Category: Class 12

Std 12 Economics Chapter 8 Question Answer Public Finance in India Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 8 Public Finance in India Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 8 Public Finance in India Question Answer Maharashtra Board

Economics Class 12 Chapter 8 Question Answer Maharashtra Board

1. Choose the correct option

Question 1.
Optional functions of Government:
a) Protection from external attack
b) Provision of education and health services
c) Provision of social security measures
d) Collection of tax
Options:
1) b and c
2) a, b and c
3) b, c and d
4) All of the above
Answer:
1) b and c

Question 2.
Obligatory functions of the Government:
a) Provision of employment
b) Maintaining internal law and order
c) Welfare measures
d) Exporting goods and services
Options:
1) c and d
2) a and b
3) only b
4) a, c and d
Answer:
3) only b

Question 3.
Public finance is one of those subjects which are on the borderline between economics and politics’ ……………. is the view of
a) Adam Smith
b) Alfred Marshall
e) Prof. Hugh Dalton
d) Prof. Findlay Shirras
Options:
1) only a
2) only b
3) only c
4) only d
Answer:
3) only c

Question 4.
Non-tax sources of revenue:
a) Direct and Indirect Tax
b) Direct Tax and Fees
c) Fees
d) Special Levy
Options:
1) b and c
2) a and c
3) a, b, c andd
4) c and d
Answer:
4) c and d

Question 5.
Trends shown by Public expenditure of any Government shows following trend.
a) Constant
b) Increasing
c) Decreasing
d) Fluctuating
Options:
1) only a
2) only b
3) only c
4) only d
Answer:
2) only b

Question 6.
Identify the right group of pairs from the given options.
I) Direct tax – a) Non-tax revenue
ii) Indirect tax – b) Inflation
iii) Fees and Fines – c) GST
iv) Surplus budget – d) Personal income tax
Options:
a) i-d ii-c iii-b iv-a
b) i-c li-d ill-a iv-b
c) i-d li-c ill-a iv-b
d) i-a li-b iii-c iv-d
Answer:
c) i-d li-c ill-a iv-b

2. Distingwish between following concepts:

Question 1.
Public finance and Private finance.
Answer:

Question 2.
Internal debt and External debt.
Answer:

Question 3.
Developmental expenditure and Non developmental expenditure.
Answer:

Question 4.
Special assessment and Special levy.
Answer:

Question 5.
Direct Tax and Indirect tax.
Answer:

3. State with reasons whether you agree or disagree with the following statement:

Question 1.
Obligatory function is the only function of the Govenment.
Answer:
No, I do not agree with this statement.
It is essential to perform obligatory functions for the government like protection from external attack, maintaining law and order, defence and civil administration, etc.
But modern government also perform some optional functions also. They are necessary for social and economic development of the country such as provision of education and health services, provision of social security like pensions and other welfare measures.
So, government has to perform obligatory as well as optional functions.

Question 2.
Fines and penalties are a major source of revenue for the Government.
Answer:
No, I do not agree with this statement.
Public revenue is the aggregate income, with the government, comes through various sources.
These sources are classified as tax-revenue and non-tax revenue.
Tax revenue is a compulsory contribution from people to government without getting any special benefits to tax-payers.
So, tax revenue is the major source of revenue for the government.
However, fines and penalties are sources of non-tax revenue.
The government imposes fines and penalties { only on those who violate the laws of a country. So, the income from this source is ) very small.

Question 3.
The goods and services tax (GST) has replaced almost all indirect taxes in India.
Answer:
Yes, I agree with this statement.
The Goods and Service Tax (GST) came into effect in India on 1st July, 2017.
GST is an indirect tax used in India, on the supply of goods and services.
GST simplified the tax system in a country.
GST is different from an excise or sales tax imposed on the manufacture or sale of ; a product. GST is a tax levied on supply of goods and services.
GST replaced almost all indirect taxes like central excise duty, service tax, entry tax, entertainment tax, etc.
Because, GST is a comprehensive tax base with nationwide coverage of goods and ; services.

Question 4.
Democratic Governments do not lead to increase in public expenditure.
Answer:
No, I do not agree with this statement. i Public expenditure is that expenditure which is incurred by the public authority (i.e., central, state and local government). Public expenditure is required for protection of the citizens, for satisfying their collective needs and for promoting economic and social welfare of the people.
In a democratic state, government has to ( perform the obligatory functions like, defence and civil administration, maintaining internal law and order, etc.
Government also performs optional functions like provision of education and health services, provision of social security, etc.
To perform all these functions more efficiently, democratic government leads to increase in public expenditure.

Question 5.
Public finance is more elastic than private finance.
Answer:
Yes, I agree with this statement.
Public finance refers to the income and expenditure of public authorities, whereas, private finance is the income and expenditure of individuals and private sector organisations.

The main objective of public finance is to offer maximum social advantage, while the main motive of private finance is to fulfil private interest.

Public finance is more elastic compare to private finance because credit provision is much more in the market to increase public finance but, credit availability is limited to increase private finance.
It is also possible to the government to adjust revenue and expenditure with one another in case of public finance.

4. Read the given passage and answer the questions:

‘The conventional notion of social security is that the government would make periodic payments to look after people in their old age, ill-health. disability and poverty. This idea should itself change from writing a cheque for the beneficiary to institutional arrangements to care for beneficiaries. including by enabling them to look after themselves. to a large extent.

The write-a-cheque 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 earning enough to generate the taxes to pay for the care of those not working. This model is ill-suited for less, well- off India with growing life expectancy. increasing urbanization and resultant migration. Social security
under urbanization will be different from social security in a static society.

Question 1.
State the conventional notion of social security.
Answer:
The conventional notion of social security is that the government would make periodic payments to look after people in their old age, ill-health, disability and poverty.

Question 2.
What kind of conceptual change is suggested in the given paragraph.
Answer:
The given paragraph suggests that, the idea should change from writing a cheque for the beneficiary to institutional arrangement to care for beneficiaries.
It will enable them to look after themselves to a large extent.

Question 3.
What is a legacy of social security from the rich world?
Answer:
The write-a-cheque model of social security i is a legacy from the rich world.

Question 4.
Which features of India make the traditional model of social security ill-suited for the
economy?
Answer:
Growing life expectancy, increasing urbanization and resultant migration are the features of India that make the traditional model of social security ill suited for the economy.

5. Answer the following:

Question 1.
State the types and importance of Government budget.
Answer:
(B) Importance of Budget:
Budget is important in number of ways.

(1) Tax rates presented in the budget indicates disposable income of the tax payer. It also determines the development of business and individuals.
(2) Government expenditure is also a part of budget. This public expenditure on defence, administration, infrastructure, education, health care, etc. affects the lives of the citizens and overall economy.
(3) Government uses budget as a medium for implementing economy policies in the country.
(4) Budgetary actions of the government affect production size and distribution of income, utilization of human and material resources of the country.
Thus, implementing suitable budgetary policy is very important for overall development of the economy.

Question 2.
Explain the principles of taxation.
Answer:
Principles of taxation are also called canons of taxation. There are four principles (canons) of taxation, propounded by Adam Smith
(1) Canon of Equity or Equality
(2) Canon of Certainty
(3) Canon of Convenience
(4) Canon of Economy

They are explained as follows :

1. Canon of Equity or Equality : According to Adam Smith, every person should pay taxes to the government in proportion to his ability to pay.
Canon of equity or equality means rich people should pay more tax as compared to poor.

2. Canon of Certainty : Adam Smith suggested that the tax payer should know in advance that, how much tax he has to pay, at what time and in what form he has to pay tax to the government.

3. Canon of Convenience : According to this principle, every tax should be levied in such a manner and at such a time that, it becomes convenient to the tax payer to make payment.

4. Canon of Economy : This principle suggests that the cost of tax collection should be the minimum. If tax is collected economically, then such a tax is considered to be a good tax.
Every citizen of a country has to pay tax, imposed upon him as it is compulsory contribution to the government.
Tax is a major source of revenue to the government.
Therefore, public authority (Government) must consider all the principles (canons) of taxation in the preparation and implementation of tax system.

Question 3.
Explain non-tax sources of revenue of the Government.
Answer:
Non-tax revenue refers to the revenue received by the government from various ? sources other than taxes.
The sources of non-tax revenue are as follows:

Fees : It refers to charges paid, in return for certain specific services rendered by the government. E.g. fees paid for registration of house, car, education fees, etc.

Prices of Public Goods and Services : Various types of goods and services are produced, supplied and sold by modern government to the citizens. It; is added to public revenue when people s purchase them and pay their prices.

Special Assessment : It is special kind of tax, which is levied by local government on the residents of a particular area. In exchange of it, government provides some special facilities to them.

Fines and Penalties : It is imposed by government on those who violate the laws of the country.
E.g. a traffic police charges fine and collects money if someone violates traffic rule. The objective behind collection of fines and penalties is not to earn money but to discourage the people from violating the laws framed by the government It is small source of income.

Gifts, Grants and Donations : The government receives gifts from its citizens and others. It is included in public revenue. The government may also get grants from foreign government and institutions for general and specific purposes.
Foreign aid is also an important form of public revenue for developing country like India. However, this source of revenue is uncertain in nature.

Special Levies : It refers to the charges levied by government on those commodities, whose consumption is harmful to human health.
Special levies are paid for using commodities like wine, opium and other intoxicants. Special levy is imposed, not to earn income, but to discourage the people from using harmful products.

Borrowings: Government borrows to raise fund because government expenditure generally exceeds government revenue, in a welfare state.

When government borrows from foreign government or international organisations, it is known as external debt. It is more popular source of public revenue for investment in development of projects. Thus, public revenue in form of non-tax sources play very important role in socio¬economic development of a country. Explain the classification of public expenditure.

6. Answer in detail :

Question 1.
Explain various reasons for the growth of public
expenditure.
Answer:
Public expense is the expense incurred by the government (central, state and) local government). It is necessary for the protection of the citizens, for satisfying collective needs of the society and for ? promoting economy.and social welfare of a S country.

Public expense is necessary to perform various functions of the government Public ; expense consists of revenue and capital expenses as well as developmental and non-developmental expenses.

1. High Growth of Population : In a developing country like India, population is rising rapidly. Therefore, government has to incur greater expense to fulfil the needs of growing population.

(2) Growing Urbanisation : Due to expansion of urban sector, government expense increases. Government has to make the provision of water supply, roads, energy, schools and colleges, public transport, hospitals, welfare centres, sanitation, drainage system, etc.
It leads to growth in public expense.

(3) Public Health Care : Public health is a top most priority of modern welfare state. Government undertakes public vaccination programme, maintenance of dispensaries, maternity care and child welfare centres, etc
.
(4) Democracy : There is a democracy in India. A democratic form of government is very expensive due to regular elections and other public works.
It leads to growth in public expense.

(5) An increase in Defence Expense : Government has to incur defence expense to protect the country from external attacks as well as to maintain law and order in a country. Hence, an increase in defence expense leads to growth of public expense.

(6) Disaster Management : Many natural calamities like earthquakes, flood, cyclones, Covid-19 and man-made problems like social unrest, economic instability, etc. occur frequently. In such cases, government has to spend for disaster management which increases public expense.

(7) Infrastructure Development : It is necessary to make provision of economic infrastructure like energy, transport, communication and social infrastructure like education, health, etc. for rapid economic development of a country.
Thus, development of infrastructure facilities results into growth of public expense.

(8) Inflation : Due to inflation, prices of goods and services tend to rise. When government buys goods and services from the market for development of a country, government has to pay higher cost which raises public expense.

(9) Industrial Development : An increase in production depends upon industrial development. It leads to an increase in level of employment and overall economy growth. So, government implements various schemes and programmes for industrial development.
It results into growth of public expense.

