12th Economics Question Paper 2022 with Solution | Maharashtra Board (Download Free Pdf)
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12th Economics Question Paper 2022
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| Chapter Name | Solution Link |
| 1) Introduction to Micro and Macro Economics | Click Here |
| 2) Utility Analysis | Click Here |
| 3A) Demand Analysis | Click Here |
| 3B) Elasticity of Demand | Click Here |
| 4) Supply Analysis | Click Here |
| 5) Forms of Market | Click Here |
| 6) Index Numbers | Click Here |
| 7) National Income | Click Here |
| 8) Public Finance in India | Click Here |
| 9) Money Market and Capital Market in India | Click Here |
| 10) Foreign Trade of India | Click Here |
12th Economics Question Paper 2022
Q. 1. (A) Complete the correlations : (5) {20}
(i) Macro Economics: Income and Employment : : Micro Economics: Price Theory
(ii) Direct demand: Food and Mobiles : : Indirect Demand: Land and Labour.
(iii) Perfectly elastic demand : Ed = ∞ : : Unitary elastic demand : Ed = 1.
(iv) Output method: Product method : : Income Method: Factor cost method.
(v) Personal income tax : Direct Tax : : Goods and service tax(GST) : Indirect tax.
(B) Give economic terms: (5)
(i) Additional utility derived by a consumer from an additional unit consumed.
Answer: Marginal Utility
(ii) Price being constant, demand falls due to unfavorable changes in other factors.
Answer: Decrease in demand.
(iii) Revenue per unit of output sold.
Answer: Average revenue (AR)
(iv) Period in which all factors of production are variable.
Answer: Long run period.
(v) The gross market value of all final goods and services produced within the domestic territory of a country during a period of a year.
Answer: Gross Domestic Product at Market Price (GDP at MP)
(C) Complete the following statements : (5)
(i) Whole Economy is studied in ______.
a) Micro Economics
b) Macro Economics
c) Econometrics
d) Natural Sciences
(ii) When percentage change in quantity demanded is less than percentage change in price, the demand curve is _______.
a) Flatter
b) Steeper
c) Rectangular hyperbola
d) Horizontal
(iii) The cost incurred by the firm to promote sales _____.
a) Total cost
b) Average cost
c) Marginal cost
d) Selling cost
(iv) Budget that consists of revenue receipts and revenue expenditure ______.
a) Capital budget
b) Govemtncnt budget
c) Revenue budget
d) Family budget
(v) Purchase of goods and services from one country and selling them to another country is _______.
a) Entrepot trade
b) Import trade
c) Export trade
d) National trade
(D) Assertions and reasoning questions : (5)
(i) Assertion (A): Marginal utility (MU) goes on diminishing.
Reasoning (R): Total utility (TU) increases at diminishing rate.
Options :
a) Assertion (A) is true but Reasoning (R) is false.
b) Assertion (A) is false but Reasoning (R) is true.
c) Both statements A and R are true and R is the correct explanation of A.
d) Both statements A and R are true and R is not the correct explanation of A.
(ii) Assertion (A): With rising price, supply of a commodity falls.
Reasoning (R): Seller earns more profit at higher price.
a) Assertion (A) is true but Reasoning (R) is false.
b) Assertion (A) is false but Reasoning (R) is true.
c) Both statements A and R are true and R is the correct explanation of A.
d) Both statements A and R are true and R is not the correct explanation of A.
(iii) Assertion (A): Index number considers all factors.
Reasoning (R): Index number is based on samples.
Options:
a) Assertion (A) is true but Reasoning (R) is false.
b) Assertion (A) is false but Reasoning (R) is true.
c) Both statements A and R are true and R is the correct explanation of A.
d) Both statements A and R are true and R is not the correct explanation of A.
(iv) Assertion (A): Money market economises use of cash.
Reasoning (R): Money market does not deal with financial instruments that are close substitutes of money.
Options:
a) Assertion (A) is true but Reasoning (R) is false.
b) Assertion (A) is false but Reasoning (R) is true.
c) Both statements A and R are true and R is the correct explanation of A.
d) Both statements A and R are true and R is not the correct explanation of A.
(v) Assertion (A): International trade leads to division of labour and specialisation.
Reasoning (R): India’s national trade is not increasing.
