NUMERICALS FROM UNIT-1 TO UNIT -8

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1 UNIT-1 INTRODUCTION NUMERICALS FROM UNIT-1 TO UNIT A country produces two goods Its production possibilities are shows in the following table. Calculate MOC and draw PPC. Give reason. (AISSCE-2015) Possibilities Good-X(UNITS) Good-Y(UNITS) A B 95 1 C 85 2 D A chartered accountant is earning Re 1 lac per month from his own practice. He could earn Rs p.m. from a job in Reliance industries or Rs p. m. from a consultancy. What will be his opportunity cost? (Rs 75000) 3. Calculate MOC in the following example. Plot the PPC by taking cloth consumption on the X- axis.comment on t6he shape the curve. (22,25,28,30) (AISSCE-2001) Food Consumption Cloth Consumption UNIT-2 CONSUMER S BEHAVIOUR AND DEMAND 1. A commodity has Rs 5 as price per unit. His TU Schedule is given below. Determine equilibrium point. (Rs.5) Units of good TU A consumer consumes only two goods X and Y whose prices are Rs.5 and Rs. 4 respectively. If the consumer chooses a combination of the two goods with MU of X equal to 4 and that of Y equal to 5, is the consumer in equilibrium? Why or why not? What will a rational consumer do in this equal? Use utility analysis. (AISSCE-2015) 3. A consumer wants to consume two goods I and II. Price of two goods are Rs.8 and Rs 10. Consumer s income is Rs. 80. Write down the equation of budget line and determine units of

2 good I and II bought by him and the slope of the budget line. (X=10 Units, Y=8Units and slope=4/5) 4. Suppose a consumer wants to consume two goods, which are available only in integer units. The two goods are equally priced at Rs. 10 and consumer s income is Rs.40. (i)make all the possible bundles that are available to the consumer. (ii) Among the bundles that are available to the consumer, identify those which cost him exactly Rs Suppose there are three buyers A,B And C in a market for commodity X Demand functions for these buyers are as under: Dxa=30-0.5Px Dxb=20-o.4Px Dxc=10-0.2Px If prices of x commodity in rupees are 10,20,30, Draw the market demand function and estimate the market demand. (49, 38 and 27) 6. A consumer buys 27 units of a good at a price of Rs. 10 per unit. When the price falls to Rs. 9 per unit, the demand rises to 30 units. What can you say about price elasticity of demand of good through the expenditure approach? (ed=1) (AISSCE-2014) 7. A consumer spends Rs on a good priced at Rs. 8 per unit. When price rises by 25% consumer continues to spend Rs,1000 on the good. Calculate price elasticity of demand by percentage method. (ed=0.8) (AISSCE-2015) 8. What will be the effect of 10% rise in price of a good on its demand if price elasticity of demand is (a) 0 (b) -1 (c) -2 (AISSCE-2016) 9. Given Px=Rs2 and Py=Re 1, income=rs 12 Find how a consumer spends her income in order to maximize TU AND CAL CULATE tu RECEIVED BY THE CONSUMER. Show that equilibrium conditions for the consumer are satisfied (TU=93) Q MUx MUy A consumer spends Rs 40 on a good at a price of Re 1 per unit and Rs 60 at a price of Rs 2 per unit. What is the price elasticity of demand? What kind of good it is? What shape its demand curve will take? (Ed=0.25) (inelastic demand like food demand curve will be steeper) 11. Price elasticity of demand of a good is (-) 3. If the price rises from Rs 10 per unit to Rs 12 per unit. What is the % change in demand? (Ed=1) (AISSCE-2008) UNIT: 3 PRODUCER S BEHAVIOUR AND SUPPLY 1. The price elasticity of good X is half the price elasticity of supply of good Y. A 10% rise in the price of good Y results in a rise in its supply from 400 units to 520 units. Calculate the percentage change in quantity supplied of good X when its price falls from RS.10 to Rs.8 per unit. (30%) (AISSCE-2010) 2. Complete the following: Output AR(Rs) MR(Rs) TR(Rs)