(10) Increase in Government Activities : The modern government performs various obligatory and optional functions for social and economic development of a country. It requires huge fund to spend on education, public health, public recreation, social welfare schemes, etc.

Many other functions like maintenance of roads, lighting, public streets, construction of public houses, protecting life and property, public vaccination, garbage collection and ; disposal, prevention and control of epidemics etc. lead to growth of public expenses.

Government also spends on provision of pure water supply, removal of slums, checking ) food adulteration, etc.
All these factors are responsible for the j growth of public expense.

Intext Questions

Find out (Textbook Page 70) :

More examples of obligatory and optional functions of the government.
Answer:

Find out (Textbook Page 73) :

Reasons for growth in public expenditure other than given in the text-book.
Answer:

1. Rise in per capita income.
2. Rural development.
3. Provision of transport and communication.
4. Reducing inequalities.
5. Expenditure on social services (like food, housing, education etc.)
6. Effects of war.
7. Pressure of social progress.

Find out (Textbook Page 73) :

Important Social Welfare Schemes in India.
Answer:

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Economics Chapter 7 Question Answer National Income Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 7 National Income Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 7 National Income Question Answer Maharashtra Board

Economics Class 12 Chapter 7 Question Answer Maharashtra Board

1. Complete the following statements:

Question 1.
While estimating national income, we include only the value of final goods and services in order to
a) make computation easier
b) avoid double counting
c) maximize national welfare of the people
d) evaluate the total economic performance of a nation
Answer:
b) avoid double counting

Question 2.
NDP is obtained by
a) deducting depreciation from GNP
b) deducting depreciation from GDP
c) including depreciation in GDP
d) including depreciation in GNP
Answer:
b) deducting depreciation from GDP

Question 3.
In India, national income is estimated using
a) output method
b) income method
c) expenditure method
d) combination of output and income method
Answer:
d) combination of output and income method

2. Complete the Correlation:

1) ……………… :C+I+G+(X-M)::GNP:C+I+G + (X-M) + (R-P).
2) Output method : ……………… :: Income method : Factor cost method
3) Theoretical difficulty : Transfer payments :: ……………… : Valuation of Inventories
Answer:

1. GDP
2. Product / Inventory method
3. Practical difficulty

3. Identify the incorrect pair:

a) National Income Committee — 1949
b) Financial year 1’ April to 31st March
c) Income method — National Income = Rent + Wages + Interest + Profit + Mixed income + Net Income from abroad
d) Expenditure method – National Income = Rent + Wages + Interest + Profit
Options:
1) a 2) b 3) c 4) d
Answer:
d) Expenditure method — National Income = Rent + Wages + Interest + Profit

4. Identify and Explain the following concepts:

Question 1.
Vrinda receives monthly pension of Rs.5,000/- from the State Government.
Answer:
Concept: Transfer payment.
Explanation : Pension is a part of money income earned by an employee during his service period with the entrepreneur.
Such income is paid by Government to an employee after his retiement so as to make employee survive during his retirement period.
Thus, transfer income is not included in National Income. It is just an government expenditure.

Question 2.
Viru kept aside 1oo kgs. out of 500 kgs. of wheat produced in his farm for his family.
Answer:
Concept: Production for self-consumption. Explanation : In above case, Viru’s total production is 500 kgs but he keep aside 100 kgs for his self consumption.
This 100 kg will not be shown by him as his income and hence it will not be included in national income accounting.
Such output kept for self consumption is called as theoretical difficulty in measurement of national income.

Question 3.
Sheetal purchased wheat flour for her bakery from the flour mill.
Answer:
Concept: Intermediate goods.
Explanation : In the above case, wheat flour is not the final product.
Wheat flour will be used by Sheetal to produce cake or pastry or biscuits which will be final product for her.
So, in above case wheat flour is considered j! (8) as intermediate goods. Intermediate goods are excluded while calculating NI by Final ( Ans. Goods approach method and included while calculating by Value Added approach method.

Question 4.
Shobha collected data regarding the money value of all final goods and services produced in the country for the financial year 2018-2019.
Answer:
Concept: National Income.
Explanation : National Income estimate ( measures the column of commodities and ) services turned out during a given period, counted without duplication.
NI is the macro concept. It is flow concept.

Question 5.
Rajendra has a total stock of 500 gel pens in his shop which includes 200 gel pens produced in the previous financial year.
Answer:
Concept: Flow Concept
Explanation : National Income accounting considers the production of goods and services in a current year. The production of previous year is ignored.
Thus, out of total inventory, of Mr Rajendra, only 300 pens will be taken into consideration while calculating NI for the current year.

5. Answer the following

Question 1.
Explain the two sector model of circular flow of national income.
OR
Explain the circular flow of National Income.
Answer:
The two sector economy consists of household J and business firm. The income is circulated between household and business firm. It is explained with the help of following diagram.

In every economy there is household sector on one hand and business firm on the other hand.

(A) Household is the basic consuming unit. It) centres around a family. Its main function j is to consume goods and services. Business firm is the basic producing unit. Its main function is to produce goods and services with the aim of maximising profits. When s the household supplies factor services (land, ^ labour, capital, enterprise to business firms, business firms supply goods and services to the household. This is known as Real Flow.

(B) In a money economy when the household supplies factor services, there is a flow of income from the business firm to the j household in form of rent, wages, interest and profit. This income comes from the firms to the household sector. The household ; sector uses this income to satisfy the wants. Therefore, there is a flow of consumption expenditure from the household to the business firms. The flow of factor payments from business sector to household sector and corresponding flow of consumption expenditure from household sector to business firms. This is known as Money Flow. Both the money flow and real flow should balance for the smooth functioning of the economy. If the money flow is greater j than real flow there would be inflation and if the money flow is less than the real flow there would be deflation.

(C) In the above diagram, the inner circle represents the Real flow and the outer circle represents the Money flow. There is circular and continuous flow of money income as production is a continuous activity due to never ending human wants. The circular J flow shows interdependence in the economy.

Question 2
Explain the importance of national income.
Answer:
National income data is very useful for various purposes. It is as follow :

• For the Economy : National income data are very important for macro economic analysis and performance of the economy.
• National Policies : National income gives the industrial policy, agricultural policy, export promotion policy etc.
• Economic Planning : The data of national income is very important tools for long term and short term economic planning e.g. planning for aggregate saving, investment, output, etc.
• Economic Research: The data of national income is very useful to the research students to study in detail how income is produced, how it is distributed, how much is spent, saved or taxed.
• Comparison of Standard of Living :
  Because of national income, it is possible to do comparison between the standard of living of the people of different countries and home country.
• Distribution of Income : The data of national income is very important to understand the disparities in the income of different sections of the society and to make the policies to reduce the disparities in income.
• Speed of Economic Growth : Because of national income, it is possible to know the trends or speed of the economic growth of our country in relation to previous years.

Question 3.
Explain the features of national income.
Answer:
(1) Flow Concept : National Income is the flow of goods and services produced in the economy during a year. The flow of goods takes place when there is production activity in the economy. It generates flow of income in the form of rent, wages, interest and profit.

(2) Avoid Double Counting: While estimating National Income we include only the value of final goods and services and not the value of intermediate goods or raw materials to avoid double counting.

(3) National Income is the net aggregate value : National Income includes net value of goods and services produced. It does not include depreciation cost. Depreciation is wear and tear of capital goods due to their continuous use in production.

(4) Transfer Income : Transfer Income in J the form of old age pension, lottery prize, scholarship, etc. are not to be included as they are received without contributing anything to the current national income.

(5) National Income is money valuation of goods: National Income is always expressed ( in money terms. Only those goods and services which are exchanged for money are included. Unpaid services like the service of housewife should not be included.

(6) National Income is calculated for one year : National Income is always expressed with reference to time period i.e. generally one financial year from 1st April to 31st March of every year.

(7) Net Income from Abroad: While estimating National Income net Income from abroad i.e. difference between exports and imports (X – M) as well as net income from foreign investment should be included (R – P).

(8) Macro Economic Concepts : National Income is a macro economic concepts as it is the aggregate income of the country. It includes the value of goods and services produced in the different sectors of the economy. National Income data present the (1) There are many theoretical difficulties picture of the performance of the economy in the measurement of National Income, during a given period of time.

(9) National Income is calculated at current and constant price: National Income when calculated at the prevailing market price it is called National Income at current price and when it is calculated at the base year price, it is called National Income at constant price

Question 4.
Explain the concept of Green GNP.
Answer:
The Green GNP is the measurement of the national income adjusted for degradation of environment.
E.g. The National Income for a current year is 8,000 units and the degradation of environment is 500 units, so Green GNP is ( 8000 – 500 = 7500 units.
The green GNP considers the environmental degradation or resource depletion.
It is defined as, “Green GNP is an indicator of sustainable use of natural environment and equitable distribution of benefits of development.”

The features of Green GNP are :

1. Sustainable economic development means economic development without creating pollution or environmental degradation.
2. The benefits of sustainable economic development should be equally distributed. In the long period of time it helps to promote economic welfare.
   Green GNP = (Net fall in stock of natural capital + Pollution load)

6. State with reasons, whether you agree or disagree with the following statements:

Question 1.
There are many theoretical difficulties in the measurement of national income.
Answer:
Yes, I agree with this statement.
National income is a very broad concept and it is difficult to precisely define what exactly should be included and not to be included.

• Transfer payment: If it included in national income then there will be overestimation of NI. E.g. pension, gifts, unemployment allowances, etc. are excluded.
• Unpaid services : The value of unpaid services are not included in national income as they are not paid for. E.g. services of housewife.
• Illegal income : The income from illegal activities are not included in NI. E.g. black marketing, smuggling.
• Production kept for self-consumption :
  It is not accounted for in the national income as such product does not enter the

Question 2.
Under output method, value added approach is used to avoid double counting.
Answer:
Yes, I agree with this statement.

• The value added approach is the difference between the value of final output and input at each stage of production.
• In this approach, the value added at each stage of production is considered.
• E.g.
  
• In the above example, value of groundnut with shell is ₹ 50, after removing shells value of groundnut is ₹ 80, after crushing groundnut value oil ₹ 120 and when oil is packed its value ₹ 150.
• So, the value added raw groundnut (₹ 50), groundnut (₹ 30), oil (₹ 40), packed oil (₹ 30), total value ₹ 150 is included in national income.

7. Answer in detall:

Question 1.
Explain the practical difficulties involved in the measurement of national income.
Answer:
National Income means money value of) goods and services produced in the country in a year.
AccordingtoNationallncome Committee:
“A national income estimate measures the volume of goods and services turned out during a period without duplication.” National income is a very broad concept and it is difficult to precisely define what exactly should be included and not to be included. So, there are many practical difficulties in the measurement of NI.

Practical Difficulties or Statistical Difficulties :

• Problem of double counting: In case of certain goods it is difficult to distinguish properly between final goods and intermediate goods. That’s why problem of double counting arises e.g. flour is final goods for housewife, but it is intermediate goods for the bakery.
• Existence of non-monetised sector : In India large non-monetised sector exists in rural area specially in agriculture. In agriculture many places goods and services are exchanged with goods that’s why it is difficult to count in national income.
• Inadequate and unreliable data : Because of illiteracy it is difficult to get adequate and reliable data from unorganised sector, small enterprises, agriculture, etc.
• Depreciation : Its difficult to measure exact value of depreciation. There are no uniform common accepted standard rates of depreciation applicable to the various capital assets.
• Capital gain or loss : Due to capital gain there is over estimation and due to capital loss there is under estimation of national income.
• Illiteracy and ignorance : Majority of small producer in developing counties are illiterate and ignorant and are not able to keep accounts of their productive activities.
• Lack of systematic, occupational classification: There is lack of systematic occupational classification, which makes the calculation of national income difficult. Especially in rural areas where many villagers work on farms for some time and also take some other job during off season.
• Untrained and incompetent staff: Due to untrained and incompetent staff, accurate and timely, information cannot be obtained.