Options :
a) Assertion (A) is true but Reasoning (R) is false.
b) Assertion (A) is false but Reasoning (R) is true.
c) Both the statements A and R arc true and R is the correct explanation of A
d) Both the statements A and R are true and R is not the correct explanation of A.
Q. 2. (A) Identify and explain the following concepts : (Any 3) (6) [12]
(i) Asha collected information about the income of a particular firm.
Identified Concept: Microeconomics
Explanation: Microeconomics refers to the study of the small unit from whole economy. Microeconomics uses slicing method to split the whole economy into small individual units.
(ii) Ramesh’s demand for salt remained unchanged inspite of a 10% rise in its price.
Identified Concept: Perfectly inelastic demand
Explanation: It is a situation where there is no change in quantity demanded even if there is a change in the price of the goods, the demand is said to be perfectly inelastic.
(iii) Out of 4000 kgs of rice the farmer offered to sale 1000 kgs of rice in the market at Rs 40 per kg.
Identified Concept: Supply
Explanation: Supply in economics is defined as the total amount of a given product or service a supplier offers to consumers at a given period and a given price level. It is usually determined by market movement. For instance, a higher demand may push a supplier to increase supply.
(iv) Shobha collected data regarding the money value of all final goods and services produced in the country for the financial year 2019-20.
Identified Concept: National Income
Explanation: National income is referred to as the total monetary value of all services and goods that are produced by a nation during a period of time.
(v) Lucy deposited a lumpsum amount oft in the Bank of India for the period of one year.
Identified Concept: Fixed Deposit
Explanation: Fixed deposits refer to those deposits that are held for a fixed period of time. These deposits cannot be withdrawn before the maturity period.
Q. 2. (B) Distinguish between (Any 3) (6)
(i) Slicing method and lumping method.
| Slicing method | lumping method |
| It splits or divides the whole economy into small individual units and then studies each unit separately in detail. | Lumping method is the study of the whole economy rather than its part. |
| Micro economics uses slicing method. | Macro economics uses lumping method. |
(ii) Joint/complementary demand and competitive demand.
| Joint/Complementary demand | Competitive demand |
| When two or more goods are demanded jointly to satisfy a single want, it is known as joint or complementary demand. | It is demand for those goods which are substitutes for each other. |
| For example, car and fuel. pen and refill etc | For example, tea or coffee, sugar or jaggery etc. |
(iii) Total revenue and marginal revenue.
| Total revenue | Marginal revenue. |
| Total revenue is the total sales proceeds of a firm by selling a commodity at a given price. | Marginal revenue is the net addition made to total revenue by selling an extra unit of the commodity. |
| Total revenue = Price × Quantity | MRn = TRn – TRn-1 |
(iv) Price Index Number and Quantity Index Number
| Price Index Number | Quantity Index Number |
| It measures the general changes in the prices of goods. | It measures changes in the level of output or physical volume of production in the economy. |
| Consumer Price Index (CPI) and Wholesale Price Index (WPI) are major examples of a price index. | For example, changes in agricultural production, industrial production etc. over a period of time. |
| P01 = Σp1 / Σp0 × 100 | Q01 = Σq1 / q0 × 100 |
(v) Internal debt and External debt.
| Internal Debt | External Debt |
| When a government borrows from its citizens, banks, central bank, financial institutions, business houses etc. within the country, it is known as internal debt. | When a government borrows from foreign governments, foreign banks or institutions, international organizations like International Monetary Fund, World Bank etc., it is known as external debt. |
| Use of domestic currency | Use of foreign currency |
| Internal debt is less complex for management. | External debt is more complex for management. |
Q. 3. Answer the following : (Any 3) (12)
(i) Explain the scope of macroeconomics.
Answer: “Macroeconomics deals with the functioning of the economy as a whole.”
Scope of Macroeconomics:
1) Theory of Income and Employment:
The macroeconomic analysis explains which factors determine the level of national income and employment and what causes fluctuations in the level of income, output, and employment. To understand, how the level of employment is determined, we have to study the consumption function and investment function. The theory of Business Cycles is also a part and parcel of the Theory of Income and Employment.
2) Theory of General Price Level and Inflation:
Macroeconomic analysis shows how the general price level is determined and further explains what causes fluctuations in it. The study of general price level is significant on account of the problems created by inflation and deflation.
