CLASS XII

There will be two papers in the subject. Derivation of market demand curve from
individual demand curve.
Paper I - Theory: 3 hours ……80 marks
(a) Cardinal Utility Analysis: meaning of
Paper II- Project Work ……20 marks utility, total utility, marginal utility,
relationship of TU and MU, Law of
PAPER - I (THEORY) – 80 Marks Diminishing Marginal Utility (schedule and
Part I (20 marks) will consist of compulsory short diagram, Only assumptions to be taught,
answer questions testing knowledge, application and criticisms not required), Consumer’s
skills relating to elementary / fundamental aspects of equilibrium – one commodity (schedule and
the entire syllabus. diagram), Law of Equimarginal Utility
(statement, schedule) and conditions of
Part II (60 marks) will consist of eight questions out consumer’s equilibrium using marginal
of which candidates will be required to answer five utility; (b) Ordinal Utility Analysis:
questions, each carrying 12 marks. Indifference Curve – its meaning and
properties (including MRS and DMRS),
Note: The syllabus is intended to reflect a study of the indifference map, consumer’s budget line,
theory of Economics with specific reference to the Consumer’s equilibrium – condition (to be
Indian Economy. Therefore, examples and specific explained with the help of a diagram).
references to the Indian Economy must be made (ii) Elasticity of demand: meaning, types of
wherever relevant. elasticity of demand, measurement of
elasticity of demand; factors affecting
1. Micro Economic Theory elasticity of demand.
(i) Demand: meaning, factors affecting demand; Various methods of measurement of the
Demand function; Law of Demand; derivation elasticity of demand: point method -
of demand curve; movement and shift of the percentage method, expenditure method and
demand curve; exceptions to the Law of geometric method. (Numericals required on
Demand. percentage method only). The cross and
Law of Diminishing Marginal Utility, Law of income elasticity of demand must be
Equimarginal Utility, consumer’s equilibrium explained. Degrees of elasticity of demand to
through utility approach (Cardinal) and be explained. Use diagrams wherever
indifference curve analysis (Ordinal). necessary.
The concept of demand: meaning. A demand (iii) Supply: meaning; difference between stock
function to be specified incorporating the and supply; determinants of supply; Law of
determinants of demand. Diagrams should be Supply; movement and shift of the supply
used in explaining the Law of Demand, curve; elasticity of supply
reasons for downward slope of demand curve, Difference between stock (intended supply)
its derivation using demand schedule. and supply (actual supply) with the help of
relevant examples. A supply function should
 be specified and explained. Law of Supply, Revenue – Average revenue, marginal
supply schedule and supply curve. Derivation revenue, total revenue – concepts and
of market supply curve from individual supply relationships under perfect competition and
curve. Movement and shift of the supply imperfect competition. Producer’s
curve, exceptions to the Law of Supply. equilibrium (Profit maximization goal) –
Elasticity of Supply: Meaning and meaning; conditions: (a) TR and TC
measurement of elasticity of supply by approach along with diagram (b) MR and MC
percentage method and geometric method. approach along with diagram.
(iv) Market Mechanism: Equilibrium and (vii) Main market forms: perfect competition,
disequilibrium; Equilibrium price and effect monopolistic competition, oligopoly,
of changes in demand and supply on the monopoly, monopsony; characteristics of the
equilibrium price. Simple applications of tools various market forms; equilibrium of a firm in
of demand and supply. perfect competition under short run and long
A basic understanding of the concept of run.
equilibrium. The effects of changes in demand
and supply - both along the curves and shift of Features of perfect competition, monopolistic
the curves to be explained. Basic competition, oligopoly, monopoly and
understanding of Price control, rationing, monopsony (meaning only). Equilibrium of a
Price ceiling and Floor price with the help of firm in perfect competition under short run
demand and supply curves. (explanation and diagram, shut down point
and break even point) and long run (diagram
(v) Concept of production and production not required).
function (short run and long run production
function), returns to a factor, total, average 2. Theory of Income and Employment
and marginal physical products; Law of
Variable Proportions and its three stages. Basic concepts and determination of Income and
Employment
A production function (concept only). Law of
Variable Proportions: statement, The concept of demand (exante) and effective
assumptions, schedule (for the purpose of (expost) demand. Aggregate demand and its
understanding and not for testing), diagram components, propensity to consume and propensity
and explanation to the three stages. to save (average and marginal), equilibrium
(vi) Cost and revenue: Basic concepts of cost; output; investment multiplier (its meaning and
fixed cost, variable cost, total cost, marginal mechanism). Meaning of full employment.
cost and average cost – their relationships; Problems of excess demand and deficient demand;
opportunity cost; short run and long run cost measures to correct them.
curves. Revenue: meaning; average revenue,
marginal revenue and total revenue and their 3. Money and Banking
relationships under perfect competition and
imperfect competition, Producer’s (i) Money: meaning, functions of money, supply
equilibrium. of money.
Basic concepts – private cost, economic cost, Meaning, kinds of money, functions of money
social cost, money cost, real cost, explicit (primary, secondary and contingent) to be
