KENDRIYA VIDYALAYA SANGATHAN BANGALORE 1) PP curve is a downward sloping curve. In a full employment

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    KENDRIYA VIDYALAYA SANGATHAN

    BANGALORE REGION

    STUDY/SUPPORT MATERIAL

    2014-15

    CLASS: XII

    ECONOMICS

    KENDRIYA VIDYALAYA SANGATHAN, BANGALORE REGION

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    Study Material- Class XII (Economics) 2012-13

    CHIEF PATRON

    SHRI. AVINASH DIXIT I.D.A.S

    Commissioner, KVS (HQ), New Delhi

    PATRON

    SHRI. ISAMPAL,

    Deputy Commissioner, KVS, RO, Bangalore Region

    DIRECTOR OF WORKSHOP

    Dr.(Smt).M.RAJESWARI

    Assistant Commissioner, KVS, RO, Bangalore Region

    VENUE DIRECTOR

    SHRI. E. JAYACHANDRAN

    Vice Principal, KV MEG & Centre, Bangalore

    CO-ORDINATOR

    SHRI. Ch.VIJAYA RATNAM, PRINCIPAL,

    Kendriya Vidyalaya, T.B. Dam, Hospet

    STUDY MATERIAL PREPARATION COMMITTEE MEMBERS

    1. Smt. T.M.Sushma, PGT Economics, KV Hebbal, Bangalore

    2. Shri. A.K. Singh, PGT Economics, KV MEG & Centre, Bangalore

    3. Smt. Lizamma Philip, PGT Economics, KV Jalahalli No.1, Bangalore

    4. Shri. C.P. Singh, PGT Economics, KV AFS Yelahanka , Bangalore

    5. Smt. Alha Reji, PGT Economics, KV Malleswaram, Bangalore

    TECHNICAL ASSISTANCE

    Mr. G.Shashidhar, PGT Computer Science, KV MEG & Centre, Bangalore

    Workshop Venue: KV MEG & Centre, KVS, Bangalore

    Date: 16 th and 17

    th August 2012

    Reviewed By: Mrs. T.M. Sushma (PGT Economics)

    K.V.Hebbal

    Date: 07.08.2014 & 08.08.2014

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    Foreword

    This bilingual study material incorporates the latest changes in the CBSE curriculum 2012-13. All efforts have been made to make the book exhaustive by including frequently asked questions, Common errors, Quick revision questions for low achievers, HOTS, Sample Question Papers with model answers and handy tips on solving numerical problems etc.

    The main objectives of this support material are as follows:

    a. To supplement the existing material

    b. Simplify key concept of each unit with an extensive question bank including HOTS to address students’ requirement to score good marks.

    c. To help students attain minimum level competencies with Chapter wise weightage of marks.

    d. To familiarize students with latest exam pattern, marking scheme and expected answers.

    e. Latest CBSE Sample Paper 2012-13 has been incorporated in order to familiarise the students with latest trends of questions being asked in the Board Examinations.

    I hope this revised study material will fully equip students to face the ensuing examinations.

    SHRI. ISAMPAL,

    Deputy Commissioner, KVS, RO,

    Bangalore Region

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    INDEX

    S.NO. NAME OF THE TOPIC PAGE NO.

    1 Unit wise Weightage & Syllabus 5 7

    2 Suggested Question paper design 8

    3 Common errors Committed by students in Board Examination 9

    4 Introduction 10 16

    5 Consumer Behaviour and Demand 17 31

    6 Producer Behaviour and Supply 32 50

    7 Forms of Market, Price Determination under perfect competition

    with Simple Application.

    51 62

    8 National Income and Related Aggregates 63 83

    9 Money and Banking 84 89

    10 Determination of Income and Employment 90 105

    11 Government Budget and the Economy 106 112

    12 Balance of Payment 113 119

    13. Sample Paper I ( New Pattern March 2015) 120 132

    14 Sample Paper II( New Pattern March 2015) 133 140

    15 Sample Paper (Old Pattern) 141 173

    16 Quick Revision Question and Answers for Low Achievers 174 216

    17 Higher Order thinking Questions 217 222

    18 Value Based Questions 223 234

    19 Multiple Choice Questions 235 256

    18 Micro Economics – Hindi version 1 26

    19 Macro Economics – Hindi version 1 26

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    COMMON ERRORS COMMITTED BY STUDENTS IN BOARD EXAMINATION:

    1. Inability to understand the questions correctly due to language problem. Read the

    questions carefully twice or thrice. Due to the same problem, they are unable to convey

    the answers suitably. Practice writing the answers at home to avoid this problem.

