MODEL TEST PAPER 3
Time: 3 hour ECONOMICS – P3 Marks: 80
Q.1. A) Choose the correct option. (5 marks)
1. Concepts studied under Micro economics
a) National Income b) General price level c) Factor pricing d) Product pricing
Options: 1 – b and c 2 – b, c and d 3 – a, b and c 4 – c and d
2. Statements indicating consumer equilibrium
a) MU is greater than price b) MU is equal to price c) MU is less than price d) Price is less than one
Options: 1 – a and b 2 – a, b, c and d 3 – a, b and c 4 – only b
3. A rightward shift in supply curve shows ________
a) Contraction in supply b) decrease in supply c)expansion of supply d) increase in supply
Options: 1 – a 2–d 3–c 4–b
4. Homogeneous product is a feature of this market
a) Monopoly b) Monopolistic competition c) Perfect competition d) Oligopoly
Options: 1 – c and d 2 – a, b and c 3 – a, c and d 4 – only c
5. Demand curve is parallel to X axis in case of:
a) Perfectly elastic demand b) perfectly inelastic demand c) relatively elastic demand d) relatively
inelastic demand
Options: 1 – a 2–b 3–c 4–d
B) Give economic terms
1. A desire which is backed by willingness to purchase and ability to pay
2. Achieved when all goods and factors of production in an economy are distributed or allocated to their most
valuable user and waste is eliminated or minimized.
3. When the utility one derives from it depends on the users or individuals using it. This concept is used in
public finance.
4. The point where demand and supply curve intersect
5. It is monetary policy tool used by RBI which allows commercial banks to borrow money through repurchase
agreements.
C) Assertion and Reasoning type questions:
1. Assertion (A) : A change in quantity demanded of one commodity due to a change in the price of other
commodity is cross elasticity.
Reasoning (R) : Changes in consumers income leads to a change in the quantity demanded.
Options: a) (A) is True but (R) is False
b) (A) is False but (R) is True
c) Both (A) and (R) are True and (R) is the correct explanation of (A)
d) Both (A) and (R) are True and (R) is not the correct explanation of (A)
2. Assertion (A) : Perfect competition prevails when the demand for the output of each producer is perfectly
elastic.
Reasoning (R) : A single uniform price prevails under perfect competition which is determined by the
interaction of demand and supply.
Options: a) (A) is True but (R) is False
b) (A) is False but (R) is True
c) Both (A) and (R) are True and (R) is the correct explanation of (A)
d) Both (A) and (R) are True and (R) is not the correct explanation of (A)
3. Assertion (A) : Simple Index number are assumed based year
Reasoning (R) : Every commodity is given equal importance.
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MODEL TEST PAPER 3
Options: a) (A) is True but (R) is False
b) (A) is False but (R) is True
c) Both (A) and (R) are True and (R) is the correct explanation of (A)
d) Both (A) and (R) are True and (R) is not the correct explanation of (A)
4. Assertion (A) : Total utility increases at a diminishing rate
Reasoning (R) : Then marginal utility goes on diminishing.
Options: a) (A) is True but (R) is False
b) (A) is False but (R) is True
c) Both (A) and (R) are True and (R) is the correct explanation of (A)
d) Both (A) and (R) are True and (R) is not the correct explanation of (A)
5. Assertion (A) : Money market economizes use of cash
Reasoning (R) : Money market deals with financial instruments that are close substitutes of money.
Options: a) (A) is True but (R) is False
b) (A) is False but (R) is True
c) Both (A) and (R) are True and (R) is the correct explanation of (A)
d) Both (A) and (R) are True and (R) is not the correct explanation of (A)
D) Complete the following statement
1. Development financial institutions were established to __________.
2. NDP is obtained by __________
3. Net addition made to the total revenue by selling an extra unit of a commodity is __________
4. Symbolically the functional relationship between Demand and Price can be expressed as _________
5. Ed = 0 in case of __________
Q.2 A) Identify and explain the concept: (Any 3/5) 6 marks
1. Lalita sacrifice her want of writing on essay by using pen and notebook
2. Rajendra has a total stock of 500 gel pen in his shop which includes the 200 gel pens produced in the
previous financial year
3. Karan sold 1500 kg of cotton in the market
4. Assuming 2012 as the base year the Government of Maharashtra fixed the value for 2016
5. The firm Maruti Suzuki decided on lease the four wheeler on a contract basis
B) Distinguish Between: (Any 3/5) 6 marks
1. Organized sector and Unorganized sector of money market
2. Contraction of supply and decrease in supply
3. Micro economics and Macro economics
4. Laaspeyre's index and Paasche's index
5. Balance of payment and Balance of trade
Q.3. Answer the following: (Any 3/5) 12 marks
1. Explain the functions of commercial bank
2. Explain the concept of foreign trade and its types
3. Explain the monopolistic competition with its features
4. Explain features of utility
5. Explain the law of supply
Q.4. State with reason whether you agree or disagree with the following statements: (Any 3/5) 12 marks
1. Macroeconomics deals with the study of individual behaviour.
2. Demand curve slopes downward from left to right.
3. Perfectly elastic demand curve is horizontal line to x axis.
4. There are many theoretical difficulties in the measurement of National income.
5. Obligatory function is the only function of the government.
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MODEL TEST PAPER 3
Q.5. Study the following table, figure, passage and answer the questions given below: (Any 2/3) 8 marks
(A) Observe the following table and answer the following questions
Price (Rs) A B C Market Supply (kg)
1 ____ 20 45 100
2 37 30 45 ____
3 40 ____ 55 155
4 44 50 ____ 154
1) Complete the quantity of potato supplied by the firms to the market in the above table.
2) Draw the market supply curve from the schedule.
(B) Calculate Laaspeyre's and Paasche's Index number from the given data
Commodity P0 Q0 P1 Q1
X 8 30 12 25
Y 10 42 20 16
(C) Read the given passage and answer the questions
The conventional notion of social security is that the government would be periodic payments to look after people in
their old age, ill health, disability and poverty this idea should itself changed from writing the cheque for the
beneficiary to institutional arrangements to care for beneficiaries including by enabling them to look after
themselves to a large extent the right a check model of social security is a legacy from the rich world at the optimal
phase of its demographic transition when the working population was numerals enough and early enough to
generate the taxes to the for the care of those not working this model is ill suited for less well-off of India with
growing life expectancy increasing urbanization and resultant migration social security under urbanization will be
different from social security in a static society
1. State the conventional notion of social security
2. What kind of conceptual change is suggested in the given paragraph
3. What is the legacy of social security from the rich world
4. Which features of India make the traditional model of social security ill-suited for the economy?
Q.6. Answer in detail: (Any 2/4) 16 marks
1. State and explain the law of demand with assumptions
2. Explain the practical difficulties involved in the measurement of National income
3. Explain the main source of public revenue
Best of Luck
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