cost, implicit cost. explained; supply of money (only meaning
Cost concepts – Fixed cost, variable cost, of M1, M2, M3 & M4).
total cost, marginal cost, average cost with (ii) Banks: functions of commercial bank; high
schedule and diagram; relationship between powered money, credit creation by
average cost, marginal cost, total cost (only commercial banks; Central Bank: functions.
concepts of long run and short run cost
curves, derivations not required). Opportunity Basic understanding of the functions of
cost – meaning only. Difference between commercial banks, credit creation process
accounting cost and opportunity cost. with limitation. The regulatory role of the
Central Bank, its functions and the way it
 controls the flow of credit needs to be prices, real GDP and nominal GDP, National
explained. A brief mention may be made of Disposable Income (Gross and Net), GDP
quantitative CRR, SLR, Bank Rate policy and Welfare, GDP as an indicator of
(reporate and reverse reporate) and Open Economic welfare.
Market Operations) and qualitative methods. (iii) Methods of measuring National Income:
product or value-added method; income
4. Balance of Payment and Exchange Rate method and expenditure method with simple
Balance of Payment – meaning, components; numericals based on them.
foreign exchange – meaning, determination of Simple numericals based on all the methods to
exchange rate (Flexible). be covered for better understanding of the
Balance of Payment - Meaning and components; concept. Precautions and difficulties of
Causes of disequilibrium and how the measuring National Income for each method.
disequilibrium can be corrected; Foreign
Exchange Rate – meaning, meaning of fixed and PAPER II – PROJECT WORK – 20 Marks
flexible exchange rate, determination of exchange Candidates will be expected to have completed two
rate in a free market. Concepts of depreciation, projects from any topic covered in Theory.
appreciation, devaluation and revaluation
(meaning only). The practical work will be assessed by the teacher
and a Visiting Examiner appointed locally and
approved by the Council.
5. Public Finance
(i) Fiscal Policy: meaning and instruments of Mark allocation for each Project [10 marks]:
fiscal policy.
Overall format 1 mark
Meaning and instruments of fiscal policy –
Public Revenue: Meaning, taxes (Meaning Content 4 marks
and types), difference between direct and Findings 2 marks
indirect taxes; Public Expenditure: Meaning Viva-voce based on the Project 3 marks
and importance; Public Debt: Meaning and
redemption; Deficit Financing: meaning. A list of suggested Projects is given below:
(ii) Government Budget: meaning, types and 1. Study a Public Sector Enterprise with reference to
components. its relevance to the Indian Economy and its future
Meaning and types of Government budget – prospects. Analyse the trend of its growth for the
union, state; components – revenue and last ten years.
capital. Concept of deficit budget: revenue
deficit, fiscal deficit, primary deficit – their 2. Conduct a Socio-Economic survey of a locality
meaning and implications. (minimum sample size should be 30 households)
with reference to:
6. National Income (a) Demographic features.
(i) Circular flow of Income. (b) Consumption Pattern – Expenditure on
A simple model explaining the circular flow of necessities, comforts and luxuries.
income with two, three and four sector models (c) Occupational structure.
with leakages and injections. 3. Compare the contribution made by different
(ii) Concepts and definition of NY, GNP, GDP, sectors of the economy towards GDP growth
NNP, private income, personal income, during the planning period.
personal disposable income, National
Disposable Income and per capita income; 4. Prepare a report on the competition in the
relationship between the income concepts. Aviation Sector in India with reference to:
A brief understanding of the mentioned (a) Performance of the Public Sector and Private
national income aggregates is needed. The Sector.
concepts of GNP and NNP should be (b) Operational strategies adopted by budget/low
explained both at factor cost and market cost carriers.
5. Make a comparative analysis of lending 7. Make a comparative study of the allocation of
performance of five Commercial Banks in the past financial resources of the Central Government
six years with reference to the changing CRR and Budget on Agriculture, Defence, Industry and
SLR. Education in the last ten years. Prepare a report on
6. Many thinkers believe that we are rapidly your observations.
depleting our natural resources. Assume that there
are only two inputs (labour and natural resources) 8. Prepare a trend Analysis of Growth and
producing two goods (wheat and gasoline) with Productivity of any one industry such as:
no improvement in technology over time. Show Textile / Automobiles / Electronic and Tele-
what would happen to the Production Possibility communication, etc. in India for the past ten years.
Curve over time as natural resources are
exhausted. How would invention and
technological improvement modify your answer? NOTE: No question paper for Practical work will be
On the basis of this example, explain why it is set by the Council.
said “economic growth is a race between
depletion and invention.”
 SAMPLE TABLE FOR PRACTICAL WORK
S. No. Unique PROJECT 1 PROJECT 2 TOTAL
Identification MARKS
Number A B C D E F G H I J
(Unique ID) of Teacher Visiting Average Viva- Total Teacher Visiting Average Viva-Voce Total (E + J)
the candidate Examiner Marks Voce by Marks Examiner Marks by Visiting Marks
(A + B ÷ 2) Visiting (C + D) (F + G ÷ 2) Examiner (H + I)
Examiner
7 Marks* 7 Marks* 7 Marks 3 Marks 10 Marks 7 Marks* 7 Marks* 7 Marks 3 Marks 10 Marks 20 Marks
1

10

*Breakup of 7 Marks to be awarded separately by the Name of Teacher:

Content 4 Marks Name of Visiting Examiner