3) Theory of Growth and Development:
Macroeconomics consists of the theory of economic growth and development. It explains the causes of underdevelopment and poverty. It also suggests strategies for accelerating growth and development.
4) Macro Theory of Distribution
Macro theory of distribution deals with the relative shares of rent, wages, interest and profit in the total national income.
(ii) Explain any four features of monopoly.
Answer: The term monopoly is derived from the Greek word ‘Mono’ which means single and ‘poly’ which means the seller. Monopoly is a market in which there is only one seller who controls the entire market supply for a product that has no close substitute.
The following are the main features of the monopoly market:
1) Single seller:
In a monopoly, there is no competition as there is only one single producer or seller of the product. But, the number of buyers is large.
2) No close substitute:
There are no close substitutes for the product of the monopolist. Therefore, the buyers have no choice. They have to either buy the product from the monopolist or go without it. The cross elasticity of demand for his product is either zero or negative.
3) Barriers to entry:
Entry of the rivals is restricted due to legal, natural, and technological barriers which do not allow the competitors to enter the market.
4) Complete control over the market supply:
The monopolist has a complete hold over the market. He is the sole producer or seller of the product.
5) Price maker:
A monopolist can fix the price of his own product as he controls the whole market supply. Monopolists is a price makers.
6) Price discrimination:
A monopolist being a price maker, he can charge different prices to different consumers for the same product, on the basis of time, place etc. Thus, price discrimination is an important feature of a monopoly market. For example, students and senior citizens are provided railway tickets at concessional rates.
7) No distinction between firm and industry:
A monopolist is the sole seller and producer of the product. A monopoly firm itself is an industry.
iii) Elaborate any four features of utility.
Answer: Utility is the capacity of a commodity to satisfy human wants.
The following are the features of utility:
1) Relative concept:
Utility is related to time and place. It varies from time to time and place to place. For example, (i) woollen clothes have a greater utility in the winter. (ii) sand has greater utility at the construction site than at the seashore.
2) Subjective concept:
It is a psychological concept. Utility differs from person to person. This is due to differences in taste, preferences, likes, dislikes, nature, habits, profession, etc. For example, a stethoscope has utility to a doctor but not to a layman.
3) Ethically neutral concept:
The concept of utility has no ethical consideration. It is a morally colorless concept. The commodity should satisfy any want of a person without consideration of what is good or bad, desirable or undesirable. For example, a knife has the utility to cut fruits and vegetables as well as it can be used to harm someone. Both wants are of different nature but are satisfied by the same commodity. Thus, utility is ethically neutral.
4) Utility differs from usefulness:
Utility is the capacity of a commodity to satisfy human wants, whereas usefulness indicates value in the use of the commodity. For example, milk has both utility as well as usefulness to a consumer, while liquor has utility only to an addict, but has no usefulness.
5) Utility differs from pleasure:
A commodity may possess utility but it may not give any pleasure to the consumer. For example, injection for a patient has utility because it cures the ailment but it hardly gives any enjoyment or pleasure to him.
(iv) Write any four practical difficulties in national income estimation.
Answer: In practice, a number of difficulties arise in the collection of statistical data required for the estimation of national income. Some of the practical difficulties are as follows:
1) Problem of double counting:
The greatest difficulty in calculating national income is of double counting. It arises from the failure to distinguish properly, between a final and an intermediate product. For example, flour used by a bakery is an intermediate product and that by a household is final product.
2) Existence of non-monetized sector:
In India, especially in rural areas, there exists the non-monetized sector. Agriculture, still being in the nature of subsistence farming, a major part of production is partly exchanged for other goods and services. It is excluded while counting national income.
3) Inadequate and unreliable data:
Adequate and correct data on production and cost data relating to crops, fisheries, animal
husbandry, forestry, construction workers, small enterprises etc., are not available in a developing country. Besides this, data on unearned incomes, consumption and investment expenditure of rural and urban population are also not available. This does not reveal the actual size of national income.
4) Depreciation:
Depreciation refers to wear and tear of capital assets, due to their use in the process of production. There are no uniform, common or accepted standard rates of depreciation applicable to the various capital assets. Thus, it is difficult to make correct deductions for depreciation.
5) Capital gains or losses:
Capital gains or capital losses, which accrue to the property owners by an increase or decrease in the market value of their capital assets or changes in demand, are not included in the national income because these changes do not result from current economic activities.
