
B
Decrease in expenditure on it.
C
Increase in expenditure on it.
D
Any one of the above.

State any one feature of oligopoly.

A
Perfect competition between firms.
B
There are many firms, each with little market power.
C
There is a monopoly in the market.
D
Few large firms control the market.

Average revenue and price are always equal under:

A
All market forms
B
Perfect competition only
C
Monopoly only
D
Monopolistic competition only

Explain the problem of ‘what to produce.’

A
Deciding on the amount of labor to use.
B
Determining the price of a commodity.
C
Choosing between different types of goods to produce.
D
Identifying the target market for a product.

State the meaning and properties of production possibilities frontier.

A
It shows the total demand in a market.
B
It shows the supply curve of a firm.
C
It shows the trade-off between two goods.
D
It shows the equilibrium price.

Explain the conditions of consumer’s equilibrium under indifference curve approach.

A
When the budget line is tangent to the highest indifference curve.
B
When the total supply equals total demand.
C
When the price of goods is equal.
D
When all firms produce at maximum efficiency.

Why is an indifference curve negatively sloped? Explain.

A
Because demand increases as price decreases.
B
Because of diminishing marginal returns.
C
Because the consumer substitutes one good for another.
D
Because of consumer preferences for luxury goods.

State different phases of the law of variable proportions on the basis of total product. Use diagram.

A
Capital intensive, labor intensive, and technological intensive.
B
Decreasing returns, constant returns, and no returns.
C
Fixed, variable, and total cost.
D
Increasing returns, constant returns, and diminishing returns.

Explain the geometric method of measuring price elasticity of supply. Use diagram.

A
Supply is determined by consumer preferences.
B
Price is determined by demand and supply.
C
Elasticity can only be measured in short-term supply curves.
D
The slope of the supply curve is used to measure elasticity.

Explain the ‘free entry and exit of firms’ feature of monopolistic competition.

A
When firms can freely enter or leave the market.
B
When firms face government restrictions on market entry.
C
When firms form cartels to control the market.
D
When the price of goods is regulated.

Complete the table showing marginal cost, average cost, and average variable cost.

A
By calculating the change in cost for each additional unit produced.
B
By using the marginal revenue curve.
C
By summing up fixed and variable costs.
D
By assuming a linear cost structure.

Explain how the law of variable proportions operates on the basis of total product.

A
It shows the relationship between the quantity of a variable factor and the total output.
B
It determines the level of equilibrium price.
C
It measures the total fixed cost.
D
It represents the elasticity of supply.

When the price of commodity X falls by 10%, its demand rises from 150 to 180 units. Calculate its price elasticity of demand.

A
Price elasticity of demand = % change in quantity demanded / % change in price.
B
Price elasticity of demand = (Initial demand - Final demand) / Price change.
C
Price elasticity of demand = (Change in price / Change in demand) * 100.
D
Price elasticity of demand = (Final demand - Initial demand) / Price change.

Explain the chain of effects of a fall in price of a good Y on the market of its complementary good X.

A
Price of good X rises as demand increases.
B
Price of good X falls due to the increased demand.
C
Demand for good X decreases as price of good Y falls.
D
Supply of good X increases due to lower prices of Y.

What is the meaning of involuntary unemployment?

A
Unemployment that arises due to a mismatch between workers' skills and job requirements.
B
Unemployment caused by voluntary withdrawal from the labor force.
C
Unemployment that occurs when workers are willing to work at current wages but cannot find employment.
D
Unemployment caused by a decline in economic growth.

What is the revenue deficit?

A
When the government’s revenue is less than its expenditure.
B
When the government has a surplus in its revenue.
C
When total national income exceeds the national debt.
D
When government spending does not include investment.

What is fiscal deficit?

A
It is the difference between the government's total expenditure and its total revenue excluding borrowings.
B
It is the total amount the government borrows in a fiscal year.
C
It is the total national savings in a fiscal year.
D
It is the deficit between the public and private sector borrowing.

What is balance of payments?

A
The record of a country's total exports and imports.
B
The total debt a country owes to other countries.
C
The record of all financial transactions made between a country and the rest of the world.
D
The record of the domestic market supply and demand.

What is the meaning of the statutory liquidity ratio?

A
The ratio of total debt to equity in a bank's capital structure.
B
The ratio between a country's foreign exchange reserves and its debt.
C
The interest rate that banks must charge for government securities.
D
The minimum percentage of a bank's net demand and time liabilities that it must hold in the form of liquid assets.

What is the primary function of money?

A
It is a method for transferring goods and services without cash.
B
It functions as a store of value only.
C
It serves as a medium of exchange.
D
It works only as a unit of account.

Explain the store of value function of money.

A
Money retains its value over time.
B
Money provides immediate liquidity to individuals.
C
Money acts as a unit of account for goods and services.
D
Money is used to trade at any given time.

What is a progressive tax?

A
A tax that increases with the income or wealth of the taxpayer.
B
A tax applied at a fixed rate to all income levels.
C
A tax that decreases as income increases.
D
A tax on luxury items only.

What is the role of the central bank as a banker to the government?

A
Managing government accounts and facilitating payments.
B
Issuing and controlling the country's currency.
C
Enforcing monetary policy through open market operations.
D
Regulating commercial banks and financial institutions.

How does a government budget influence income distribution?

A
It determines the allocation of resources through taxes and welfare programs.
B
It decides the total amount of goods and services produced in an economy.
C
It sets the interest rate for public borrowing.
D
It controls the inflation rate.

What is the multiplier effect?