3 Given below is the cost schedule of a firm. Its TFC is Rs Calculate the MC and AVC at each level of output. Output(units) ATC Following information is available regarding the production of a firm Labour TP Determine various stages of production. 5. The ratio of elasticity of supply of commodities A and B is 1: % fall in price of A results 40% gall in supply. Calculate the percentage increase in supply of B, If its price rises from Rs.10 per unit to Rs. 11 per unit. (30%) (AISSCE-2010) 6. The price elasticity of supply of a commodity is 2.0 A firm supplies 200 units of it at a price of Rs. 8 per unit. At what price will it supply 250 units. (Rs.9) (AISSCE-2013) 7. When the price of a commodity is Rs. 10 per unit, its quantity supplied is 100 units.when its price rises by 10 %, its quantity supplied rises by 9 units. Calculate its elasticity of supply. Is its supply elastic? Give reasons. (0.9, NO) (AISSCE-2014) 8. Find out (a) Explicit Cost (b) Implicit Cost SL.No. Items Rs in thousands i Investment in fixed assets 2000 ii Borrowings at 12% interest per annum 1500 iii Wages paid during year 120 iv Annual rental value of the owner s factory building 180 v Annual depreciation 100 vi Estimated annual value of the management services of the owner Using following data find out producer s equilibrium using MR-MC Approach Output(units) TR(Rs) TC(Rs) TFC is Rs 90 complete the table (AISSCE-2002) Output (units) AVC (Rs) TC (Rs) MC(Rs) Calculate TR, MR AND AR (AISSCE- 2006) OUTPUT PRICE (Rs) 50 1

4 A seller of potatoes sells 80 quintals a day when the price of potatoes is Rs 4 per Kg. The elasticity of supply of potatoes is known to be 2. How much quantity will this seller supply when the price rises to Rs 5 per Kg? UNIT: 4 FORMS OF THE MARKET AND PRICE DETERMINATION 1. When demand function is given as Qd= 100-p and supply function is Qs=60+p Determine equilibrium price and equilibrium quantity. Draw demand and supply curves. (p=rs.20 and quantity=80 units) 2. Market demand and supply schedule of apples (per day) are given Price (per Kg) Q(in Kg) Q(in Kg) Determine (a) Equilibrium price and equilibrium quantity (b) Excess demand at Re 1 per Kg (c) Excess supply at Rs 5 per Kg UNIT 5 NATIONAL INCOME (NUMERICALS) 1) Calculate NNPfc by product method Items (Rs. Crore) a) Intermediate consumption of i) Primary sector 500 ii) Secondary sector 400 iii) Tertiary sector 300 b) Value of Output of i) Primary sector 1000 ii) Secondary sector 900 iii) Tertiary sector 700 c) Net factor income from abroad -20 d) Consumption of fixed capital 40 e) Net indirect taxes 10 Ans. NNPfc = (b-a)+c+d+e

5 = ) Calculate GDPmp by Income method a) Rent 10 b) Emoluments of employees 400 c) Mixed income 650 d) Operating surplus 300 e) Consumption of fixed capital 40 f) Interest 5 g) Net indirect taxes 10 Ans. GDPmp = b+d+c+e+g = ) Calculate NNPmp by Expenditure method a) Personal consumption expenditure 4000 b) Gross domestic capital formation 1000 c) Government consumption expenditure 2000 d) Net export 100 e) Depreciation 200 f) Net factor income from abroad -100 Ans. NNPmp = a+b+c+d-e+f = ) Calculate national income a) Net Export 15 b) Net factor income to abroad -10 c) Net domestic fixed capital formation 180 d) Consumption of fixed capital 100 e) Net indirect taxes 50 f) Private final consumption expenditure 900 g) government final consumption expenditure 400 h) change in stock 0

6 Ans. NNPfc = a+c+f+g+h+d-d+b+e = ) Find National income a) Subsidy 5 b) Change in stock 7 c) Net domestic capital formation 50 d) Indirect taxes 30 e) Government final consumption expenditure 100 f) Net factor income from abroad 10 g) Private final consumption expenditure 400 h) Net export -20 Ans. NI = g+e+c+h-f-d+a = 495 6) Calculate GDPfc a) Consumption of fixed capital 120 b) Mixed income of self employed 7000 c) Interest 250 d) Rent 300 e) Profit 800 f) Compensation of employees 2000 Ans. GDPfc = b+c+d+e+f+a = ) Calculate NNPfc a) Profit 1000 b) Mixed income c) Dividend 200 d) Interest 400 e) Compensation of employee 7000 f) Net factor income to abroad 100 g) Depreciation 400 h) Rent 500 Ans. NNPfc = e+a+b+d+h-f