(v) Explain the Ratio method of measuring price elasticity of demand.
Answer:
1) Ratio or Percentage method:
The ratio method is developed by Prof. Marshall. According to this method, the elasticity of demand is measured by dividing the percentage change in demand by the percentage change in price. The percentage method is also known as the Arithmetic method. Price elasticity is measured as :
Ed = Percentage change in Quantity demanded / Percentage change in Price
Symbolically:
Ed=△Q/Q ÷△P/P
=△Q/Q × P/△P
△Q= Difference between the new quantity and original quantity demanded.
△P= Difference between the new price and original price
Q= Original quantity demanded
P= Original price
Numerical example:
| Price (Rs) | Qty. Demanded (in Kg) | Formula |
| 20 | 10 | Ed=△Q/Q × P/△P |
| 25 | 09 |
Original Price, P = 20, New price P = 25
△P = 5 (Difference between new and original price)
Original Quantity Demanded, Q = 10, New demand = 9
△Q = 1 (Difference between new and original quantity demanded)
Ed = △Q/Q × P/△P
Ed = 1/10 × 20/5
Ed = 0.4
Ed < 1
It means the elasticity of demand is relatively inelastic.
Balbharti Textbook Solutions for other subjects
Solution of all Chapters of OCM
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Q. 4. State with reasons whether you agree or disagree with the following statements (Any 3) (12)
(i) There are no exceptions to the law of diminishing marginal utility.
Answer: Disagree
Reason:
a) There are exceptions to the law of diminishing marginal utility.
b) This law fails to operate in case of earning money, acquiring knowledge, consumption of liquor and cigarettes, hobbies such as jewellery collection by women, stamp collection, old coins, antiques, listening to good music and reading good poems again and again, etc.
c) In such cases, the greater the consumption, greater is the utility derived.
(ii) Supply curve of labour is backward bending.
Answer: Agree
Reason:
a) Labour supply is the total number of hours that workers work at a given wage rate.
b) It is represented graphically by a supply curve. In case of labour, as the wage rate rises the supply of labour would increase. So supply curve slopes upward.
c) Supply of labour falls with a further rise in wage rate and supply curve of labour bends backward.
d) This is because the worker would prefer leisure to work after receiving higher amount of wages.
e) Thus, after a certain point when wage rate rises the supply of labour tends to fall.
(iii) Price under perfect competition is decided by the interaction between demand and supply.
Answer: Agree
Reason:
a) Under perfect competition, price is determined by the equilibrium of demand and supply.
b) In perfect competition, the price of a product is determined at the point at which the demand and supply curves intersect each other.
c) The price determined at this point is called the Equilibrium Price.
(iv) Capital market plays an important role in India.
Answer: Agree
Reason:
Following are the role of capital market in India.
a) Mobilizes long term savings:
There is an increasing demand for investment funds by industrial organizations and the government. Capital market helps to mobilize long term savings from various section of the population through the sale of securities.
b) Provides equity capital:
Capital market provides equity capital or share capital to entrepreneurs which could be used to purchase assets as well as fund business operations.
c) Operational efficiency:
Capital market helps to achieve operational efficiency by lowering transaction costs, simplifying transaction procedures, lowering settlement timings in purchase and sale of stocks.
d) Quick valuation:
Capital market helps to determine a fair and quick value of both equity (shares) and debt (bonds, debentures) instruments.
e) Integration:
Capital market leads to integration among real and financial sectors, equity and debt instruments, government and private sector, domestic and external funds etc.
(v) Balance of Payment is same as Balance of Trade.
Answer: Disagree
Reason:
Balance of Payment is differrent from Balance of Trade.
a) The Balance of payments of a country is a systematic record of all international economic
transactions of that country during a given period, usually a year.
b) According to Ellsworth, “Balance of payments is a summary statement of all the transactions between the residents of one country and the rest of the world.
c) Balance of trade is the difference between the value of a country’s exports and imports for a given period. Balance of trade is also referred to as the international trade balance.
d) According to Bentham, “Balance of trade of a country is the relation over a period between
the values of her exports and imports of physical goods.”
