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CBSE Board Exam 2020: Check Important Questions & Answers for Class 12 Economics (Micro) - Chapter 6: Non Competitive Markets

If you are appearing for CBSE Class 12th Board exams 2020, check this list of important questions and answers from Chapter 6 of Microeconomics.

Feb 6, 2020 16:06 IST
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Important Questions & Answers for Class 12 Economics (Micro) - Chapter 6
Important Questions & Answers for Class 12 Economics (Micro) - Chapter 6

CBSE Class 12th Economic exam is scheduled for 13th March 2020. In this article we have complied a list of important questions from Chapter 6 of Part A (Microeconomics): non-competitive Markets. Questions given below are important questions and are expected to be asked in Class 12 Economics board exam 2019-20.

Ques 1 Define price elasticity of demand.

Solution: Price elasticity of demand is the measure of the degree of responsiveness of change in quantity demanded for a good due to given change in its price.

Ques 2 Arrange the following coefficients of price elasticity of demand in ascending order :

(–) 3·1, (–) 0·2, (–) 1·1

Solution: (-) 0.2, (-)1.1, (-) 3.1

CBSE Class 12 Syllabus 2020: All Subjects

Ques 3 State whether the following statements are true or false. Give valid reasons in support of your answer.

(a) The coefficient of price elasticity of demand for the commodity is inversely related to the number of alternative uses of the commodity.

(b) Luxury goods often have lower price elasticity of demand.

Solution: a) The given statement is false:- A commodity with a number of alternative uses carries positive relation with the coefficient of price elasticity of demand. With the fall in the price of such a commodity the quantity demanded increases as people can put it for different uses.

b) The given statement is false:-If the price of luxury goods increases, people may postpone its consumption. Hence the demand is elastic in nature.

Ques 4 If the price of a commodity rises by 40% and its quantity demanded falls from 150 units to 120 units, calculate coefficient of price elasticity of demand for the commodity.

Solution:

Ed= (% change in Quantity demanded)/(% change in price)

= % change in quantity demanded = (ΔQ/Q) x 100 = (30/150) x 100

= 20% fall in the quantity demanded

Ed = 20%/40% = 0.5

Ques 5 Elaborate the law of demand, with the help of a hypothetical schedule.

Solution: Law of Demand: Law of Demand states that other things being equal; there exists an inverse relation between price of a commodity and its quantity demanded. In other words, when the price of a commodity increases, its quantity demanded falls and vice-versa, other factors remaining the same.

Price of the

Commodity X

(in )

 

Quantity Demanded

of the Commodity X

(in units)

 

10

1

8

2

6

3

4

4

2

5

 Ques 6 The coefficient of price elasticity of demand for Good X is (–) 0·2. If there is a 5% increase in the price of the good, by what percentage will the quantity demanded for the good fall ?

Solution: Ed = (-) 0.2 (given)

Percentage rise in price = 5% (given)

Let percentage change in quantity demanded = x

Ed= (% change in Quantity demanded)/(% change in price)

0.2 = x/5%

x = 1 %

Percentage fall in quantity demanded is 1%

Download CBSE Class 12 Economics Syllabus 2019-20 in PDF format

Ques 7 If the price of a commodity rises by 10% and its quantity demanded falls from 40 units to 30 units, calculate coefficient of price elasticity of demand. Comment on the nature of price elasticity of demand.

Solution: Ed= (% change in Quantity demanded)/(% change in price)

Percentage change in quantity demanded (%∆Q)= (10/40) x 100 = = 25% (fall)

Ed= 25%/10%

Ed = 2.5

Demand is more elastic as Ed>1

Ques 8 “Demand curve is the Average Revenue (AR) curve of a firm.’’ Do you agree ? Discuss briefly, with reason in support of your answer.

Solution: Yes, Average Revenue (AR) is the revenue earned per unit of output. It is same as the price of the commodity.

AR = Total Revenue/Quantity= (Price x Quantity)/Quantity = Price

Demand curve shows the relationship between price (= AR) and quantity demanded of a commodity in the market. Thus, the demand curve is the Average Revenue (AR) curve of a firm.

Ques 9 Which of the following statements are true or false ? Give valid reasons in support of your answer.

(a) Average cost curve cuts Average variable cost curve, at its minimum level.

(b) Average product curve and Marginal product curve are ‘U-shaped’ curves.

(c) Under all market conditions, Average revenue and Marginal revenue are equal to each other.

(d) Total cost curve and Total variable cost curve are parallel to each other.

Solution: a) The given statement is false. Average Cost curve is the vertical summation of Average Variable Cost and Average Fixed Cost(AC = AFC + AVC). Since, Average Fixed Cost cannot be zero (AFC ≠ 0) the two curves would never touch each other.

b) The given statement is false. As per Laws of Returns to a Factor, Average Product Curve and Marginal Product Curve both rise and then tend to fall. Thus, the two curves are inverted ‘U’ shaped curves and not ‘U’ shaped curves.

c) The given statement is false.This condition is obtained in perfect competition market a price remains constant only under the perfect competition a market.

d) The given statement is true. The difference of the two is represented by Total Fixed Cost (TFC). TFC remains constant at all levels of output. It represents the vertical distance between the two curves making them parallel to each other.

Ques 10 The Total Revenue earned by selling 20 units is < 700. Marginal Revenue earned by selling 21st unit is < 70 . The value of Total Revenue earned by selling total 21 units will be ____________. (Choose the correct alternative)

(a) Rs.721

(b) Rs. 630

(c) Rs.770

(d) Rs.720

Solution: c) 770

Important Questions & Answers for Class 12 Economics (Micro) - Chapter 1

Important Questions & Answers for Class 12 Economics (Micro) - Chapter 2

Important Questions & Answers for Class 12 Economics (Micro) - Chapter 3

Important Questions & Answers for Class 12 Economics (Micro) - Chapter 4

Important Questions & Answers for Class 12 Economics (Micro) - Chapter 5

Important Questions & Answers for Class 12 (Macro) Economics - Chapter 1 , Chapter 2Chapter 3, Chapter 4, Chapter 5, Chapter 6

 

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