Bharat National public School
Class XII Assignments and handouts on Micro --- Economics
-------------------------------------------------------------------------------
Dear Children
I
take pride to be your teacher for ECONOMICS, and assure you all my
co-operation for your success in your examination. I have compiled the
questions ,that are asked in the CBSE examination for revision and
practice. It does not include numerals. However ,I have solved a number of
problems in the class.
These questions are also discussed in the class. I am sure all of you practice
these questions and if you have any problem please consult me. I have also
prepared comprehensive slides for MICRO ECONOICS Which will be useful
for your revision. Space is provided by the side of slides for writing your
own notes. It is not the replacement for your text book but compliment in
learning and remembering your studies. It is concise and help you in your
revision.
All of you are intelligent and sure that you will come out in flying colours
in the final examination. I assure you all my support and pray GOD to
“GIVE MY CHILDREN happiness ,prosperity and good marks.” You should
bring name and fame to you, your family, your school and your teachers
who work day and night with you for your success. You are known for your
behaviour with your classmates, seniors, teachers and elders.
Remember !





Winners are always not born but made
You can make your future
You have the ability to excel
There can be no great success without commitment
you are never defeated unless you accept defeat
Chitra
“Education is a companion which no future can depress, no crime can
destroy, no enemy can alienate it and no nepotism can enslave.”
Ropo Oguntimehin
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Economics
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Bharat National public School
Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------Points to revision
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Definition of Demand?
Elements of demand
Determinants of demand
Demand Function
Kinds of demand
Demand Schedule
Demand Curve
Individual and market demand
Law of Demand
Assumptions
Why does demand curve slope downwards
Exceptions of Law of demand
Extension of demand
Increase of demand
Contraction of demand
Decrease of demand
Movement along demand curve
Shift in demand curve
Factors affecting changes in demand.
Income demand
Cross Demand
Substitute Goods
Complementary Goods
Inferior Goods
Normal Goods
ery Short Answer
1
2
3
4
5
6
7
8
9
10
11
What is meant by commodity in Economics?
What is increase in demand ? Define it.
What term is used for rightward shift of the demand curve?
What is meant by inferior goods?
What will be the shape of the Income Demand curve concerning
Normal
good?
What will be the shape of the Income Demand curve concerning
Inferior Good?
What do you understand by substitute goods? Give an example.
What happens to the demand for substitute goods of a commodity
when the price of the commodity falls?
What happens to the demand for substitute goods of a commodity
when the price of the commodity rise?
What will be the shape of demand curve in the case of substitute
goods?
“When God measures man, He puts tape around the heart not
the head “
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Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------12
13
14
15
16
17
18
19
20
21
22
What do you understand by complementary goods? Give an example
When does the consumer buy less of commodity at a given price?
When does the consumer buy more of commodity at a given price?
What do you understand by unrelated goods?
Mention any one determinant of demand for a commodity other than
the
price?
If the demand of good Y increases as the price of another good X rises
how are the goods related?
If the quantity demanded of commodity X decreases as the
household’s income increases what type of good is ‘X’?
If the demand of good Y Decreases as the price of another good X falls
how are the goods related?
If the demand of good Y increases as the price of another good X falls
how are the goods related?
If the demand of good Y Decreases as the price of another good X
rises how are the goods related?
State one factor that causes an increase in demand of good
Short answer Questions
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Define Demand. What factors influence the demand of a commodity?
Name 4 factors that affect the consumer’s Demand for the commodity
by an individual house hold.
What is demand function ? Explain in brief.
What is demand schedule? Distinguish individual and market demand
schedule.
Explain the relationship between household and market demand.
What is demand curve? Distinguish individual and market demand
curve.
Explain the Law of Demand .Give the assumptions also.
Why does the demand curve slope downwards from left to right?
What is income effect of fall in price of a commodity on its demand.?
What is substitution effect of fall in price of a commodity on its
demand.?
Why does the demand of a commodity fall with the rise in price?
Why do household buy more at a lower price?
When does the consumer buy more of a commodity at a given price?
Define Increase in Demand. What Factors causes increase in demand?
Define decrease in Demand. What Factors causes decrease in
demand?
Distinguish between ‘Extension of demand’ and ‘Increase in demand’.
Distinguish between ‘Contraction of demand’ and ‘Decrease in
demand’
“The roots of education are bitter, but the fruit is sweet. “
Aristotle
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Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------18
19
20
21
22
23
Distinguish between ‘Movement along the demand curve’ and ‘Shift
in emand curve’.