Importance of National Income (NI) :
For the economy : National income data are particularly important for macro economic analysis and performance of the economy.

Question 2.
Explain the income method and expenditure method of measuring national income.
OR
Explain any two methods of measuring National Income.
Answer:
National Income is macro economic concept. National Income means money value of goods and services produced in the country in a year. There are three methods to measure national income.
(1) The Output Method,
(2) The Income Method,
(3) The Expenditure Method.

(A) The Income Method : This method is also known as factor cost method. According to this method national income is the sum of income received by all factors of production in a year. So national income is the income received by all the citizens of the country in a year. In income method national income studied from the distribution side. According to income method national income or GNP is
NI = R + W + I + P + MI + (X – M)

• Rent (R) : Rent and Royalty is usually treated as the payment for the land, building, machines that are rented.
• Wages (W) : It includes wages and salaries earned by labour as well as it includes commission, bonus, social security payments, fringe benefits, etc.
• Interest (I) : Interest is the payment for using the services of capital. It includes interest paid by banks, insurance companies etc.
• Profit (P) : It includes the profit of private and public sector companies.
• Mixed Income (MI) : It is the income which is earned by self-employed. They earn income through various sources like wages for effort put, rent on own property, interest on own capital, etc.
• Net Exports (X – M) : It is the difference between export and imports.

Precautions :

• Transfer payment : It should not be included in national income. E.g. pension, gifts, unemployment allowances, lottery prize, etc.
• Unpaid services : It should not be included in national income. E.g. services of housewife, teacher teaching her own child, etc.
• Second hand goods : The income from sale of second hand goods should not be included.
• Financial asset : The income from sale of shares and bonds should not be included in national income.
• Tax revenue : The revenue of government through taxes should not be included in national income.
• Undistributed profits of companies, income from government property and profits from public enterprise should be included.
• Imputed value of production kept for self consumption and rental value of owner occupied houses should be included in national income.

(B) Expenditure Method :
This method also known as outlay method. NI = C + I + G + (X – M) + (R – P)
National Income can also be calculated by adding up the expenditure incurred on purchase of final goods and services. We can get National Income by summing up all consumption expenditure, investment expenditure made by all individuals, firms as well as the government of a country during a year.

• Consumption Expenditure (C) : It includes all expenditure incurred on goods and services by households during the year. It includes expenditure mostly on durable and non-durable goods, which are consumed by the consumers. E.g. food, medical care, clothing, car, computer and services, etc.
• Investment Expenditure (I) : It refers to the investment made by private businessman on capital goods like machinery, plants, factories, warehouses, etc.
• Government Expenditure on goods and services (G) : Government expenditure refers to expenditure on consumption and investment –
  • Consumption expenditure : It refers to expenditure incurred on various administrative services like law and order, defence education, generation and distribution of electricity.
  • Investment expenditure : It refers to expenditure incurred by government on construction of roads, railways, dams, canals, etc.
• Net Exports (X – M): It refers to difference between exports and imports of the country. If the exports are more than imports then net exports will be positive, it is called Trade Surplus and if imports are greater than exports, the net exports will be negative, it is called as Trade Deficit.
• Net Receipts (R-P) : It is the difference between expenditure incurred by foreigners in the country (R) and expenditure incurred abroad by Nationals (P). Net Receipts can also be Positive or Negative.
  Net National Expenditure = NNE = C + I + G + (X – M) + (R – P) – Depreciation. NNPFC or NI = C + I + G + (X -M) + (R -P) “Depreciation “ Indirect Tax + Subsidies.

Precautions :
The following precautions should be taken while estimating National Income.

• To avoid double-counting take the expenditure incurred only on final goods and services.
• Government expenditure on transfer payments to be excluded like unemployment allowances, old age pension, etc.
• Expenditure on second-hand goods like furniture, house, land, and financial assets { like shares, bonds, etc. should be excluded.
• Exclude expenditure incurred on the purchase of financial assets such as shares, bonds, etc.
• Deduct indirect tax and add subsidies. Out of these methods, output method and income method are extensively used. The expenditure method is rarely used because of its practical difficulties.
• In India, the Central Statistical Organisation (CSO) adopts a combination of output method and income method to estimate N.I. of India.

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Economics Chapter 6 Question Answer Forms of Market Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 6 Index Numbers Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 6 Forms of Market Question Answer Maharashtra Board

Economics Class 12 Chapter 6 Question Answer Maharashtra Board

1. Choose the correct option:

Question 1.
Statements that are incorrect in relation to index numbers.
a) Index number is a geographical tool.
b) Index numbers measure changes in the air pressure.
c) Index numbers measure relative changes in an economic variable.
d) Index numbers are specialized averages.
Options :
1) c and d
2) a and b
3) b and c
4) a and d
Answer:
2) a and b

Question 2.
Statements that highlight the significance of index numbers.
a) Index numbers are useful for making future predictions.
b) Index numbers help in the measurement of inflation.
c) Index numbers help to frame suitable policies.
d) Index numbers can be misused.
Options :
1) b, c and d
2) a, c and d
3) a, b and d
4) a, b and c
Answer:
4) a, b and c

Question 3.
Statements that apply to weighted index
numbers.
a) Every commodity is given equal importance.
b) It assigns suitable ‘weights’ to various commodities.
c) In most of the cases, quantities are used as weights.
d) Laaspeyre’s and Paasche’s method is used in the calculation of weighted index numbers.
Options :
1) b, c and d
2) a, c and d
3) a, b and d
4)a, b, c and d
Answer:
1) b, c and d

Question 4.
Statements related to limitations of index numbers.
a) Index numbers are not completely reliable.
b) There may be a bias in the data collected.
c) Every formula has sorne kind of defect.
d) Index numbers ignore changes in the qualities of products.
Options :
1) a, c and d
2) a, b, c and d
3) a, b and d
4) b, c and d
Answer:
2) a, b, c and d

Question 5.
Choose the correct pair:

Options :
1) 1-d, 2-c, 3-a, 4-b
2) 1-d, 2-a, 3-b, 4-c
3) 1-b, 2-c, 3-d, 4-a
4) 1-c, 2-d, 3-a, 4-b
Answer:
2) 1-d, 2-a, 3-b, 4-c

2. Complete the Correlation:

1) Price Index: Inflation :: ………………. : Agricultural production
2) ……………….: Base year prices :: P₁ : Current year prices
3) Laaspeyre’s index : ………………. :: Paasches index : Current year quantities
4) ……………….: Single variable :: Composite index: Group of variables
Answers:

1. Quantity Index
2. P₀
3. Base year quantity
4. Univariate Index

3. Solve the following:

Question 1.
Calculate Price Index number from the given data:

Answer:

Steps:
Add the price of base year (p₀)
Add the price of current year (p₁)
P₀₁ = \(\frac{\Sigma p_{1}}{\Sigma p_{0}}\) x 100
= \(\frac{60}{50}\) x 100
= 120
Hence P₀₁ = 120

Question 2.
Calculate Quantity Index number from the given data:

Answer:

Steps : Add quantities of base year (q0).
Add quantities of current year (q ).
Q₀₁ = \(\frac{\Sigma q_{1}}{\Sigma q_{0}}\) x 100
= \(\frac{480}{820}\) x 100
= 58.53
Hence, Q₀₁ = 58.53
As quantity in the current year has fallen Q₀₁ is less than loo.

Question 3.
Calculate Value Index number from the given data:

Answer:
Steps:
(1) Formula used for Value Index Number
= V₀₁ = Zpq x 100
(2) We find product of prices and their respective quantities of the different commodities for the base year to derive p0q0, then take the sum total of the products to derive Zp0q0.
(3) Similarly, find the product of prices and their respective quantities for the current year to derive p1q1, then take the sum total of the products to derive p₁q₁.

Value Index Number = \(\frac{\Sigma p_{1} q_{1}}{\Sigma p_{0} q_{0}}\) x 100
= \(\frac{6,540}{1,890}\) x 100
= 346.03
Value Index Number = 346.03

Question 4.
Calculate Laaspeyre’s and Paasche’s index from the given dala:

Answer:
I’m 7
Price Index P₀₁ = \(\frac{\Sigma p_{1}}{\Sigma p_{0}}\) x 100
= \(\frac{42}{40}\) x 100
= 105
Hence, P₀₁ = 105

4. Distinguish between:

Question 1.
Simple Index Numbers and Weighted Index Numbers.
Answer:

Question 2.
Price Index and Quantity Index.
Answer:

Question 3.
Laaspeyre’s Index and Paasche’s Index.
Answer:

5. State with reasons whether you agree or disagree with the following statements:

Question 1.
Index numbers measure changes in the price level only.
Answer:
No, I do not agree with this statement.

• Index numbers are statistical devices which are used to measure changes in some quantities which cannot be measured directly.
• It shows the changes in the variables like price, quantity of output, exports, standard of living, cost of living, stock markets, etc.
• Index numbers are like economic barometers, measuring changes in variables over time with respect to a chosen base year.
• Hence, it is not right to say Index Numbers measures changes in price only.

Question 2.
Index numbers are free from limitations.
Answer:
No, I do not agree with this statement.
Although index numbers are very useful in business and industry, they suffer from following limitation:

• Bias in the data: If the data is not collected properly, we may not get proper index numbers.
• Based on samples : If the samples are not collected properly, there may be error in index number calculations.
• Misuse of index number : We compare the index numbers with the base year, but if a businessman chooses a base year in which profits are high and show that his profits are falling now.
• Changes in the economy : In long run habits, tastes, etc of people may change, so it is difficult to include all such changes in index number.
  Hence, it is not right to say that index numbers are free from limitations.

Question 3.
Index numbers can be constructed without the base year.
Answer:
No, I do not agree with this statement.
Index numbers can be constructed without the base year because :

• Index Numbers are the tools for measuring J the changes in the magnitude of a variable or a group of variables over time with respect to a chosen year.
• Prices of some goods may increase and of other may decrease during the two periods. Index numbers solves this problem by taking the average change.
• For example, to know cost of living of people in general in India, Government chooses a base year 2010 which is taken as 100. Then  cost of living is calculated in 2019 which may be 140.
• This difference of 40(140-100) shows that cost of living in India has increased by 40% ( since 2010.
  Hence, Index Numbers cannot be constructed – without the base year.

6. Answer the following:

Question 1.
Explain the features of index numbers.
Answer:
Features of Index Numbers :

• Index numbers are a specialised form of averages.
• They are expressed in percentage form without using a percentage sign.
• The year for which index number is being prepared is the current year.
• The year from which index number is being prepared is called the base year which is ? always taken as 100.
• They are used in measuring the changes ( in magnitudes which cannot be measured directly.
• The formula used for Price Index Number = \(\frac { Total price of the current year }{ Total price of the base year }\) x 100
• They are considered as barometer of economic activity.
• Index number which is calculated from a single variable is called “univariate index” and which is constructed from a group of variables is called a “composite index”.

Question 2.
Explain the significance of index numbers in economics
Answer:
Index numbers are significant tools of economic analysis in the following ways:

(1) Help in formulating Policies : Index numbers help the government and business organisations in framing their suitable economic policies for agriculture and industrial sector, wage and dearness allowance policies, etc.

(2) Help in the study of Trends and Tendencies : Index numbers study the relative changes in the level of phenomenon of different periods of time, so they can be used to predict future events. The economists can study the general trends of changes in price levels, agricultural and industrial production, export, imports, etc.

