UP Board 2019 Class 12: Economics Solved Questions

UP Board 2019: The time clock for the up board examination has started backward and there are only four weeks left for the examination.   

At this time students are rushing to do as many preparations as they can.

The preparations for the UP Board exam are getting more serious as the exam dates are coming closer.

Here are some questions for Economics that will help you score better in the subject.

Question 1. What do you understand by budget line?                                    

Answer: A budget line represents the different combinations of two goods that are affordable and are available to a consumer; while being aware of his/her income-level and market prices of both the goods.
 
Question 2. Explain why the budget line is downward sloping.                    
 
Answer: The budget line is downward sloping because a consumer can increase the consumption of good 1 only by decreasing the consumption of good 2. The consumer has limited income which can be spent to buy good 1 and good 2.
 
Question 3: Define market equilibrium.                  
 
Answer: Market equilibrium is a market state where the demand in the market is equal to the supply in the market. Market equilibrium occurs where demand = supply. At this point, there is no tendency for prices to change. We say the market clearing price has been achieved.  
 
Question 4: What will be the shape of MR curve in case when TR curve is:                 
 
(a) Positively sloped straight line
(b) Horizontal straight line        
 

Answer: (a) Positively sloped straight line: When TR curve is a positively sloped straight line, then MR curve is a horizontal straight line parallel to X axis.MR and demand curve is the same, and the price (AR) remains constant for different output levels. This happens under perfect competition. MR is constant, therefore, TR increases at an increasing rate. That is why TR is positively sloped straight line.
(Please explain with a diagram to score more).
 
(b) Horizontal straight line:  When TR curve is a horizontal straight line, then MR is zero as it will touch X axis. Therefore, MR curve is also a horizontal straight line and coincides with the output-axis. It is because the units sold are the same at every level of output and Marginal revenue is the additional revenue generated from the sale of an additional unit of output.
(Please explain with a diagram to score more).
 
Question 5: What do you mean by production function? Explain.              
Answer: The production function of a firm depicts the relationship between the inputs used in the production process and the final output. It specifies how many units of different inputs are needed in order to produce the maximum possible output. The production function is written as:
 
Qx = f (L, K)
 
Where,
 
Qx, represents units of output x produced.
L, represents units of labor employed.
K, represents units of capital employed.
The above equation explains that Qx, units of output x are produced by employing L units of labor and K units of capital for a given technology. As the given level of technology appreciates, the output will increase with the same level of capital and labor units.
 
Question 6: Explain how technological progress affects the supply curve of a firm.             
 
Answer: The supply curve of a firm is a positive function of a state of technology. That is, if the technology available to the firm appreciates, more amount of output can be produced by the firm with the given levels of capital and labor. Due to such innovations or technological advancements, the firm will experience a lower cost of production, which will lead to a downward shift (to the right)of the MC curve. This will further lead to a rightward shift of the firm's supply curve. Thus, due to the appreciation and advancement of production techniques, the firm will produce more and more output that will be supplied at a given market price. It can cause a fall to the marginal cost also.
 
 
Question 7: Define the central problems of an economy. What are the major central economic problems?                
 
Answer: An economy is a system of organizations and institutions that either facilitate or play a role in the production and distribution of goods and services in a society. We know that resources are limited as against unlimited wants, hence it is important to economize their use and utilize them in the most efficient manner. Every economy faces three central problems due to multiplicity of wants, scarce availability of resources and problems of choice. This scarcity challenges the best possible usage of these available resources to fulfill the unlimited demands. The three central problems of an economy are as follows:
 
(a) Problems of allocation of resources.
(b) Problems of fuller and efficient utilization of resources
(c) Problems of growth of resources.
 
 
Question 8: Briefly define the features of perfect competitive market.            
 
Answer: The Features of Perfectly Competitive Market are as follows:

i) Free and Perfect Competition:
In a perfect market, there are no checks either on the buyers or sellers. They are free to buy or to sell to any person. It means there are no monopolies.

ii) Cheap and Efficient Transport and Communication:
Uniform price for the commodity would not be possible if the changes in the prices are not quickly adjusted or the commodity cannot be quickly transported. Thus, cheap and efficient means of transport and communication are must in perfectly competitive market.

iii) Wide Extent:
Sometimes the wide market is regarded as the same thing as the perfect market. For the wide market, the commodity should have permanent and universal demand. The commodity or product should be portable. Means of transport and communication should be quick enough.

iv) Large number of firms:
In this market, a product is produced and sold by large number of firms. Since there are a large number of firms, therefore each firm is supplying only a small part of the total supply in the market, thus no single firm has any market power. It implies that no firm can influence the price of the product rather each must accept the price set by the forces of market demand and supply.

v) Large number of buyers:
In a perfectly competitive market, there are large numbers of buyers each demanding a small part of the total market supply of the product. As a result, no single buyer is in a position to influence the market price determined by the forces of market demand and supply.
 
 
 
For Question (9-10): Do it yourself-                                                         
Question 9: Graphically explain the relationship between the marginal products and the total product of input with an example.
 
Question 10: Differentiate between Microeconomics and Macroeconomics.