7 = ) Calculate NNPmp a) Gross domestic fixed capital formation 400 b) Private final consumption expenditure 8000 c) Government final consumption expenditure 3000 d) Change in stock 50 e) Consumption of fixed capital 40 f) Net indirect taxes 100 g) Net export -60 h) Net factor income to abroad -80 i) Dividend 100 Ans. NNPmp = a+b+c+d+g-e-h = ) Calculate national income by income method a) Mixed income 2500 b) Net factor income from abroad -50 c) Rent 500 d) Corporate tax 700 e) Profit 300 f) Compensation of employees 1600 g) Interest 500 h) Dividend 60 Ans. NI = f+a+c+e+g+b = ) Calculate National income a) Rent 200 b) Wages and salaries 700 c) Undistributed profit 20 d) Corporation tax 30 e) Interest 150 f) Social security contributions 100 g) Dividend 50 h) Net factor income to abroad 10

8 Ans. NI = a+b+c+d+e+f+g-h = 1240 UNIT-7 DETERMINATION OF INCOME AND EXPENDITURE Q.1. Ans: Q.2. Ans: Find consumption expenditure from the following: National Income= Rs 5000/- Autonomous consumption= Rs 1000/- Marginal propensity to consume=0.80 C=c +b.y =Rs (0.8)x5000 =Rs Rs Rs 5000/-.(Ans) Find National Income from the following: Autonomous Consumption=Rs 100/- Marginal propensity to consume=0.60 Investment=Rs 200/- At equilibrium Y=C+I Y=c +b.y+i =100+(0.6)Y+200 =300+(0.6)Y (0.4)Y=300 Y=Rs 750 (Ans) Q.3 Find Investment from the following: National Income= Rs 600 Autonomous consumption= Rs 150 Marginal propensity to consume=0.70 Ans: I=Y-C =600-[150+(0.7)x600] =600-[ ] = =30 (Ans) Q.4 An economy is in equilibrium. Calculate the Investment Expenditure from the following: National Income=Rs 800 Marginal propensity to sale=0.3 Autonomous consumption=rs 100 Ans: At Equilibrium Y=C+I I=Y-C Or at Equilibrium I=S

9 S=(-)s+(1-b)Y =(-)100+(1-0.3)x800 =460 (Ans) Q.5 An economy is in Equilibrium. Calculate the MPS from the following: National Income=1000 Autonomous Consumption=100 Investment=120 Ans: C=Y-I = =880 C=c +b.y 880=100+b.1000 b=780/1000=0.78 (Ans) Q.6 An Economy is in Equilibrium. Calculate the National Income from the following: Autonomous Consumption=120 Marginal propensity to save=0.2 Investment expenditure=150 Ans: MPC=1-MPS=1-0.2=0.8 At Equilibrium Y=C+I C=c +b.y =120+(0.8)Y Y=120+(0.8)Y Y=270 Y=1350 (Ans) Q.7 From the data given below for an Economy, Calculate a)investment Expenditure ; b) Consumption Expenditure Equilibrium level of Income=5000 Autonomous Consumption=500 Marginal propensity to consume=0.4 Ans: C=c +b.y C=500+(0.4)x5000 =2500 I=Y-C = =2500 (Ans) Q.8 In an Economy, C= Y is the consumption function where C is consumption Expenditure and Y is National Income. Investment expenditure is Calculate equilibrium level of Income and Consumption Expenditure. Ans: At Equilibrium y=c+i Y= Y Y=4200 Y=16800 and C=200+(0.75)x16800 =12800 (Ans) Q.9 From the following data about an Economy, Calculate