How do the changes in income of a buyer of a commodity affect the
demand for the commodity.?
Distinguish between ‘Substitute’ and ‘Complimentary’ goods.
Distinguish between ‘Inferior’ and ‘Normal’ goods
What will happen to the demand for the commodity if the price of
complementary good changes?
What will happen to the demand for the commodity if the price of
Substitute good falls?
Long Questions
1.
2.
3.
4.
5.
6.
Define Demand. Explain the factors influencing the demand for a
commodity in the
market
What is ‘Law of Demand’ ? State the assumptions.
What is demand curve? Why it is sloped downwards?
Explain Income substitution and price effects.
Explain with diagrams extension of demand and increase in demand.
How is demand for commodity affected by changes in prices of related
goods? Give suitable Examples
Price Elasticity and consumer Equilibrium
1.
2.
3.
4.
5.
Definition of Elasticity of demand
Price Elasticity
Determinants of price Elasticity
Types
Measurements
a. Total Outlay or Expenditure Method
b. Percentage or Proportionate Method
c. Geometric or Arc method
6. Problems applying the measurement concepts
7. Consumer Equilibrium
8. Marginal utility approach
9. Law of diminishing marginal utility
10. Relationship between Total Utility and Marginal Utility
11. Consumer Equilibrium
“There is nothing training cannot do. Nothing is above its reach. It can turn
bad morals to good; it can destroy bad principles and recreate good ones; it
can lift men to angelship.”
Mark Twain
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Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------Very Short Answer
1. Give the range of price Elasticity of demand
2. What is arc elasticity?
3. What is the shape of perfectly inelastic demand curve?
4. What is the shape of perfectly elastic demand curve?
5. What is the shape of perfectly unitary elastic demand curve?
6. When is the demand for commodity is said to be completely inelastic?
7. Define Equilibrium
8. What is utility?
9. What is the Law of diminishing Utility?
10. What is the budget line?
Short Answer
1. Define Price Elasticity of demand. How it is measured?
2. Explain the factors on which price elasticity of demand for a commodity
depends.
3. How does the close substitute of a good affect price elasticity of demand?
4. Explain with illustration the price elasticity using expenditure method.
5. What is the price elasticity demand for life saving drugs?
6. What is the relationship between slope and elasticity of demand curve?
7. Explain Paradox of plenty.
8. What does consumer equilibrium position convey?
9. Explain the cardinality and Ordinality
10. Explain Rationality
11. When the price of Wheat goes up by 10% its demand falls from 800 units to
600 units. Calculate price elasticity. Will the demand curve for Wheat be
flatter or steeper?
12. The consumer spends Rs 40 at a price Rs 1/- per unit and Rs 60 at a price Rs
2/-per unit. What is the price elasticity of demand? What kind of good it is?
What is the shape of its demand curve?
13. Price of good X rises from Rs20 to 30 per unit , consequently the demand falls
by 20 units and become 100 units. Find elasticity of demand.
14. The market demand for a good at Rs 5/- per unit is 100 units. When price
change market demand raises to 150 units. Find out the new price if price
elasticity of demand is –2.5
“While we try to teach our children all about life, our children teach us what life is all
about”.
Angela Schwindt
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Bharat National public School
Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------Long Answer
1. How is the concept of price elasticity of demand useful?
2. Discuss the point method of measuring elasticity of demand.
3. Draw the downward sloping straight line demand curve touching both the
axes. Mark the price elasticity at different points. Mention 3 factors affecting
price elasticity.
4. Explain law of Equi marginal utility with examples. What is saturation point.
Production and Cost
1. Meaning of production
2. production function
a. Definition
b. Types
3. Aspects of production
a. Short run Vs Long Run
b. Fixed factors Vs Variable Factors
c. Level of Production Vs Scale Of Production
4. Concept of Production
a. Total Product (TP)
b. Average Product(AP)
c. Marginal Product(MP)
d. Relation Ship between AP,MP,TP
5. Law of variable Proportion
a. Statement
b. Assumption
c. Stages
d. Reasons
6. Law of return to Scale
a. Statement
b. Three stages
c. Reasons
7. Difference between return to factor and return to scale
8. Producer Equilibrium
“The beautiful thing about learning is that no one can take it away from you”.
B.B. King
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Class XII Assignments and handouts on Micro --- Economics
-------------------------------------------------------------------------------
Very Short and short questions
1. Define Production and give example
2. Distinguish Short run and Long run production
3. As a variable input labour is increased by one unit , total output falls. What
would you say about Marginal productivity of labour ?