A
The increase in national income resulting from an increase in government expenditure.
B
The effect of a tax increase on disposable income.
C
The process of expanding the money supply in an economy.
D
The decrease in investment following a fall in interest rates.

What is the foreign exchange market?

A
A market for buying and selling currencies.
B
A market for foreign bonds and stocks.
C
A market for commodity futures and options.
D
A market where national currencies are pegged to the U.S. dollar.

How do supply and demand influence the foreign exchange rate?

A
The supply of and demand for a currency determine its value relative to others.
B
The supply of currency is fixed, and demand fluctuates based on economic policies.
C
Demand for foreign goods and services dictates the value of a currency.
D
Supply is controlled by the government, and demand is driven by international investors.

Explain the concept of market equilibrium.

A
It is the point where the supply of goods matches the demand for those goods.
B
It is the point where the government sets prices for commodities.
C
It is the market price for commodities that results in a surplus.
D
It is a situation where demand exceeds supply in all markets.

What is the impact of a rise in interest rates on investment?

A
It increases the cost of borrowing and reduces investment.
B
It decreases the cost of borrowing and encourages investment.
C
It leads to an increase in consumer spending.
D
It has no significant impact on investment activities.

What is the effect of a tax on supply?

A
It increases the supply of the taxed good.
B
It decreases the supply of the taxed good.
C
It has no effect on the supply of the taxed good.
D
It reduces the demand for the good.

What is the income effect of a price change?

A
It changes the cost structure of the firm.
B
It results in a shift of the demand curve.
C
It refers to the direct impact of a price change on the cost of production.
D
It occurs when a change in the price of a good alters the consumer's real income, affecting the quantity demanded.

What does elasticity of demand measure?

A
The quantity of a good demanded based on consumer preferences.
B
The total supply in the market.
C
The total quantity demanded at different income levels.
D
The responsiveness of quantity demanded to a change in price.

What is the meaning of an inferior good?

A
A good for which demand decreases as income increases.
B
A good for which demand increases as income increases.
C
A good that is always produced by a monopoly.
D
A good that cannot be substituted by other goods.

What does the production function show?

A
The relationship between inputs used in production and the resulting output.
B
The cost of producing a certain quantity of goods.
C
The relationship between labor costs and output.
D
The price of goods in a competitive market.

What is the effect of a minimum wage law?

A
It creates a price floor, potentially leading to a surplus of labor.
B
It sets the highest price that can be paid to labor.
C
It eliminates all unemployment in the market.
D
It lowers the demand for low-skilled workers.

What does the term 'demand shift' refer to?

A
A change in the demand for a good caused by factors other than price.
B
A movement along the demand curve due to a change in price.
C
A change in the total supply of goods in the market.
D
A change in consumer preferences that raises the price of goods.

What is the opportunity cost of attending college?

A
The cost of tuition, fees, and books.
B
The potential income you could have earned if you worked instead of studying.
C
The price of accommodation and food.
D
The amount of money spent on transportation to campus.

What is the difference between a shift in the demand curve and a movement along the demand curve?

A
A shift in the demand curve occurs due to factors other than price, while a movement along the curve is caused by a price change.
B
A shift occurs when price changes, while a movement is caused by consumer income.
C
A shift represents changes in supply, while movement reflects demand changes.
D
A shift is permanent, while movement is temporary.

What is perfect competition?

A
A market structure where many firms sell identical products and cannot influence market price.
B
A market where one firm controls the entire market.
C
A market where firms produce differentiated products.
D
A market where firms face government price controls.

What is the meaning of monopoly power?

A
The ability of a firm to set prices above competitive levels due to lack of competition.
B
The ability of a firm to charge lower prices than competitors.
C
The ability to reduce production costs by economies of scale.
D
The ability to produce all goods in a market at lower costs.

What is market failure?

A
A situation where the allocation of goods and services is inefficient.
B
A situation where firms operate under monopoly conditions.
C
A situation where competition drives prices to their lowest point.
D
A situation where supply exceeds demand.

What is the law of supply?

A
As the price of a good increases, the quantity supplied increases, all else equal.
B
As the price of a good increases, the quantity supplied decreases.
C
Supply does not change with price.
D
The quantity supplied is fixed regardless of price.

What does a negative income elasticity of demand indicate?

A
The good is unrelated to consumer income.
B
The good is an inferior good, where demand decreases as income increases.
C
The good is a luxury item, where demand increases with income.
D
The good is a normal good, where demand increases with higher income.

What is the primary goal of an oligopolistic firm?

A
To maximize consumer surplus.
B
To reduce government regulation in the market.
C
To ensure perfect competition in the market.
D
To maximize profits while maintaining market share.

What is the purpose of central bank policy?

A
To regulate the money supply and control inflation.
B
To set the price of all goods in the market.
C
To regulate prices for all goods and services.
D
To eliminate competition among banks.

What is a public good?

A
A good that is non-excludable and non-rivalrous.
B
A good that is excludable but non-rivalrous.
C
A good that is both excludable and rivalrous.
D
A good that is non-excludable but rivalrous.

What is the impact of technological advancement on the supply curve?

A
It shifts the supply curve to the left.
B
It shifts the supply curve to the right.
C
It causes no change in the supply curve.
D
It creates a new demand curve.

What does GDP deflator measure?

A
It measures the total demand for goods and services.
B
It measures the quantity of goods produced.
C
It measures the price level of all goods and services produced in an economy.
D
It measures the price level of goods imported by a country.

What is the primary feature of a monopoly?

A
A single firm controls the market and is the sole producer of a good or service.
B
Many firms produce identical products.
C
There is a high level of competition in the market.
D
There are few barriers to entry for new firms.