(3) Economic Barometer : Just as barometer is used to measure atmospheric pressure, index numbers measure the level of economic and business behaviour. They are very important for an economist, businessman, planners, policy makers, etc.

(4) Helps in Measurement of Inflation :
It helps the government to take measures against inflation by giving additional D.A. to the employees on the basis of Dearness Index.

(5) Help to adjust National Income : By comparing current year’s national product prices with the base year’s prices, the Domestic Product (GDP) produced. Hence, this shows changes in real national income.

(6) To present Financial Data in Real Income : Index numbers are used to adjust price change, wage change, etc. Thus deflating helps to present the financial data at constant prices.
(Note: Deflating means to make adjustments in the original data)

(7) Helps in determining Depreciation
Cost: The price index helps in determining the depreciation cost of durable goods. At the time of inflation, it is useful to know the original cost of the commodities.

7. Answer in detail:

Question 1.
Explain the steps involved in the construction of index numbers.
Answer:
Steps involved in the construction of j index numbers are as follows :
1. Purpose of an Index Number : Before constructing an index number, one must know the purpose for which the index number is constructed. E.g. for the whole c sale price or retail price or for agricultural – output, etc.

2. Selection of a Base Year : It is important to select a base year against which comparisons are made. So base year or reference year should be
(i) a recent year and not a distant past.
(ii) it should be normal and free from natural calamities, war, etc.

3. Selection of Commodities: When the cost c of living index number of the middle class jj families is to be constructed, the items that are used by middle class families in everyday life should be included and items like big cars, AC’s, etc. should not be included.

4. Selection of Prices : Prices differ from city to city and even from shop to shop in the same city. Hence, we should take a few standard shops from where middle class families buy goods and take the average of the prices of goods sold by them. Otherwise index number
constructed may be misleading.

5. Selection of suitable Average : An ; index number is a special kind of average, Generally arithmetic mean is commonly ? used for construction of index number as it is simple to calculate.

6. Selection of Formula : Number of formulae can be used for construction, of index numbers. Economists have to decide which formula to use for the construction of a particular index number.

7. Assigning proper Weights : Weights refer to the relative importance of different items in the construction of an index number. ( Weights may either be quantity weights (q) or value weights (p). All weights may not be equally important. Therefore, by s assigning specific weights better result can be obtained.

Index Questions

Find out (Textbook Page 58) :

(a) List of crops included in the Index of Agricultural Production in India.
Answer:
Food grains : Rice, Wheat, Jowar, Bajra, Maize, Ragi, Barley and Small Millets. Gram, Tur and other pulses.
Fibres: Cotton, Jute, Mesta and Sannhemp.
Non-food grains : Oilseeds Groundnut, Sesame, Rapeseed and Mustard, Linseed, Castorseed, Safflower, Nigerseed, Soyabean, Sunflower, Coconut and Cottonseed.
Plantation crops: Tea, Coffee and Rubber.
Condiments and Spices : Pepper, Ginger, Garlic, Chillies, Turmeric, Arecanut, Coriander and Cardamom.
Fruits and Vegetables : Potato, Onion, Banana, Cashewnut, Tapioca and Sweet Potato.
Other Crops : Sugarcane, Tobacco and Guarseed.

(b) List of products included in the Index j of Industrial Production in India.
Answer:
Index of Industrial Production in ; India includes – Consumer Durable goods, Consumer non-durable goods, manufacturing goods, mining, electricity, infrastructure or construction goods, etc.

Find out (Textbook Page 59) :

Newspaper headlines related to the following types of index numbers :
(a) Price Index
(b) Agricultural Productivity Index
(c) Index of Industrial Production
(d) Equity Share Price Index
Answer:
[Students should do this activity by themselves.]

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Economics Chapter 5 Question Answer Forms of Market Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 5 Forms of Market Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 5 Forms of Market Question Answer Maharashtra Board

Economics Class 12 Chapter 5 Question Answer Maharashtra Board

1. Choose the correct option:

Question 1.
In economic sense, market includes following activities
a) The place where goods are sold and purchased.
b) An arrangement through which buyers and sellers come in close contact with each other directly or indirectly.
c) A shop where goods are sold.
d) All of the above.
Options :
1) a and b
2) b and c
3) a, b and c
4) only b
Answer:
4) only b

Question 2.
Classification of markets on the basis of place
a) Local market, National market, International market
b) Very short period market, Local market, National market.
c) Short period market, National market, International market.
d) Local market, National market, Short period market.
Options :
1) a, b and c
2) b. c and d
3) only a
4) a and d
Answers:
3) only a

Question 3.
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
Answer:
4) only c

Question 4.
Under Perfect competition, sellers are
a) Price makers
b) Price takers
c) Price discriminators
d) None of these
Oplions:
1) a, b and c
2) only b
3) only c
4) a and c
Answers:
2) only b

2. Give economic terms:

1) The market where there are few sellers.
2) The point where demand and supply curve intersect.
3) The cost incurred by the firm to promote sales.
4) Number of firms producing identical product.
5) Charging different prices to different consumers for the same product or services.
Answers:

1. Oligopoly
2. Equilibrium point
3. Selling cost
4. Homogeneous
5. Discriminating monopoly

3. Complete the Correlation:

1) Perfect competition : Free entry and exit :: ……………. : Barriers to entry.
2) Price taker …………….:: Price maker:: Monopoly.
3) Single price : Perfect competition :: Discriminated prices : …………….
Answers:

1. Monopoly
2. Perfect competition
3. Monopoly

4. Find the odd word out:

1) Selling cost : Free gifts, Advertisement hoardings. Window displays. Patents.
2) Market sructure on the basis of competition : Monopoly. Oligopoly. Very Short Period market. Perfect competition.
3) Features of monopoly : Price maker, Entry barriers, Many sellers. Lack of substitutes.
4) Legal monopoly : Patent. OPEC. Copyright. Trade mark.
Answers:

1. Free gift
2. Very short period
3. Many sellers
4. OPEC

5. Answer the following:

Question 1.
Explain the features of Oligopoly.
Answer:
The term Oligopoly is derived from the Greek words ‘Oligo’ which means few and ‘Poly’ which means sellers. Hence, following are its features –

1. Many buyers and few sellers : There are many buyers and a few sellers or firms (may be five or six) who dominate the market and have major control over the price of a product.

2. Interdependence : Since the number of firms are less, any change in price, output, product etc. by one firm will affect the rival firms and will force them to change their price, output, etc. E.g. In case of Coke and Pepsi in soft drink market.

3. Selling cost or advertising : Each firm in order to sell more of its product takes aggressive steps to advertise or through free samples. This helps them to capture larger sales.

4. Barrier to entry : The firm can easily exit from the industry whenever it wants, but to enter a new industry it has certain entry barriers like government license, patent right, etc.

5. Uncertainty : There is a great uncertainty in this market if the rival firms join hands and may try to fight each other.

6. Lack of Uniformity : The firms may produce either homogeneous or differentiated products. Eg. In automobile industry, Maruti, Indica are examples of differentiated product but cooking gas of Bharat Petroleum and Hindustan Petroleum are examples of homogeneous product or pure oligopoly.

Question 2.
Explain the types of Monopoly.
Answer:
There are different types of monopoly as analysed below:

(1) Natural Monopoly : A natural monopoly arises when a particular type of natural resource is located in a particular region like petrol or crude oil in Gulf countries. Also natural advantages such as good location, business reputation, age – old establishment s etc., confer natural monopoly. Similarly, many professional skills, natural talents give monopoly power. E.g. A singer or actor has monopoly of his skill, talent.

(2) Legal Monopoly : Legal monopolies are those monopolies which are recognised by law. Legal protection granted by the Government in the form of trade mark, copy rights, license etc., give monopoly power to j the firms. Here the potential competitors are j not allowed to copy the product registered under the given brand names, patents or trade marks according to the law.

(3) Joint Monopoly or Voluntary Monopoly : This monopoly arises through mutual agreement and business combinations like the formation of cartels, syndicate, trust etc. For e.g. Oil producing nations have come together and formed a Cartel OPEC Organisation of Petroleum Exporting Countries.

(4) Simple Monopoly : A simple monopoly firm charges a uniform price for its product to all the buyers.

(5) Discriminating Monopoly : A discriminating monopoly firm charges different prices for the same product to ) different buyers. E.g. a doctor, a teacher, a lawyer, etc., charges different fees from the people. The practice of charging different j prices from different buyers is called “Price discrimination.”

(6) Private Monopoly : When an individual or a private firm enjoys the monopoly of manufacturing and supplying a particular product, it is called private monopoly. The main aim of private monopolist is profit maximisation.

(7) Public Monopoly : When a field of production is solely owned, controlled and operated by the government, it is regarded as public monopoly. Eg. Public utility service like Railways, Electricity, Water Supply etc. Since these monopolies are service motivated and welfare oriented they are also called welfare monopolies.

6. Observe the table and answer the questions:

Question 1.
Fill in the blanks in the above schedule.
Answer:

Question 2.
Derive the equilibrium price from the above schedule with the help of a suitable diagram.

Answer:
In the diagram, equilibrium price is ₹ 30/- because at this point dd curve insects SS curve at point ‘P’. At this point DD is 300 doz of bananas and sellers are ready to sell 300 doz at price ₹ 3.

7. Answer in detail:

Question 1.
Explain the meaning of Monopolistic competition with its features.
Answer:

(1) Fairly large number of Sellers : There are large number of sellers selling closely related, but not identical products. There is tough competition among sellers. An individual seller supply is just a small part) of the total supply, so he has limited degree l of control over market supply and price. Each firm (seller) can formulate its own price and output policy independently.

(2) Fairly large number of Buyers: There are large numbers of buyers in a monopolistic competition market. Each buyer enjoys his preference over a particular brand and chooses to buy a specific brand of product. Hence, the buying is by choice and not by chance.

(3) Product Differentiation : The most distinguishing feature of monopolistic competition is that the product produced by different firms are not identical, they are slightly different from each other but they are close substitutes. The product differentiation can be done in different ways like may be in the form of brand names say Raymonds. It can be differentiated in terms of colour, size, design, etc., say soap, mobiles etc., or through sales technique. For e.g. cars, two wheelers, air conditioners, etc.

(4) Free Entry of Firms: A firm is free to enter the market as there are no entry barriers. Similarly there are no restrictions if the firm wants to quit the market. Freedom of entry leads to occurrence of only normal profit in the long run.

(5) Selling Cost : One of the special features of monopolistic competition is the selling cost. Selling costs are those costs, which are incurred by firms to create more and more demand for its products through advertisement, salesmanship, free samples, exhibitions, etc.

(6) Downward Sloping Elastic Demand Curve : The demand curve faced by each firm is downward sloping and comparatively more elastic. It implies that an individual firm can sell more only by reducing the price.

(7) Concept of Group : Under monopolistic competition, Prof. E. H. Chamberlin introduced the concept of group in place of Marshallian concept of industry. Industry means a number of firms producing identical products. A group means a number of firms producing differentiated product, which are close substitutes.

Question 2.
Explain the meaning of Perfect competition with its features.
Answer:

(1) Perfect Mobility of Factors of Production : Factors of production that is land, labour, capital are perfectly free to move from one firm to another or from one industry to another from one region to another or from one occupation to another. This ensures freedom of entry and exit for individuals and firms.

(2) Single / Uniform Price : There exists a single price for homogeneous product in the entire market at a given point of time. The price is determined by forces of demand and supply.

(3) Large Numbers of ellers : There are many sellers in this market. The number of sellers (firms) are so large that a single seller cannot influence the market price nor the total output in the market (Industry). The contribution of one seller is insignificant and microscopic. The price in the market is determined by the forces of market demand and market supply. Hence, a firm or seller is a ‘price taker’ and not a ‘price maker.’