4. What happens to total output when the marginal product of variable input is
negative
5. What is production function
6. What are the types of production functions?
7. What is the relationship between MP and AP
8. Explain the law of diminishing return.
9. What do you mean by increasing return to scale? How do they arise ?
10. What do you mean by decreasing return to scale? How do they arise ?
11. Define Total product and Marginal Product . What happens to MP when TP is
decreasing?
12. Explain Law of Variable proportions in terms of behaviour of total product.
13. Explain Law of Variable proportions in terms of behaviour of Marginal
product
Long answer
1. Explain Law of diminishing returns
2. Explain Law of Variable proportion with the help of diagram.
NCERT Questions
1.
2.
3.
4.
5.
How does the total fixed cost change when output changes?
How does the TVC derived from marginal cost schedule?
What does the division of labour mean?
What are volume discount ?
“ Increasing and Decreasing returns to scale respectively imply downward and
upward sloping portion of long run average cost curve” Defend or Refute.
6. Classify the following as Fixed and Variable Cost:
a. Rent for shed
b. Minimum Telephone Bill
c. Cost of Raw material
d. Wages to permanent staff
e. Interest on capital
f. Payment for transportation of goods
g. Daily Wages
h. Telephone charges beyond the minimum
“Education's purpose is to replace an empty mind with an open one”.
Malcolm Forbes
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Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------7. Calculate the APP and MPP from the following table:
Level
Of
factor
of
Employment
0
1
2
3
4
5
6
7
TPP
0
5
12
20
28
35
40
42
8. Find TPP and APP from the following table. TPP at zero level is zero
Level
Of
MPP
factor
of
Employment
1
20
2
22
3
18
4
16
5
14
6
6
“Education is the ability to listen to almost anything without losing your temper.”
Robert Frost
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Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------9. Total cost schedule of a firm is given below. What is the TFC? Derive
AFC,AVC,MC and ATC.
Output
0
1
2
3
4
5
6
7
8
11
TC
40
120
170
180
210
260
340
440
550
Complete the table if AFC of 1 unit of
production is Rs 60.
Out
put
1
2
3
4
5
6
7
8
TC
TVC
TFC
AVC
AFC
ATC
MC
90
105
115
120
135
160
200
260
Unit of
Output
0
1
TC
2
21
TVC
MC
12
18
“Those who educate children well are more to be honored than parents, for
these only gave life, those the art of living well. “
Aristotle
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Class XII Assignments and handouts on Micro --- Economics
-------------------------------------------------------------------------------
Short Questions
1. Distinguish Between
a. Explicit Cost Vs Implicit Cost
b. Private Cost Vs Social Cost
c. Fixed Costs Vs Variable cost
d. Short Period Vs Long Period
e. Short Period Vs Very Short Period
f. Marginal Cost Vs Average Cost
g. Marginal Cost Vs Total Cost
h. Marginal Revenue Vs Average Revenue
Note : Each one can be a 3 mark question asked in CBSE
2. Give two example of implicit and explicit cost in :
a. Tailoring Shop
b. House hold enterprise
3. Can marginal cost rise when average cost is falling? Explain with diagram.
4. Calculate Marginal Cost from the following Data:
Quantity
Produced
Average
Cost
5
6
7
40
41
42
5. Calculate Marginal Cost and Average Cost from the following Data:
Quantity
Produced
Total
Cost
0
1
2
10
15
22
“Develop a passion for learning. If you do, you will never cease to
grow.”
Anthony J. 'Angelo, The College Blue Book
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Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------6
Complete the following table:
Out
Put
1
2
3
TC
AFC
20
26
39
6
3
2
AVC
MC
7
What is revenue? Explain the meaning
and calculation of Average Revenue, Marginal Revenue.
8
From the following table Calculate AR
and MR
Units
1
2
3
4
5
6
7
9
10
11
12
13
14
15
16
TR
10
18
24
28
30
30
28
What is the nature of Total cost at zero level of production? Explain with Reasons
What are the Features of AFC Curve?
Explain the relationship between MC and AC.
Explain the relationship between MC and TC.
Explain the relationship between MR and AR.
Explain the relationship between MR and TR.
Define Break Even Point.
What would you say about the average cost of the firm if the marginal cost of
production is less than Average Cost.
Long Answer
17 What are fixed Cost? Explain the nature
And shape of the total fixed and average
fixed cost
18 Why is average fixed cost curve is ‘U’
shaped in short run?