Q. 5. Study the following table, figure, passage and answer the questions given below it (Any 2): (8)
(i)
| Components | Crores (Rs) |
| Consumption (C) Investment (1) Government Expenditure (G) Net Export (X-M) Depreciation (D) | 800/- 700/- 400/ -150/- 100/- |
(1) Calculate GDP (Gross Domestic Product) on the basis of above table. (2)
Answer:
GDP = C + I + G (X-M)
= 800+700+400+(-150)
= Rs 1750 Crores
(2) Calculate NDP (Net Domestic Product) on the basis of above table. (2)
Answer:
NDP = GDP – Depreciation
= 1750 – 100
= Rs 1650 Crores
(ii) Identify the price elasticity of demand from the following diagrams:
Answer:
1) Perfectly inelastic demand
2) Perfectly elastic demand
3) Relatively inelastic demand
4) Unitary elastic demand
(iii)
Commercial banks act as intermediaries in the country’s financial system to bring savers and investors together. They are profit-seeking financial institutions. Due to bank nationalization in 1969, there was an increase in loan disbursement in urban and rural areas. Agriculture and retail traders started getting more loans. Those sectors which were not getting loans before 1969, started getting loans in post nationalization period. After the nationalization of the bank branch expansion took place. There has been diversification in the functions of banks. Commercial Banks are providing different types of services like safe deposit lockers, D-mat facilities, internet banking, mobile banking, etc.
(1) Write any two benefits of Bank nationalization. (1)
Answer:
i) Increase in loan disbursement in urban and rural areas.
ii) Agriculture and retail traders started getting more loans.
(2) Write various services provided by banks. (1)
Answer:
Banks provide different types of services like safe deposit lockers, D-mat facilities, internet banking, mobile banking, etc.
(3) Write your opinion about the above passage (2)
Answer:
Commercial banks act as intermediaries in this process to link depositors and investors in the country’s financial system. Those industries that did not obtain loans prior to 1969 started to do so after being nationalized. Commercial banks started providing a range of services, including mobile banking, Internet banking, D-mat rooms, safe deposit boxes, and more.
Q. 6. Answer the following questions in detail: (Any 2) (16)
i) Explain the concepts of variation and changes in demand with the help of diagrams.
Answer:
When the demand for a commodity falls or rises due to a change in price alone and other factors remain constant, it is called variations in demand. It is of two types :
1) Expansion of demand: Expansion of demand refers to rise in quantity demanded due to fall in price alone while other factors like tastes, income of the consumer, size of population, etc. remain unchanged.
Demand moves in a downward direction on the same demand curve.
This is explained with the help of following figure.
As shown in above fig. DD is demand curve. A downward movement on the same demand curve from point a to point b indicates an expansion of demand.
2) Contraction of Demand: Contraction of demand refers to a fall in demand due to rise in price alone. Other factors like tastes, income of the consumer, size of population etc. remain unchanged.
Demand curve moves in the upward direction on the same demand curve.
This can be explained with the help of following fig.
Changes in Demand: When demand for a commodity increases or decreases due to changes in other factors and price remains constant, it is known as changes in demand. It is of two types:
1) Increase in demand: It refers to an increase in quantity demanded due to favourable changes in other factors like tastes, income of the consumer, climatic conditions, etc. and price remains constant.
Demand curve shifts to the right hand side of the original demand curve.
This can be explained with the help of fig.
2) Decrease in demand: It refers to a decrease in quantity demanded due to unfavourable changes in other factors like tastes, income of the consumer, climatic conditions etc. and price remains constant.
Demand curve shifts to left hand side of the original demand curve.
This can be explained with the help of fig.
As shown in Fig., DD is the original demand curve. It shifts inward to the left from DD to D2D2 which indicates a decrease in demand.
(ii) Explain the meaning of index number. Explain various steps involved in the construction of index numbers.
Answer: An index number is a device to measure changes in an economic variable (or group of variables) over a period of time. Index numbers were originally developed to measure changes in the price level.
Spiegel: “An index number is a statistical measure designed to show changes in a variable or a group of related variables with reference to time, geographical location, and other characteristics such as income, profession, etc.”
Following steps are involved in the construction of index numbers :
1) Purpose of index number:
The purpose for constructing the index number, its scope as well as which variable is intended to be measured should be clearly decided to achieve fruitful results.
