# CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics: Questions 390 - 397 of 523

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## Question number: 390

» Producer Behaviour and Supply » Supply » Market Supply

Essay Question▾

### Describe in Detail

The ratio of elasticity of supply of commodities A and B is 1: 1.5. 20 percent fall in price of a results in a 40 percent fall in its supply. Calculate the percentage increase in supply of B if its price rises from Rs. 10 per unit to Rs. 11 per unit.

### Explanation

Percentage change in price of commodity A = 20 per cent

Percentage change in supply of commodity A = 40 per cent

Thus, price elasticity of supply of commodity A is = =2 Percentage change in price

If Elasticity of supply of commodity A 1 = Elasticity of supply of commodity B 1.5

Price elasticity of supply of commodity A is 2 =?

Elastici…

… (56 more words) …

## Question number: 391

True-False▾

### Following Statement is true or false:

The difference between average total cost and average variable cost is constant.

## Question number: 392

Essay Question▾

### Describe in Detail

In an economy S=-50 + 0.5 Y is the saving function (Where S = saving and Y = national income) and investment expenditure is 7000. Calculate:

(i) Equilibrium level of national income

(ii) Consumption expenditure at equilibrium level of national income.

### Explanation

(I) Equilibrium level of national income

I = S

Y= = 14, 100

So, Equilibrium level of national income is 14, 100.

(iii) Consumption expenditure at equilibrium level of national

Y = C + I

14100 = C + 7000

C = 14100 - 7000

C = 7100

So, Consumption expenditure at equilibrium level of national income is Rs. 7100.

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## Question number: 393

Essay Question▾

### Describe in Detail

Distinguish between domestic product and national product. When can domestic product be more than national product?

### Explanation

 Characteristics Domestic product National product What in comprises? Domestic product comprises of goods and services and it is produced by domestic territory. National product comprises of goods and services produced by residential. Income It is exclusive of income from abroad It is inclusive income from abroad. …

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## Question number: 394

Essay Question▾

### Describe in Detail

Explain two merits and two demerits of fixed foreign exchange rate.

### Explanation

Two merits of fixed foreign exchange rate are given below:

(i) Promotes International Trade: Fixed exchange rate mention a stable exchange rate. Stability prevents uncertainty and promotes international trade.

(ii) Prevents Speculation: Stable exchange rate prevents speculation in foreign exchange market. So, hedging is not required.

Two de…

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## Question number: 395

Essay Question▾

### Describe in Detail

Explain with the help of total product curve the meaning of increasing return to a factor.

### Explanation

Increasing returns to a factor refers total product (TP) increases at the increasing rate. Increasing returns to a factor can be shown with the help of total product curve as follows:

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## Question number: 396

Essay Question▾

### Describe in Detail

Complete the following table:

 Output (units) Price ( Rs. ) Total Revenue Marginal Revenue 4 9 36 - 5 - - 4 6 - 42 - 7 6 - - 8 - 40 -

### Explanation

 Output (units) Price ( Rs. ) Average revenue Total Revenue Marginal Revenue 4 9 36 5 8 40 4 6 7 42 2 7 6 42 0 8 5 40 -2

In that sum

Average revenue =

And Total Revenue = quantity average revenue

Marginal revenue =

Put values to all the formulas.…

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## Question number: 397

» Consumer's Equilibrium and Demand » Demand » Demand Curve

Essay Question▾

### Describe in Detail

Explain the effect of following on the market demand of a commodity:

(i) Change in price of related goods

(ii) Change in the number of its buyers.

### Explanation

(I) Change in price of related goods: -

Quantity demand of good is depended on market price of goods. When demand for one good changes than there is a change in market price of the other good.

• Substitute Goods: - In this when price of good decreases than the supply of a commodity increases these two goods are substitute goods. So supply and p…

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