19 Explain the relationship between AC and
MC.
.
“I have never met a man so ignorant that I couldn't learn something from
him.”
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Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------20
Explain the concept of TR, MR, AR with their Relationship
21 What is the difference between SAC and LAC . Why is it LAC also
‘U’ Shaped
23. With the help of diagram explain Break even Point.
Supply and Elasticity
Points for Revision
1
2
3
a.
b.
4
5
6
7
8
9
10
11
12
a.
b.
c.
d.
Meaning of Supply
Factors determining Supply
Supply
Schedule
Curve
Increase in supply
Extension in supply
Decrease in supply
Contraction in supply
Reasons for increase in supply
Reasons for decrease in supply
Movement along the supply curve
Shift in supply curve
Elasticity of supply
Meaning
Degree
Measurement
Factors affecting
“We have learned silence from the talkative, toleration from the intolerant, and kindness from the
unkind; yet, strange, I am ungrateful to these teachers.”
Kahlil Gibran
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Class XII Assignments and handouts on Micro --- Economics
------------------------------------------------------------------------------Very Short answer
1
2.
3
4
5
What is meant by supply ? Define it.
State the law of supply.
What is meant by elasticity of supply?
What is perfectly inelastic supply?
What is perfectly elastic supply?
7.
8.
9.
10.
What
What
What
What
6.
What will be the shape of Perfectly
elastic curve?
will be the shape of Perfectly inelastic curve?
is increase in supply?
is decrease in supply?
is unitary elastic curve?
Short Answer Questions
11. Define supply. What factors influence the supply of a commodity?
12. Name 3 factors that affect the supply of a commodity.
13. What is Supply function ? Explain in brief.
14. What is Supply schedule?.
15. Why does the supply curve slope upwards?
16. What do you understand by contraction of supply? Show it with example and
diagram
17. Define Increase in supply. What Factors causes increase in supply?
18. Define decrease in supply. What Factors causes decrease in supply?
19. Distinguish between ‘Extension of supply’ and ‘Increase in supply’.
20. Distinguish between ‘Contraction of supply’ and ‘Decrease in supply’
21. Distinguish between ‘Movement along the supply curve’ and ‘Shift in
22. supply curve’.
23. Will a crop disease which reduces yield of wheat on farm result in a contraction or
decrease in the supply of wheat?
24. Price elasticity of a good is 5. A producer sells 500 units at Rs 5. How much will
he be selling at Rs 6
25. From the following supply schedule calculate elasticity of supply.
Commodity X
Price
Units
8
20
6
16
Commodity X
Price
Units
10
20
8
15
“The whole art of teaching is only the art of awakening the natural curiosity of
young minds for the purpose of satisfying it afterwards”.
Anatole France
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Class XII Assignments and handouts on Micro --- Economics
-------------------------------------------------------------------------------
27
Find out the elasticity of supply from
the following:
Price
5
4
Total
Revenue
250
160
Long Answer
1
2
3
4
5
6
7
8
10.
Define Supply. Explain the factors
influencing the Supply for a commodity in the market
What is ‘Law of Supply with diagram’ ? State the assumptions if any. Or What
is Supply curve? Why it is sloped upwards?
Explain with diagrams extension of Supply and increase in Supply
Explain with diagrams Contraction of Supply and Decrease in Supply
Distinguish between ‘Movement along the supply curve’
and
‘Shift in
supply curve’.
Define Price elasticity of supply.
How it is measured?
Draw the supply curve for
Elasticity of supply > 1
Elasticity of supply < 1
Elasticity of supply =1
What is meant by change in supply? What factors affect the change in supply ?
“You cannot teach a man anything; you can only help him find it within himself”.
Galileo
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Class XII Assignments and handouts on Micro --- Economics
-------------------------------------------------------------------------------
If one wishes a subject to be taught with maximal effectiveness, he
should:
1.
Present it in its most interesting form.
a. Demonstrate its general use in life.
b. Demonstrate its specific use to the student in life.
2
Present it in its simplest form (but not necessarily its most
elementary).
a. Gauge its terms to the understanding of the student.
b. Use terms of greater complexity only as understanding
progresses.
3.
Teach it with minimal altitude (prestige).
a. Do not assume importance merely because of a knowledge of
the subject.
b. Do not diminish the stature of the student or his own prestige
because he does not know the subject.
From: Teaching by L. Ron Hubbard.
To my children Chitra
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