    2. Inadequate skills in presenting the diagrams due to lack of practice. For e.g. drawing

    of demand curve instead of supply curve and vice versa; drawing of cost curves instead of

    revenue curves and vice versa. Diagrams should be practiced regularly.

    3. Students are not practicing mathematical problems regularly. The numerical questions

    and formulae should be practiced.

    4. Overall presentation of answers is not as per CBSE expectations.

    5. All questions are not attempted by the students. They should attempt all the questions.

    8. Inadequate practice and revision lead to confused presentation of answer.

    9. Writing question number wrongly. Hence write the question number correctly.

    10. Writing answer of one question at different places. Avoid splitting of answer and write

    the answer at one place.

    11. Frequently asked questions in the board examination, should be revised thoroughly.

    (Last five year board questions) CBSE sample papers should be practiced at home within

    stipulated time period.

    12. Devote minimum of two hours time daily at home for self study in economics.

    14. Time management should be adhered to strictly and regular practice at home will

    help to avoid shortage of time/inconvenience during board exams.

    ALL THE BEST.

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    PART-A

    INTRODUCTORY MICRO ECONOMICS

    UNIT 1: INTRODUCTION

    KEY CONCEPTS

     MICRO ECONOMICS

     ECONOMY

     CENTRAL PROBLEMS OF AN ECONOMY | BASIC ECONOMIC PROBLEMS

     WHAT TO PRODUCE?

     HOW TO PRODUCE?

     FOR WHOM TO PRODUCE?

     CAUSES OF AN ECONOMIC PROBLEM

     PRODUCTION POSSIBILITY CURVE

     MARGINAL OPPORTUNITY COST –MOC

     MARGINAL RATE OF TRANSFORMATION

     OPPORTUNITY COST

    1. MICRO ECONOMICS :

    It is a study of behaviour of individual units of an economy such as individual

    consumer, producer etc.

    2. ECONOMY: An economy is a system by which people get their living.

    3. ECONOMIC PROBLEM: “An economic problem is basically the problem of choice”

    which arises due to scarcity of resources having alternative uses”.

    4. CAUSES OF ECONOMIC PROBLEM :

    i) Scarcity of resources

    ii) Unlimited wants

    iii) Limited resources having alternative uses

    5. BASIC (CENTRAL) ECONOMIC PROBLEMS

    i) Allocation of resources

    a. What to produce?

    b. How to produce?

    c. For whom to produce

    ii). Efficient Utilization of resources

    iii.) Growth of resources

    6. PRODUCTION POSSIBILITY CURVE (PPC):

    PP curve shows all the possible combination of two goods that can be produced with

    the help of available resources and technology.

    7. MARGINAL OPPORTUNITY COST: MOC of a particular good along PPC is the

    amount of other good which is sacrificed for production of additional unit of another

    good.

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    8. MARGINAL RATE OF TRANSFORMATION: MRT is the ratio of units of one good

    sacrificed to produce one more unit of other good.

    Unit of one good sacrificed ∆y

    MRT = --------------------------------------------- = ----

    One more unit of other good produced ∆x

    9. SCARCITY OF RESOURCES: Scarcity of resources means shortage of resources in

    relation to their demand.

    10. OPPORTUNITY COST: It is the cost of next best alternative foregone.

    VERY SHORT ANSWER QUESTIONS (1 MARK)

    1. What is economics about?

    Ans : - Economics is the study of the problem of choice arising out of scarcity of resources

    having alternative uses.

    2. Define scarcity.

    Ans : - Scarcity means shortage of resources in relation to their demand is called scarcity.

    3. What is an economy?

    Ans : - An economy is a system by which people get their living.

    4. Define central problem.

    Ans : - Central problem is concerned with the problems of choice (or) the problem of

    resource allocation.

    5. Give one reason which gives rise to economic problems?

    Ans : - Scarcity of resources which have alternative uses.

    6. Name the three central problems of an economy.

    Ans : - i) What to produce?

    ii) How to produce?

    iii) For whom to produce?

    7. What is opportunity cost?

    Ans : - It is the cost of next best alternative foregone.

    8. Why is there a need for economizing of resources?

    Ans : - Resources are scarce in comparison to their demand, therefore it is necessary to use

    resources in the best possible manner without wasting it.

    9. What is production possibility frontier?

    Ans : - It is a boundary line which shows the various combinations of two goods which

    can be produced with the help of given resources and technology.

    12. Why PPC is concave to the origin?

    Ans :- PPC is concave to the origin because of increasing marg

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