(4) Homogeneous Product : The products produced by all the firms in the industry are identical and are perfect substitute to each other. The products are identical in shape, size, colour, etc. and hence uniform price rules the market for the product.

(5) Large Number of Buyers : There are large number of buyers in the market. One individual buyer’s demand is only a small fraction of total market demand so he is not in a position to influence the price. He is a price taker.

(6) No Government Intervention : It is assumed that the government does not interfere with the working of market economy. There are no tariffs, subsidies, licensing policy or other government interventions. This non – intervention of government is necessary to permit free entry of firms and automatic adjustment of demand and supply. In short, laissez faire policy prevails under perfect

(7) Perfect Knowledge : There is perfect knowledge on the part of buyers and sellers regarding the market conditions especially regarding market price. As a result no buyer will pay a higher price than the market price and no seller will charge a lower price than the market price. So a single price would prevail for a commodity in the entire market.

(8) Free Entry and Free Exit : There is freedom for new firms or sellers to enter the industry or market. There are no legal, j economic or any other type of restrictions or; barriers for new firms to enter the industry or an existing firms to quit the industry, Entry of new firm usually takes place j when existing firms enjoy abnormal profit. Similarly, existing firms quit the industry when they face losses.

(9) No Transport Cost: It is assumed that all firms are close to the market and hence there  is no transport cost. If the transport cost are added to the price of product then the homogeneous commodity will have different prices depending upon the distance from the place of supply to the market.

Question 1.
Do you know? (Textbook Page 50)
What is monopsony?
Answer:
Monopsony is opposite of monopoly market but it is rarely found in reality.
In monopsony, there are large number of sellers but buyer is only one. So buyer has complete control over the price in the market. He can bargain with the sellers and fix the price at his terms.

Find out (Textbook Page 50)

What are the types of monopoly of the following products or services and give reason.
(1) Tea in Assam, (2) Atomic energy, (3) Logo of a commercial bank
Answer:

Find out (Textbook Page 51)

Find the close substitutes for the following products:
Answer:

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Economics Chapter 4 Question Answer Supply Analysis Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 3B Elasticity of Demand Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 4 Supply Analysis Question Answer Maharashtra Board

Economics Class 12 Chapter 4 Question Answer Maharashtra Board

1. Complete the following statements:

Question 1.
When supply curve is upward sloping, it’s slope is ……………….
a) positive
b) negative
c) first positive then negative
d) zero
Answer:
a) positive

Question 2.
An upward movement along the same supply curve shows ………………..
a) contraction of supply
b) decrease in supply
c) expansion of supply
d) increase in supply
Answer:
c) expansion of supply

Question 3.
A rightward shift in supply curve shows ………………..
a) contraction of supply
b) decrease in supply
c) expansion of supply
d) increase in supply
Answer:
d) increase in supply

Question 4.
Other factors remaining constant, when less quantity is supplied only due to a fall in price, it shows ………………..
a) contraction of supply
b) decrease in supply
c) expansion of supply
d) increase in supply
Answer:
a) contraction of supply

Question 5.
Net addition made to the total revenue by selling an extra unit of a commodity is ………………..
a) total Revenue
b) marginal Revenue
c) average Revenue
d) marginal Cost
Answer:
b) marginal Revenue

2. Complete the Correlation:

1) Expansion of supply: Price rises:: Contraction of supply: ………………….
2) Total revenue : …………………. :: Average revenue :TR/TQ
3) Total cost : TFC + TVC :: Average cost : ………………….
4) Demand curve : …………………. :: Supply curve : Upward
5) …………………. : Change in supply :: Other factors constant: Variation of supply
Answers:
(1) Price falls
(2) PxQ
(3) TC ÷ TQ
(4) Downward
(5) Other factor changes

3. Give economic terms:

1) Cost incurred on fIxed factor.
2) Cost incurred per unit of output.
3) Net addition made to total cost of production.
4) Revenue per unit of output sold.
Answers:
(1) Fixed Cost
(2) Average Cost
(3) Marginal Cost
(4) Average Revenue

4. Distinguish between:

Question 1.
Stock and Supply.
Answer:

Question 2.
Expansion of Supply and Increase in Supply.
Answer:
Expansion / Extension of Supply

1. When the supply of a commodity rises only due to the rise in the price of the commodity, then it is said to be extension in supply.
2. Extension of supply is a case of variation in supply.
3. Rise in price is the only factor due to which supply expands / extends.
4. When there is extension in supply, there is an upward movement on the same supply curve.
   

Increase in Supply :

1. The supply is said to increase if at the same price more is supplied.
2. Increase in supply is a case of changes in supply.
3. Supply increases due to
   (1) fall in cost of production
   (2) improvement in transport facility
   (3) introduction of modern technology
   (4) government subsidies
   (5) more imports etc.
4. When there is an increase in supply, the supply curve shifts to the right of original supply curve.

Question 3.
Contraction of Supply and Decrease in Supply.
Answer:
Contraction of Supply

1. Contraction of supply occurs when quantity supplied of a commodity falls due to a fall in price alone.
2. It is a case of variation in supply.
3. Supply contracts due to fall in price alone.
4. When there is a downward n curve.

Decrease in Supply

1. Decrease in supply occurs when less quantity is supplied at the same price.
2. It is a case of changes in supply.
3. Supply decreases due to –
   (1) increase in cost of production
   (2) transport strike
   (3) outdated technique
   (4) heavy taxes imposed by government.
   (5) more exports etc.
4. When there is curve shifts to curve.
   

Question 4.
Average Revenue and Average Cost.
Answer:

5. Observe the following table and answer the questions.

A) Supply schedule of chocolates

Question 1.
Complete the above supply schedule.
Answer:

Question 2.
Draw a diagram for the above supply schedule.
Answer:

Question 3.
State the relationship between price and quantity supplied.
Answer:
This diagram shows the direct relationship / between price and quantity supplied of) chocolates. When its price is ? 10, 200 units ( are supplied and as price rises to 15, 20, 25 ? …. and so on, quantity supplied also rises to )
When the schedule is plotted on the graph we 250, 300, 350 and so on. This is the law of supply of an individual firm.

B) Observe the market supply schedule of potatoes and answer the following questions.

Question 1.
Complete the quantity of potato supplied by the firms to the market in the above table.
Answer:

Question 2.
Draw the market supply curve from the schedule and explain it.
Answer:

When the schedule is plotted on the graph we get a market supply curve ‘SS’ which is upward sloping. This curve shows that as price rises from ₹ 1 to ₹ 2, supply rises from 1oo to 112 kg, but when price rises from ₹ 2 to ₹ 3, supply rises to a greater extent from 112 kg to 155 kg in the market. When price rises to ₹ 4 Supply falls from 155 kg to 154 kg. This may be because of perishable or seasonal good that supply could not Jj be increased and supply falls. This show backward bending supply curve, showing partly an exception to the supply curve.

6. Answer the following questions:

Question 1.
Explain the concept of total cost and total revenue.
Answer:
Total Cost (TC): It is the total expenditure incurred by a fir m on the factors of production required for the production of goods and services. Total cost is the sum of Total Fixed Cost (TFC) and Total Variable Cost (TVC). Total Fixed Cost is the cost incurred on fixed factors of production like land, factory, building, capital, etc. These factors cannot be changed in the short period. They remain constant. Total Variable Cost is the cost incurred on variable factors such as raw – materials, labour, etc. These factors can be varied or changed according to the change in output level. So the variable cost varies. Total Cost = Total Fixed Cost + Total Variable Cost
i.e., TC = TFC + TVC
TC increases as the level of output increases.

Total Revenue :
(Income) refers to total receipts of the firm from its sales of commodity. It is obtained by multiplying the price per unit of the  commodity with the total number of units!; of commodity sold to the consumers. Thus, Total Revenue = Price per unit Total  Number of units of commodity sold.
Example : If the firm sells lo units of a commodity at ₹ 100 per unit then total revenuewifibe TR = 100 x 10. TR= ₹ 1000

Question 2.
Explain determinants of supply.
Answer:

1. Cost of Production : Changes in the price of factors of production like rent, wages, interest affects the cost of production. When cost of production increases, supply decreases.
2. Price of Other Goods : The supply of a given commodity depends on the price of other commodity. E.g. if the price of wheat rises and that of rice remains the constant, then the producer will think of producing J more of wheat. This will affect the supply of rice.
3. price of the Commodity : Price is an important factor influencing the supply. More is supplied at a higher price and less at a lower price. So price and supply are 5 directly related.
4. Climatic Conditions : The supply of j commodity is also influenced by the forces
5. Government Policy : Government policies like taxation, subsidies, industrial policies etc., may encourage or discourage production and supply. A tax on the commodity will raise the cost of production and reduce the supply while a subsidy on the other hand will provide an incentive to increase production and supply.
6. Exports and Imports : When the
   government resort to imports, supply expands, at the same time heavy exports would reduce the supply in the domestic market.
7. Nature of Market : In a competitive market, the supply would be more but in a monopoly market the seller may create artificial scarcity to raise the price.
8. Future Expectation : If future trends indicate a rise in price, the supply decreases at present. On the other hand if the sellers expect the future price to fall, supply would increase in the current period.
9. Technique of Production : Improvement in the technique of production will lead to increase in supply. Application of advanced technology enables the producer to produce goods on large scale at a lower cost and lesser price.
10. Infrastructure Facility : If means of transport and communication are well developed, the extent of market would be wide. i.e. supply will increase.
11. Natural and Man-made Calamities : Natural calamities like earthquake, cyclone, flood etc., will affect the supply in the market. Even man-made calamities like a bomb-blast, affects supply. Even a strike call can affect supply in the market.

7. Answer in detail :

Question 1.
State and explain law of supply with exceptions.
Answer:
Law of Supply :
(A) Introduction : The law of supply was introduced by Dr. Alfred Marshall in his book “Principles of Economics” published in 1890. The law establishes a functional relationship between the price of a commodity and quantity supplied of that commodity. It explains the general tendency of the sellers in offering more goods for sale at a higher price than at a lower price.

(B) Statement of the Law : According to Prof. Alfred Marshall “Other things remaining constant, the higher the price of the commodity, greater is the quantity supplied and lower the price of the commodity, smaller is the quantity supplied.”In other words, quantity supplied of a commodity varies directly with price i.e., with a fall in price supply contract and with a rise in price supply expands.
S = f (P) [S = Supply, P = Price, f = Function of]
The law can be better understood with the help of a market supply schedule and market supply curve.

(C) Market Supply Schedule : Market supply schedule is a tabular representation of various quantities of a commodity offered for sale by all the sellers in the market at different prices during a given period of time. The schedule is a hypothetical one except one price rest are imaginary prices.

The above schedule clearly shows that sellers in general want to sell more at high prices and less at low price. E.g., at a low price of Rs.10 per unit the seller supplies only 100 units per day and at high price of Rs. 50 the supply rises to 500 units of ‘X’ per day.

(D) Market Supply Curve : It is graphical representation of the above market supply schedule. Price is measured on ‘Y’ axis and quantity supplied on ‘X’ axis and above schedule is plotted. We derive a supply curve SS.

Market Supply Schedule

There are some exceptions to the law of s supply. Following are such cases when supply may fall with the rises in price or rise with the fall in price.

(1) Labour supply : Supply of labour in the ) terms of hours of work is an important exception pointed out by economists. Generally when wages rise, workers work more, but after a certain point if wages continue to rise, supply of labour falls i.e. workers wish to earn more by work in for less hours and supply curve of labour would bend backwards as shown below :

In this figure as wage rate rises up to 0W, ;i supply of labor also rises up to ON, but when wage rate rises to 0W., labour supply falls from ON to 0Nr Hence an exception.