2) Selection of the base year:
The base year is also called the reference year. It is the year against which comparisons are made. The base year should be normal i.e. it should be free from natural calamities. It should not be too distant in the past.
3) Selection of items:
It is necessary to select a sample of the number of items to be included in the construction of a particular index
number. For example, in the construction of price index numbers, it is impossible to include each and every commodity. The commodities to be selected should represent the tastes, habits and customs of the people. Besides this, only standardized or graded items should be included to give better results.
4) Selection of price quotations:
Prices of the selected commodities may vary from place to place and shop to shop in the same market. Therefore, it is desirable that price quotations should be obtained from an unbiased price reporting agency. To achieve accuracy, a proper selection of representative places and persons is required.
5) Choice of a suitable average:
The construction of index numbers requires a choice of a suitable average. Generally, the Arithmetic mean is used in the construction of index numbers because it is simple to compute compared to other averages.
6) Assigning proper weights:
Weight refers to the relative importance of the different items in the construction of an index number. Weights are of two types i.e. quantity weights (q) and value weights (p x q). Since all items are not of equal importance, by assigning specific weights, better results can be achieved.
7) Selection of an appropriate formula:
Various formulae are devised for the construction of index numbers. The choice of a suitable formula depends upon the purpose of index number and availability of data.
(iii) Explain various sources of public revenue.
Answer: Public revenue means the aggregate collection of income with the government through various sources. Public revenue holds a permanent position in the study of public
finance which is part of a study of economics. Thus, the necessity of public revenue arises due to public expenditure.
The main sources of public revenue are as follows.
Sources of Public Revenue :
A) Taxes
B) Non-tax Revenue
A) Taxes: A tax is a compulsory contribution from the person to the government without reference to special benefits conferred
Types of Taxes:
There are two main types of taxes. They are :
1) Direct Tax and 2) Indirect Tax.
1) Direct Tax:
It is paid by the taxpayer on his income and property. The burden of tax is borne by the person on whom it is levied. As he cannot transfer the burden of the tax to others, impact and incidence of direct tax falls on the same person. For examplepersonal income tax, wealth tax etc.
2) Indirect Tax:
It is levied on goods or services. It is paid at the time of production or sale and purchase of a commodity or a service. The burden of an indirect tax can be shifted by the taxpayer (producers) to another person. Hence, the impact and incidence of tax are on different heads. For example, the newly implemented Goods and Services Tax [GST] in India has replaced almost all indirect taxes and custom duty.
B) Non-Tax revenue sources: Public revenue received by the government administration, public enterprises, gifts, and grants, etc. are called as non-tax revenue. These sources are different than the taxes. Brief information about these sources are as follows
1) Fees:
A tax is paid compulsorily without any return service whereas, a fees is paid in return for certain specific services rendered by the government. For example- education fees, registration fees, etc.
2) Prices of public goods and services:
Modern governments sell various types of commodities and services to the citizens. A price is a payment made by the citizens to the government for the goods and services sold to them. For example- railway fares, postal charges, etc.
3) Special Assessment:
The payment made by the citizens of a particular locality in exchange for certain special facilities given to them by the authorities is known as ‘special assessment.’ For example- local bodies can levy a special tax on the residents of a particular area where extra/ special facilities of roads, energy, water supply etc. are provided.
4) Fines and Penalties:
The government imposes fines and penalties on those who violate the laws of the country. The objective of the imposition of fines and penalties is not to earn income, but to discourage the citizens from violating the laws framed by the Government. For example, fines for violating traffic rules. However, the income from this source is small.
5) Gifts, Grants, and Donations:
The government may also earn some income in the form of gifts by the citizens and others. The government may also receive grants from foreign governments and institutions for general and specific purposes. Foreign aid has become an important source of development finance for a developing country like India.
6) Special levies:
This is levied on those commodities, the consumption of which is harmful to the health and well-being of the citizens. Like fines and penalties, the objective is not to earn income, but to discourage the consumption of harmful commodities by the citizens. For example- duties levied on wine, opium, and other intoxicants.
7) Borrowings:
The government can borrow from the people in the form of deposits, bonds, etc. It also gets loans from foreign governments and organizations such as IMF, World Bank, etc. Loans are becoming a more and more popular source of revenue for governments in modern times.
Balbharti Textbook Solutions for other subjects
Solution of all Chapters of OCM
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8
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