Subject

Economics

Class

CBSE Class 12

Pre Boards

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Sample Papers

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 Multiple Choice QuestionsShort Answer Type

1.

Give two examples of fixed costs.

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2.

Define marginal cost.

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3.

When is the demand for a good said to be inelastic?

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4.

Given the meaning of market demand.

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5.

Under which market form a firm’s marginal revenue is always equal to price?

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6.

Explain the difference between an inferior good and a normal good.


Normal Goods: The quantity of a good that the consumer demands can increase or decrease with the rise in income depending on the nature of the good. For most goods, the quantity that a consumer chooses increases as the consumer’s income increases and decreases as the consumer’s income decreases. Such goods are called normal goods. Thus, a consumer’s demand for a normal good moves in the same direction as the income of the consumer. For example, clothing is a normal good. As income increases, the demand for clothing increases.

Inferior Goods: The goods for which the demand moves in the opposite direction of the income of the consumer are called inferior goods. As the income of the consumer increases, the demand for an inferior good falls, and as the income decreases, the demand for an inferior good rises. Examples of inferior goods include low quality food items like coarse cereals. As the income increases, the consumer reduces its demand for coarse cereals and instead shifts its demand towards superior quality cereals.

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7.

Explain the law of diminishing marginal utility with the help of a total utility schedule.

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8.

Explain the condition of consumer’s equilibrium with the help of utility analysis. 

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9.

When the price of a good rises from Rs 20 per unit to Rs 30 per unit, the revenue of the firm producing this good rises from Rs 100 to Rs 300. Calculate the price elasticity of supply. 

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10. Complete the following table:

Units of labour Average Product (Units) Marginal Product (Units)
1 8 -
2 10 -
3 - 10
4 9 -
5 - 4
6 7 -
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