(2) Saving : In case of savings generally it is observed that as the rate of interest rises, savings also rises but some people want to have a fixed regular income by way of interest. They may save less at a higher rate of interest and save more at a lower rate of interest. For example : suppose a person is interested in earning a fixed income of ₹ 800 p.a. then he saves ₹ 10,000/- at 8% rate of interest but when rate of interest increases to 10%, he will save only ₹ 8,000/-.

(3) Future Expectations: If the seller expects a fall in price in future, then he will supply more today even at a low price. But if he expects the prices to rise further in future he will withhold the supply today to supply more in future at a high price.

(4) Need for Cash : When the sellers are in urgent need of liquid cash, then even at a lower price they will offer more goods for sale.

(5) Rare Goods : In case of rare collections such as rare painting, old coins, antique, the law is not applicable as the supply remains fixed. The supply curve is a vertical straight line parallel to Y axis.

(6) Agricultural Goods: Supply of agricultural product is influenced by natural factors like climatic conditions, rainfall etc., which cannot be controlled by man. So in bad weather condition, even at a higher price the supply of agricultural commodities will not increase.

Intext Questions

Question 1.
“Concept of supply is a micro concept but concept of aggregate supply is a macro concept”. Explain. (Textbook Page No. 43)
Answer:
Micro economics studies about economic behavior of units like households, firm market and particular commodities. Whereas macro economics deals with the broad economic concepts like total demand, total supply, national income, etc.
Supply refers to supply of an individual seller and aggregate supply refers to total supply of a commodity.
Hence, supply is a microscopic concept and aggregate supply is macro concept.

Question 2.
What do you mean by aggregate supply? (Textbook Page No. 43)
Answer:
Aggregate supply refers to the minimum amount of sales proceeds which the entrepreneurs expect to receive from the sale of output at a given level of employment.

Find out (Textbook Page No. 43)

If a firm produces 600 units of a commodity in a day and incurs a total cost of ₹ 30,000. Calculate the Average Cost.
Answer:
Average cost refers to the cost of production per unit cost of a commodity. It is calculated by dividing total cost by total quantity of a commodity. Hence,
AC = \(\frac{\mathrm{TC}}{\mathrm{TQ}}=\frac{30,000}{600}\) = ₹ 50 per unit

Find out (Textbook Page No. 43)

If a firm sells 400 units of a commodity at ₹ 10 unit. Calculate the TR and AR.
Answer:
TR = Price X Quantity
= 10 x 400
= 4,000
AR = \(\frac{\mathrm{TR}}{\mathrm{TQ}}\)
= \(\frac{4,000}{400}\)
= ₹ 10

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Economics Chapter 3B Question Answer Elasticity of Demand Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 4 Supply Analysis Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 3B Elasticity of Demand Question Answer Maharashtra Board

Economics Class 12 Chapter 3B Question Answer Maharashtra Board

1. Complete the following statements:

Question 1.
Price elasticity of demand on a linear demand curve at the X-axis is ……………
a) zero
b) one
c) infinity
d) less than one
Answer:
a) zero

Question 2.
Price elasticity of demand on a linear demand curve at the Y-axis is equal to
a) zero
b) one
c) infinity
d) greater than one
Answer:
c) infinity

Question 3.
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
Answer:
a) perfectly elastic demand

Question 4.
When percentage change in quantity demanded is more than the percentage change in price, the demand curve is ………………..
a) flatter
b) steeper
c) rectangular
d) horizontal
Answer:
a) flatter

Question 5.
Ed = 0 in case of ………………
a) luxuries
b) normal goods
c) necessities
d) comforts
Answer:
c) necessities

2. Give et onomic terms:

Question 1.
Degree of responsiveness of quantity demanded o change in income only.
Answer:
Income elasticity

Question 2.
Degree of responsiveness of a change in quantity demanded of one commodity due to change in the price of another commodity.
Answer:
Cross elasticity

Question 3.
Degree of responsiveness of a change of quantity demanded of a good to a change in its price.
Answer:
Elasticity of demand

Question 4.
Elasticity resulting from infinite change in quantity demanded.
Answer:
Perfectly elastic demand

Question 5.
Elasticity resulting from a proportionate change in quantity demanded due to a proportionate change in price.
Answer:
Price elasticity

3. Complete the correlation:

1) Perfectly elastic demand: Ed = ∞ :: ……………. : Ed = 0
2) Rectangular hyperbola : ………………. : Steeper demand curve : Relatively inelastic demand.
3) Straight line demand curve : Linear demand curve:: …………….. non linear demand curve.
4) Pen and ink : …………….. :: Tea or Coffee: Substitutes.
5) Ratio method : Ed = \(\frac{\% \Delta \mathbf{Q}}{\% \Delta \mathrm{P}}\) :: …………… : Ed = \(\frac{\text { Lower segment }}{\text { Upper segment }}\)
Answer:

1. Perfectly inelastic demand
2. Unitary elastic demand
3. Unitary elastic (convex to origin)
4. Complementary goods
5. Point or Geometric method

4. Assertion and Reasoning type questions:

Question 1.
Assertion (A) : Elasticity of demand explains that one variable is influenced by another variable.
Reasoning (R) : The concept of elasticity of demand indicates the effect of price and changes in other factors on demand.
Options: 1) (A) is True, but (R) is False
2) (A) is False, but (R) is True
3) Both (A) and (R) are True and (R) is the correct explanation of (A)
4) Both (A) and (R) are True and (R) is not the correct explanation of (A)
Answer:
3) Both (A) and (R) are True and (R) is the correct explanation of (A)

Question 2.
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:
1) (A) is True, but (R) is False
2) (A) is False, but (R) is True
3) Both (A) and (R) are True and (R) is the correct explanation of (A)
4) Both (A) and (R) are True and (R) is not the correct explanation of (A)
Answer:
4) Both (A) and (R) are True and (R) is not the correct explanation of (A)

Question 3.
Assertion (A) : Degree of price elasticity is less than one in case of relatively inelastic demand.
Reasoning (R): Change in demand is less then the change in price.
Options: 1) (A) is True, but (R) is False
2) (A) is False, but (R) is True
3) Both (A) and (R) are True and (R) is the correct explanation of (A)
4) Both (A) and (R) are True and (R) is not the correct explanation of (A)
Answer:
3) Both (A) and (R) are True and (R) is the correct explanation of (A)

5. Distinguish between:

Question 1.
Relatively elastic demand and Relatively inelastic demand.
Answer:
Relatively Elastic Demand

1. When percentage change in quantity demanded is greater than the percentage change in price then demand is said to be Relatively Elastic demand.
2. The numerical co-efficient is greater than one (e > 1).
3. Demand curve slopes flatter.
4. 
5. Example : luxury goods like LCD, TV, Car etc.

Relatively inelastic demand.

1. When percentage change in quantity demanded is less than percentage change in price then demand is said to be Relatively Inelastic demand.
2. The numerical co-efficient is less than one (e < 1).
3. Demand curve slopes steeper.
4. 
5. Example : foodgrains.

Question 2.
Perfectly elastic demand and Perfectly inelastic demand.
Answer:
Perfectly elastic demand :

1. When a small change in price brings an infinite change in quantity demanded, then demand is said to be Perfectly Elastic demand.
2. The numerical value of Perfectly Elastic demand is infinite i.e. e = ∞
3. The demand curve is horizontal straight line parallel to X-axis.
4. Such a demand is a myth or theoretical.
5. 

Perfectly inelastic demand.

1. When a change in price does not bring any change in quantity demanded, then demand
   is said to be Perfectly Inelastic demand.
2. The numerical value of Perfectly Inelastic demand is zero i.e. e = 0.
3. The demand curve is a vertical straight line parallel to Y—axis.
4. Such demand is found in case of life saving drugs, salt, etc.
5. 

6. Answer the following questions:

Question 1.
Explain the factors influencing elasticity of demand.
Answer:
The concept of Price Elasticity was developed i by great neo-classical economist Dr. Alfred \ Marshall in the year 1890.
According to Dr. Alfred Marshall, “The elasticity or responsiveness of demand in a market is great or small, according to the amount demanded which increases much or little for a given fall in price, and diminishes much or little for a given rise in price. ”
Elasticity of demand in fact refers to the £ degree of responsiveness of the quantity demanded of a commodity to change in the variable on which demand depends.

Question 2.
Explain the total outlay method of measuring elasticity of demand?
Answer:
Total Outlay Method : This method was introduced by Dr. Alfred Marshall. The limitation of this method is that in this method unlike ratio method, the exact numerical value of the elasticity of demand cannot be determined. According, to this method, the elasticity of demand is measured on the basis of expenditure incurred by consumer when the price of a commodity changes.

Total outlay or total expenditure can be calculated by multiplying the price with the quantity demanded (Price x Quantity demand = Total Expenditure). Depending upon the kind of change in total outlay, whether it increases, or decreases, or remain constant with the change in price we will be able to decide the type of elasticity. This can be explained with the following example:-

1. If the total outlay remains the same with a rise or fall in price then the demand is said to be unitary (e = 1) elastic.
2. If the total outlay decreases with a rise in price and increases with a fall in price, the elasticity of demand is greater than one or Relatively Elastic e > 1.
3. If the total outlay increases with a rise in price and decreases with a fall in price, then elasticity is less than one or relatively inelastic, e < 1.

Question 3.
Explain importance of elasticity of demand.
Answer:

• Nature of Commodity : By nature, commodities are classified as necessaries, comforts and luxuries. Normally demand for j necessaries like food grains are relatively inelastic and for comforts and luxuries like diamond, perfumes, etc is relatively elastic.
• Availability of Substitutes : The larger the number of substitutes available for a commodity, the greater would be the elasticity. Demand for products like soap, soft drinks, detergents, tooth paste, etc. have many substitute so demand is elastic, ‘j However, salt, garlic, onions have no substitute so demand is inelastic.
• Durability of the Commodity : The demand for durable goods like T.V., car, fridge, etc is relatively inelastic in the short run and elastic in the long run. Whereas the demand for perishable goods is relatively inelastic.
• Uses of Commodity : Single use commodities have less elastic demand and multi-use goods like coal, electricity, sugar, etc. have relatively elastic demand.
• Range of Price : The demand for commodities which are highly priced and will have a inelastic demand like AC, car, etc. Even very low priced goods have inelastic demand.
• Consumer’s Income : Generally if income is very high, the demand for over allcommodities tends to be relatively inelastic. The demand pattern of the rich people is rarely affected even when there is significant price change.
• Influence of Habits and Customs : When a person is habituated to consume a certain commodity, the demand will be inelastic for that commodity. E.g. demand for cigarettes to a chain smoker is inelastic.
• Time Period : The demand for goods is less elastic in the short period and more elastic in the long period. This is because (1) in the long period consumer are better informed about their price (2) habits of consumer’s change in the long run (3) durable goods get worn out in the long period.
• Proportion of Income Spend : If consumer spends a very small proportion of his income on a commodity, the demand for it will be relatively inelastic & vice-versa. For e.g. demand for salt, newspaper, pins are inelastic.
• Urgency and Postponement : If the demand for a commodity is urgent then demand for it will be inelastic. E.g. demand for medicine for a patient. Whereas, if the demand for a commodity can be postponed it will have elastic demand.
• Complementary Goods : Complementary goods are those goods which are demanded jointly such as car and petrol, mobile and sim cards, etc. Demand for petrol will be inelastic as car cannot run without petrol.

7. Observe the following figure and answer the questions:

Question 1.
Identify and define the degrees of elasticity of demand from the following demand curves.

Answer:

Concept: Perfectly Inelastic demand (Ed = 0) Explanation : When change in price has no effect on the quantity demanded of that commodity, then it is called as perfectly inelastic demand. Demand curve ‘DD’ is a vertical straight line parallel to ‘Y’ – axis.