10 Ans: a) Equilibrium level of National Income b) Total consumption expenditure at equilibrium level of National Income (i) C= Y is the Consumption function where C is the consumption expenditure and Y is the National Income (ii) Investment Expenditure is 1500 At equilibrium Y=C+I Y= Y Y=1700 Y=3400 (Ans) Q.10 Calculate marginal propensity to consume from the following data about an economy which is in equilibrium National Income=2000 Autonomous consumption expenditure=200 Investment Expenditure=100 Ans: At Equilibrium Y=C+I Y=c +b.y+i 2000=200+b.(2000)+100 b=1700/2000=0.85 (Ans) Q.11 Calculate Investment Expenditure from the following data about an economy which is in Equilibrium: National Income=1000 Marginal propensity to save=0.20 Autonomous consumption expenditure=100 Ans: MPC=1-MPS =1-0.2=0.8 At Equilibrium Y=C+I Y=c +b.y+i 1000=100+(0.8).1000+I I= =100 (Ans) Q.12 Calculate autonomous consumption expenditure from the following data about an economy which is in equilibrium: National Income=500 Marginal propensity to save=0.3 Investment expenditure=100 Ans: C=Y-I C= =400 We know C=c +b.y 400=c+(1-0.3)x =c+(0.7)x500 c= =50 (Ans) Q.13. In an economy C= Y and I=1000 (where C=Consumption, Y=Income, I=Investment Calculate the following: a) Equilibrium level of income

11 Ans: b) Consumption expenditure at equilibrium level of income At Equilibrium Y=C+I Y= Y Y=1500 Y=15000 (Ans) Q.14. In an economy the ratio of APC and APS is 5:3. The level of Income is Rs How much are Savings, Calculate. Ans: APC:APS=5:3 Consumption=(5/8)x6000=3750 And Savings= =2250 Alternatively; (3/8)x6000=2250 (Ans) Q.15 Complete the following table: Income Consumption Expenditure Ans: Y=C+S S=Y-C MPS=(ΔS)/(ΔY) APC=C/Y MPS APC Income Consumption Saving MPS APC Expenditure Q.16. In an economy, the equilibrium level of income is Rs The ratio of MPC to MPS is equal to3:1. Calculate the additional investment required to reach a new equilibrium level of income of Rs Ans: MPC=3/4=0.75 MPS=1/4=0.25 K=1/MPS=1/0.25=4 K=(ΔY)/(ΔI) ΔI=8000/4 [As ΔY= =8000] =2000 (Ans)

12 Q.17. An increase of Rs 250 in investment in an economy resulted in total increase in income of Rs Calculate the following: a) MPC(Marginal propensity to consume) b) ΔS(Change in Saving) Ans: K=(ΔY)/(ΔI)=1000/250=4 We know K=1/(1-MPC)=4 K=1/MPS=4 MPS=0.25 MPS=(ΔS)/(ΔY)=0.25 ΔS=(0.25)(ΔY)=(0.25)(1000)=250 (Ans) UNIT-8 GOVT. BUDGET AND ECONOMY Q.1 From the following data about a govt. budget, find a)revenue deficit, b)fiscal deficit, c)primary deficit i) Tax Revenue ii) Capital Receipts iii) Non tax revenue iv) Borrowings v) Revenue Expenditure vi)interest payments Ans: a) Revenue Deficit=Revenue Expenditure-Tax Revenue-Non-tax revenue = =23 b Fiscal Deficit=Borrowings=32 c) Primary Deficit=Fiscal Deficit-Interest payments =32-20=12 Q.2. Ans: From the following data about a govt. budget, find a)revenue deficit, b)fiscal deficit, c)primary deficit i)plan Capital Expenditure ii)revenue Expenditure iii)non-plan expenditure iv)revenue Receipt v)capital receipts net of borrowing vi)interest pyment a) Revenue Deficit=100-70=30 b)fiscal deficit= =90 c)primary deficit=fiscal deficit-interest payment=90-30=60

We lead you to your success. Sample Paper 1 Section A

We lead you to your success. Sample Paper 1 Section A Sample Paper 1 Section A MM :100 Time : 3 Hrs Instructions All questions in both the sections are compulsory. Questions Nos 1-5 and 17 21 are very short answer questions carrying 1 mark each. They are