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Summer Vacation Assignment – May/June 2013 Class XII: Economics General Instructions: For the summer vacation you have to answers all the questions mentioned. You are expected to complete the work in around 20 hours All the questions are arranged chapter and Marks wise Use a 100 page register to answer all the questions Assessment of the answers will be done on the basis of CBSE guidelines We strongly recommend that you do a self-assessment before submission The answer register is to be submitted on June 20, 2013 Questions carrying 1 mark are required to be answered in one sentence each. Questions carrying 3 marks are required to be answered in around 60 words each Questions carrying 4 marks are required to be answered in around 70 words each. Questions carrying 6 marks are required to be answered in around 100 words each. Chapter 1: Introduction S No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Question What do you mean by a PPC? What does rightward shift of production possibility curve indicate? State two features of resources that give rise to an economic problem How does change in technology affect the possibilities of production In an underdeveloped economy why there is the need of efficient utilization of resources? Define macroeconomics. Define microeconomics. Give one example each of microeconomics and macroeconomics. Why does an economic problem arise? Explain. Why is the PPC concave to the origin? Define Opportunity cost. Define economics. Why is it important to study economics? How does change in technology affect the possibilities of production? Explain the central problems of an economy with the help of examples. Distinguish between micro and macro economics. Give one example of each What are various types of economies? Marks 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 Chapter 2: Theory of Consumer Behavior 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 What happens to total utility when marginal utility is negative? Define Total Utility Define Marginal Utility Define an Indifference Curve What do you mean by utility When is Total Utility Maximum When can Total Utility be negative? In economics what we assume about the marginal utility of money? Explain the relationship between total and marginal utility Why does budget line slope downwards from left to right? What are the exceptions to the law of Diminishing Marginal Utility Describe law of Diminishing Marginal Utility Explain the various features of Indifference Curves Define an indifference map. Explain why an indifference curve to the right shows higher utility level. Explain the conditions of consumer’s equilibrium in case of two goods. Use indifference curve approach. Explain the conditions of consumer’s equilibrium in case of (1) single commodity and (2) two commodities. Use utility approach. For a consumer to be in equilibrium why must marginal rate of substitution be equal to the ratio of prices of the two goods? Chapter 3: Demand 1 What is Individual demand? 2 What is Aggregate demand? 3 When demand for a good rise due to rise in price of substitute goods, what is such a change in demand called? 4 What is law of demand? 5 Define Giffin Goods. 6 Why does the demand curve slopes downward? 7 State any three factors that cause an ‘increase’ in demand of a commodity. 8 Explain the effects of change in income of the buyers of a good on its demand. 9 Explain any there determinants of demand for a commodity for a household. 10 Explain various exceptions to the law of demand 11 Explain the various assumptions of law of demand 12 Distinguish between a normal good and an inferior good. Give example in each case. 13 Explain how a fall in price of the related good affects the demand for the given good. Give example. 14 Explain the effect of increase the income of buyer of a normal commodity on its equilibrium price. 15 Derive the law of demand with the help of Indifference Curve Analysis 16 Derive the law of demand with the help of Marginal Utility Analysis 17 Explain how the following influence demands for a good. (i) Rise in prices of the related goods (ii) Fall in income of the consumer. 1 1 1 1 1 1 1 1 3 3 3 3 4 6 6 6 1 1 1 1 1 3 3 3 3 3 3 3 4 6 6 6 Chapter 4: Elasticity of Demand 1 2 3 4 5 6 8 9 10 11 What happens to total expenditure on a commodity when its price falls and its demand is price elastic? When is the demand of a commodity said to be inelastic? Why the demand of the commodity which have alternative uses, is more elastic? Define Price Elasticity of Demand. Define Income Elasticity of Demand. Define Cross Elasticity of Demand. Explain any three factors that affect elasticity of demand. How does the nature of a commodity influence its price elasticity of demand? How is the price elasticity of demand of a commodity affected by the number of its substitutes? Explain. Explain the geometric method of measuring price elasticity of demand. 1 1 1 1 1 1 3 3 3 3 Chapter 5: Theory of Production 1 2 3 5 6 7 8 9 10 11 12 13 14 15 Define production function in the short run What do you mean by return to a factor? What do you mean by return to scale? What are various factors of production What are the compensation paid to the factors of productions Define production function in the long run Define short run Distinguish between production in the short run and in the long run Explain the relationship between Average and Total Product Explain the relationship between Average and Marginal Product Explain the relationship between Total and Marginal Product Explain the meaning of increasing returns to a factor with the help of Total Product schedule and Total Product curve. Giving reason, explain the behavior of total product under the law of variable proportion. Use numerical example. Giving reasons, state whether the following statement are true or false: (i) When there are diminishing returns to a factor, total product always decreases. (ii) Total product will increase only when marginal product increases. (iii) When marginal revenue is zero, average revenue will be constant. 1 1 1 1 1 1 1 3 3 3 3 6 6 6 Chapter 6: Theory of Costs 1 2 3 4 5 6 7 8 9 10 11 12 13 14 What is meant by cost in economics? Define implicit cost. What is the behavior of average fixed cost as output increases What is the behavior of Total fixed cost as output increases What is meant by Fixed Cost? What is meant by Marginal Cost? Define Explicit Cost Write the formulae for the followings: Total Cost Average Cost Average Fixed Cost Average Variable Cost Marginal Cost Give the relation between marginal cost and average variable cost with the help of diagram. Giving example distinguish between total fixed cost and total variable cost Define marginal cost. State the relation between marginal cost and average cost. Explain the relation between average fixed cost, average variable cost and average total cost. Explain the behavior of Cost in the long run. Why does the difference between Average Total Cost and Average Variable Cost decrease with an increase in the level of output? Can these two be equal at some level of output? Explain. 1 1 1 1 1 1 1 3 3 4 4 4 6 6