Concept: Perfectly Elastic demand (Ed = ∞) (infinity)
Explanation: When a change in price leads to infinite change in quantity demanded of a commodity then it is called as perfectly) (d) elastic demand.
Demand curve is horizontal straight line ( parallel to ‘X’ – axis.

Concept: Ed = 1 Unitary elastic demand Explanation : When proportionate or percentage change in quantity demanded is exactly equal to proportionate or percentage change in price, then it is called as Unitary Elastic demand. Demand curve is called as rectangular hyperbola.

Concept: Relatively Elastic Demand (Ed > 1)
Explanation : When proportionate or percentage change in quantity demanded is more than proportionate change it its price, then it is called as Relatively Elastic Demand. Demand curve is called as flatter curve.

Question 2.
In the following diagram AE is the linear demand curve of a commodity. On the basis of the given diagram state whether the following statements are True or False. Give reasons to your answer.

1) Demand at point ‘C’ is relatively elastic demand.
2) Demand at point ‘B’ is unitaiy elastic demand.
3) Demand at point ‘D’ is perfectly inelastic demand.
4) Demand at point ‘A’ is perfectly elastic demand.
Answer:

1. Demand at point ‘C’ is relatively elastic demand.
2. False, it is relatively inelastic demand.
3. False, it is relatively elastic demand.
4. False, it is unitary elastic demand.
5. True, it is perfectly elastic Ed = ∞

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Economics Chapter 3A Question Answer Demand Analysis Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 3A Demand Analysis Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 3A Demand Analysis Question Answer Maharashtra Board

Economics Class 12 Chapter 3A Question Answer Maharashtra Board

1. Complete the following statements:

Question 1.
The relationship between demand for a good and the price of its substitute is ……………
(a) direct
(b) inverse
(c) no effect
(d) can be direct and inverse
Answer:
(a) direct

Question 2.
The relationship between income and demand for inferior goods is …………….
(a) direct
(b) inverse
(c) no effect
(d) can be direct and inverse
Answer:
(b) inverse

Question 3.
Symbolically, the functional relationship between Demand and Price can be expressed as …………….
(a) D = f(Px)
(b) Dx = f (P2)
(c) D = f(y)
(d) D = f(T)
Answer:
(a) D = f(Px)

Question 4.
When less units are demanded at high price it shows ……………..
(a) increase in demand
(b) expansion of demand
(c) decrease in demand
(d) contraction in demand
Answer:
(d) contraction in demand

2. Give economic terms

1. A situation where more quantity is demand at lower price…………….
2. Graphical representation of demand schedule……………….
3. A commodity which can be put to several uses……………….
4. More quantity is demanded due to changes in the factors determining demand other than price…………..
5. A desire which is backed by willingness to purchase and ability to pay……………
Answers:
(1) Expansion or Extension of Demand
(2) Demand Curve
(3) Composite Demand
(4) Increase in Demand
(5) Demand

3. Distinguish between:

Question 1.
Desire and Demand
Answer:

Question 2.
Expansion of demand and Contraction of demand
Answer:

Question 3.
Increase in demand and Decrease in demand
Answer:

4. State with reasons whether you agree or disagree with the following statements:

Question 1.
Demand curve slopes downward from left to right.
Answer:
Yes, I agree with this statement.

Reasons justifying downwards sloping demand curve are as follows:

• The law of DiminishingMarginal Utility: Marginal utility goes on diminishing when there is increase in the stock of commodity and consumer tends to buy more when price falls and vice-versa.
• Income Effects : Whenever there is a fall in price of a commodity, purchasing power of a consumer gets increased, which enables him to buy more of that commodity.
• Substitution Effect : When price of commodity rises consumer tends to buy more of cheaper substitute goods and less of the commodity whose price has increased.
• Multi-purpose Uses : When a commodity can be used for satisfying multiple needs, its demand will rise with a fall in its price and vice-versa.
• New Consumers : When there is fall in price of a commodity, a new consumer class buy the commodity as they can afford it. Thus total demand for commodity increases with fall in price.

Question 2.
Price is the only determinant of demand.
OR
Price is the only factor that affects demand for a commodity
Answer:
No, I do not agree with the given statement. This is because there are various factors that determine demand other than price.

Reason:
The following are a few determinants:
Income of the consumer – Change in the income of the consumer also affects the market demand for goods. The effect of the change in income on the market demand depends on the type of the good.

Type of Good – The market demand for normal goods shares a positive relationship with the consumer’s income. The market demand for inferior goods (such as coarse cereals) has a negative relationship with the consumer’s income.

The market demand for Giffen goods also has a negative relationship with the income.
Consumer’s tastes and preferences – Consumers’ tastes and preferences highly influence the demand for goods. Other things being constant, if all consumers prefer a commodity over another, then the market demand for that commodity increases and vice versa.

Population size – The market demand for a commodity is also affected by the population size. Other things being equal, an increase in the population size increases the market demand for a commodity and vice-versa. This is because with the change in population size, the number of consumers in the market changes.

Question 3.
When price of Giffen goods fall, the demand for it increases.
Answer:
I Disagree with the statement.
Reason:
When price of Giffen goods falls, the demand for its decreases.
Inferior goods or low-quality goods are those goods whose demand does not rise even if their price falls. At times, demand decreases when the price of such commodities fall. Sir Robert Giffen observed this behaviour in England in relation to bread declined, people did not buy more because of an increase in their real income or purchasing power. They preferred to buy superior-good like meat. This is known as Giffen’s paradox.

5. Observe the following table and answer the following questions:

Question 1.

a) Complete the market demand schedule.
Answer:

b) Draw market demand carve based on above market demand schedule.
Answer:

Question 2.
Observe the given diagram and answer the following questions:

1) Rightward shift in demand curve …………….
2) Leftward shift in demand curve …………….
3) Price remains …………….
4) Increase and decrease in demand comes under …………….
Answer:

1. Increase in demand (D₁D₁).
2. Decrease in demand (D₂D₂).
3. Constant.
4. Change in demand.

Question 3.
Explain the diagrams:

1) Diagram A represents ……………. in demand
Answer:
Expansion or Extension.

2) In diagram A movement of demand curve is in ………………… direction
Answer:
Downward.

1) Diagram B represents …………………… in demand
Answer:
Constraction.

2) In diagram B movement of demand curve is in …………………… direction
Answer:
Upward.

6. Answer in detail :

Question 1.
State and explain the law of demand with exceptions.
Answer:
(A) Introduction : The law of demand is one of the important law of consumption which explain the functional relationship between price and quantity demanded of a commodity. Prof. Alfred Marshall in his book ‘Principle of Economics’ which was published in 1890, has explained the consumer’s behaviour as follows:

(B) Statement of the Law : According to Prof. Alfred Marshall, “Other things being equal, higher the price of a commodity, smaller is the quantity demanded and lower the price of a commodity, larger is the quantity demanded.
In other words, other things remaining constant, demand varies inversely with price. Marshall’s law of demand describes the functional relationship between demand and price. It can be presented as:
D_x = f(P_x)
where D = Demand for Commodity
x = Commodity
f = function
P_x = Price of a commodity
(C) Assumption :

• Prices of Substitute goods remain constant : The price of substitute goods should remain unchanged, as change in the price will affect the demand for the commodity.
• Prices of Complementary goods s remains constant : A change in the price j of one good will affect the demand for other,  thus the prices of complementary goods  should remain unchanged.
• No Expectation about future changes jj in prices: The consumers do not expect any \ significance rise or fall in the future prices.
• No change in Taxation Policy : The level of direct and indirect tax imposed by the government on the income and goods should remain constant.
• Constant Level of Income : Consumer’s income must remain unchanged because if income increases, consumer may buy more even at a higher price not following the law of demand.
• No Change in Tastes, Habits, Preference, Fashions, etc. : If the taste changes then the consumers preference will also change which will affect the demand. When commodities are out of fashion, then demand will be low even at a lower price.

(D) Explanation of the law of Demand :
The law of demand is explained with the help of the following demand schedule and diagram:
Demand Schedule

From the above demand schedule we observe that at higher price of ₹ 50 per kg, quantity demanded is 1 kg. When price fall from ₹ 50 to ₹ 40, quantity demanded rises from 1 kg to 2 kg. Similarly, at price ₹ 30 quantity demanded is 3kg and when price falls from ₹ 20 to ₹ 10 quantity demanded rises from 4 kg to 5 kg. This shows an inverse relationship between price and demand.

In the above diagram X-axis represent quantity demanded and Y-axis represent the price of the commodity. The demand curve DD slopes downwards from left to right ] showing an inverse relationship between price and demand. It has a negative slope.

(E) Exceptions to the Law of Demand :
No, I do not agree with this statement.
There are some important cases in which the demand for the commodity is greater when price rises and smaller when price falls. Such cases are called exceptions to the law of Demand. In such case, demand curve slopes upwards from left to right and it has a positive slope.

• Prestige Goods : Rich people buy more expensive goods like gold, diamonds, etc., even when there prices are high to maintain their status.
• Giffen Paradox : Demand for low quality goods and inferior goods decrease even if there prices falls.
  According to Sir Robert Giffen when price of bread declined, people did not buy more because of increase in their real income and they prefer to buy superior goods like meat.
• Speculation : People are tend to buy more commodities if they expect prices to rise further. E.g. prices of oil, sugar, etc., are expected to rise before Diwali, so people buy more of these commodities even at higher price.
• Habitual goods : Due to habit of
  consumption, certain goods like tea is purchased in required quantities even at higher price.
•  Ignorance : Sometimes people completely ignore the price of commodity and buy more of that commodity ignoring higher price.
• Price Illusion: Consumer feels that good at higher price are of better quality, therefore demand for such goods are higher even at rise in their prices.

Question 2.
Explain in detail the determinants of demand.
Answer:
Meaning of Demand : Demand refers to a desire or want for goods. Desire is the willingness to have some commodity which is backed by willingness and ability to pay.
Definition : According to Benham, “The demand for anything at a given price is the amount of it, which will be bought per unit of time at that price.

Features of Demand :

1. Demand is a relative concept.
2. Demand is essentially expressed with reference to time and price. ?

Determinants of Demand :

1. Price of Complementary Goods : Demand changes with changes in price of complementary goods like car and petrol, etc.
2. Advertisement : Effective advertisement and sales promotion will lead to greater demand of product. E.g. cosmetics, toothbrush, etc.
3. Price : Demand for a commodity is mainly influenced by its price. Normally at a higher price the demand is less and at a lower price it is more. Thus, demand varies inversely with price of a commodity.
4. Taste, Habits and Fashions : Habits influence market demand. If people habituated to the consumption of certain goods they will not give up such habits easily. E.g. demand for liquor, cigarettes, etc. Sometimes fashion change attitude and preference of people which in turn changes market demand.
5. Income: Income determines the purchasing power. Rise in income will lead to a rise in demand of a commodity and fall in income will lead to a fall in demand of a commodity.
6. Other Factors : (a) Climatic condition, (b) Changes in technology, (c) Government policy, (d) Customs and traditions, etc.
7. Nature of Product: Under necessary and unavailable circumstances the demand of a commodity will continue to be same irrespective of the corresponding price. E.g. medicine to control blood-pressure.
8. Level of Taxation : There would be increase in price of goods and services due to high rates of taxes which results in a decrease in demand and vice-versa.
9. Expectation about the Future Prices : If the consumer expect a rise in price in the near future they will demand more at present price. Similarly, when they expect price to fall, then they will buy less at present prices.
10. Price of Substitute Goods : Demand for cheaper substitute goods will rise when there is fall in price of such goods. E.g. when sugar price rises, then the demand for jaggery will rise.
11. Size of Population: Demand for commodity depends upon size and composition of population like age structure, gender ratio which influence demand for certain goods. E.g. larger the child population, more will be the demand for toys, chocolates, etc.

Intext Questions

Activity : (Textbook Page no. 17)

Identify the concepts :

(i) A poor person wants to have a car.
Answer:
Desire : because he does not have ability and capacity to pay the price for a car.

(ii) A rich person bought a car.
Answer:
Demand : because a rich person has a desire as well as capacity to pay a car.

Activity : (Textbook Page no. 19)

Prepare a monthly demand schedule of your family for various commodities. For example, vegetables, fruits, medicines, etc.
Answer:
[Students should do this activity by themselves]

Activity : (Textbook Page no. 19)

Complete the following hypothetical demand schedule.

Answer:

Activity : (Textbook Page no. 20)

Complete the table.


Answer:

Activity : (Textbook Page no. 22)

Draw a demand curve from the following demand schedule :

Answer:

Activity : (Textbook Page no. 23)

Find out : Examples of the given exceptions to the law of demand.

(1) Prestigious Goods
Answer:
Car, Gold, Diamond, etc.

(2) Habitual Goods
Answer:
Cigarette, Tea, Drugs, Chocolates, etc.

(3) Branded Goods
Answer:
Godrej Lockers, Levis Jeans, Sony T.V, etc.

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Economics Chapter 2 Question Answer Utility Analysis Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 2 Utility Analysis Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 2 Utility Analysis Question Answer Maharashtra Board

Economics Class 12 Chapter 2 Question Answer Maharashtra Board

1. Complete the following statements by choosing the correct alternatives.

Question 1.
In the law of diminishing marginal utility, Alfred Marshall assumes that the marginal utility of money …………..
(a) increases
(b) remains constant
(c) decreases
(d) rises and then falls
Answer:
(b) remains constant

Question 2.
As per the law of diminishing marginal utility, measurement of utility is assumed to be ……………
(a) ordinal
(b) cardinal
(c) both ordinal and cardinal
(d) none of the above
Answer:
(b) cardinal

Question 3.
MU of the commodity becomes negative when TU of a commodity is ………….
(a) rising
(b) constant
(c) falling
(d) zero
Answer:
(c) falling

Question 4.
Point of satiety means ……………….
(a) TU is rising and MU is falling
(b) TU is falling and MU is negative
(c) TU is maximum and MU is zero
(d) MU is falling and TU is rising
Answer:
(c) TU is maximum and MU is zero

Question 5.
When MU is falling, TU is ………………
(a) rising
(b) falling
(c) not changing
(d) maximum
Answer:
(a) rising

2. Choose the correct option:

Question 1.

Options :
(1) 1 – d, 2 – b, 3 – a, 4 – c.
(2) 1 – b, 2 – a, 3 – d, 4 – c.
(3) 1 – a, 2 – b, 3 – e, 4 – d.
(4) 1 – b, 2 – c, 3 – d, 4 – e.
Answer:
(2) 1 – b, 2 – a, 3 – d, 4 – c.

Question 2.
Statments 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:
I) a and b
II) a, b,c and d
Ill) a,b and c
IV) only b
Answer:
IV) only b

3. Identify and explain the concept from the given illustrations.

Question 1.
Salma purchased sweater for her father in winter season.
Answer:
Concept: Time utility.
Explanation : When utility of a commodity increases during a particular season it is called time utility.
Utility of sweater increases in winter season.

Question 2.
Nilesh purchased ornaments for his sister.
Answer:
Concept: Possession utility.
Explanation : When the ownership of a product changes from seller to buyer, it is called possession utility.
In the given example, ornaments are purchased by Nilesh for his sister. Ownership of a product changed, so it is an example of possession utility.

Question 3.
Kavita consumed five units of oranges one after the other.
Answer:
Concept: Successive consumption.
Explanation : To experience the law of DMU, there should be consumption of units of commodity, without time gap. It is called successive consumption.
The given example explains that five oranges are consumed by Kavita one after another without interval of time.

Question 4.
Bhushan refused to eat fifth chapati after eating four chapatis.
Answer:
Concept: Disutility.
Explanation : When the want is fully satisfied, a consumer realises full satisfaction i.e. point of satiety.
But, beyond this point, he experiences negative utility. So, he refuses to consume any more unit of commodity.
If consumption continues, it results into disutility.

Question 5.
Lalita satisfied her want of writing on essay by using pen and notebook.
Answer:
Concept: Utility.
Explanation : Utility is want satisfying capacity of a commodity.

The given example explains that, Lalita’s want of writing an essay can be satisfied with the help of pen and note-book.

4. Observe the given table and answer the questions:

1) Draw total utility curve and marginal utility curve.
2) a) When total utility is maximum marginal utility is …………….
b) When total utility falls, marginal utility becomes ……………
Answers:
1.

2. Zero
3. Negative

5. Answer in detail:

Question 1.
State and explain the law of diminishing margmal utility with exceptions.
OR
State and explain the law of DMU? Explain its assumptions.
Answer:
Law of Diminishing Marginal Utility :
(A) Introduction:
The law of diminishing M.U. explains economic behaviour of a rational consumer.
The law was first proposed by Prof. Gossen and further explained in detail by Prof. Alfred Marshall in his book “Principles of J economics” published in 1890.
The law of DMU is universal in nature. It ) indicates common consumer’s behaviour that Marginal Utility diminishes with reduction in the intensity of want.

(B) Statement of the Law :
According to Prof. Alfred Marshall, “Other things remaining constant, the additional benefit which a person derives from a given increase in his stock of a thing, diminishes with every increase in the stock that he already has”.
In simple words, law of DMU can be stated as follows :
“Other things being the same, MU goes on ) diminishing with every successive unit of a j commodity consumed.”

Thus, the law of DMU explains that, the more of a thing you have, the less you want to have more of it.
In short, as consumption of identical units of commodity increases, MU diminishes.

(C) Assumptions of the law of DMU :
Assumptions are those conditions which are necessary for the validity of the law. They are as follows :

• Cardinal Measurement: The law assumes that utility can be measured cardinally i.e. in numbers. So, it is possible to express and compare the utility derived from each unit of commodity consumed.
• Homogeneity : It is assumed that all the units of commodity consumed are homogeneous or same. They are identical in case of size, shape, taste, colour, flavor, etc.
• Rationality : A consumer is assumed to be rational. His behaviour is normal from economic’s point of view. It means, he tries to get maximum satisfaction.
• Continuity : All units of commodity are consumed successively, one after another, without time interval.
• Reasonability : The law assumes that, all the units of commodity consumed are reasonable in size. The unit of measurement is neither too big nor too small e.g. a cup of tea, glass of water, etc.
• Divisibility : A commodity is assumed to be divisible. So it is possible to divide the units of commodity in a proper size.
• Constancy : It is assumed that related factors like income, taste and preference, habits, choice of a consumer remain constant. MU of money is also assumed to be constant.
• Single want: A given commodity is used to satisfy a single want of a person. So that it is possible to experience full satisfaction from a single want.
• Schedule and Diagram :
  The law can be explained with the help of following schedule and diagram :

The above given schedule shows that MU goes on diminishing with an increases in units of commodity consumed.
Graphical Presentation :

In the above given diagram, X-axis indicates units of commodity and Y-axis measures marginal utility.
Various points are plotted on the graph which indicates MU derived from each unit } of commodity consumed.
When all these point are joined, we get MU curve. It slopes downward from left to right. It shows that MU diminishes as consumption of a commodity increases.
The shaded portion of the diagram shows negative utility. It is because, beyond a certain level, further consumption of a commodity results into disutility.

(E) Exceptions to the law of Diminishing M.U.
Exceptions are those cases for which the law is not applicable. They are as follows :

1. Hobbies
2. Miser
3. Addictions
4. Power
5. Money
6. Reading

They are explained as under :
(1) Hobbies : The law of DMU is not applicable in case of collection of stamps, coins, rare paintings, etc. It is because, when its stock increases, M.U. may increases because it gives more and more satisfaction.
However, it violates the assumptions like homogeneity and continuity.

(2) Miser : For a miser, every additional rupee gives him more and more pleasure.
So, when the stock of money increases, MU of money tends to rise.
However, the behavior of a miser is irrational. It violates the assumption of rationality.

(3) Addictions : It is said that, the level of intoxication increases for drunkard with every additional consumption of liquor. It may increase MU for him.
This condition is similar to most of the addictions.
Here again, the assumptions like rationality and continuity are violated.

(4) Power: It is an exception to the law of DMU because, when a person acquires power, his craze for power increases MU from power. As a person gets power, he desires to have more and more of it.
But, it violates the rationality, assumption.

(5) Money : Money is used as a medium of exchange. It helps to buy goods to satisfy human want. So MU of money increases with an increase in its stock.
MU of money never becomes zero. The law holds true to money too. MU of money declines slowly as its stock increases. So MU of money is more for poor than rich people.

(6) Reading : When a person reads more and more, he gets deeper and deeper knowledge so MU of reading tends to increase. Similarly the law does not hold true in case of music, dance, etc.
However, assumptions like continuity, homogeneity, etc. are violated.
The law of DMU is universal in nature. These cases are not real exceptions as they violate some assumptions.
So, it is said that, there are no real exceptions to the law of DMU.

Intect Questions

Try this (Textbook Page 8)

Make a list of 10 commodities which satisfy your wants.
Answer:
Book, pen, mobile, foot-wear, watch, umbrella, bag, dress, bed sheet, soap.

Try this (Textbook Page 8)

Make a list of 10 commodities which ( satisfy the wants of particular individuals performing specific activities. For example, A chalk has utility for a teacher.
Answer:

• A stethoscope has utility for a doctor.
• A net has utility for a fisherman.
• A thermometer has utility for a nurse.
• A cow has utility for a farmer.
• Cooking gas has utility for a housewife.
• A scissor has utility for a barber.
• Wood has utility for a carpenter.
• Needle has utility for a tailor.
• Mud has utility for a potter.
• A pen has utility for a writer.

Try this (Textbook Page 10) :

Following are the various types of utility and their respective examples. Arrange the information in the form of pairs:
Answer:
Types of utility : Time utility, possession utility, service utility and place utility.
Examples :

• A dentist giving dental treatment to a patient.
• A mountaineer using oxygen cylinder at a high altitude.
• A farmer selling rice stored in the warehouse at the end of the season.
• A retail trader purchasing 100 chairs from the wholesale trader.

Try this (Textbook Page 11)

Complete the following chart :
Answer:
Total Utility :

(a) Total Utility is the sum total of the individual utilities derived from the consumption of all units of good.
(b) Total Utility increases at a diminishing rate.
(c) At a point of satiety, Total Utility is maximum.
(d) Total Utility declines if consumption continues.
(e) Total Utility determines value-in-use of a commodity.
(f) Total Utility is always positive.

Marginal Utility :
(a) Marginal Utility is the addition made to the Total Utility from every additional unit consumed.
(b) Marginal Utility goes an diminishing.
(c) At a point of satiety, Marginal Utility = 0
(d) Marginal Utility becomes negative if consumption continues.
(e) Marginal Utility determines value-in­exchange of a commodity.
(f) Marginal Utility can be positive, zero or negative.

Try this (Textbook Page 14) :

Write an informative note on the paradox of values along with examples.
Answer:
The paradox of values –
The concept of value paradox is introduced by Adam Smith.
The term value has two meanings
(i) Value in use
(ii) Value in exchange
Some goods have greater value in use but a smaller value in exchange e.g. water.
However, some goods have smaller value in use but a greater value in exchange e.g. diamond.
So, the paradox of value is also called a water-diamond dilemma.
Greater value in use denotes high total utility whereas, greater value in exchange shows high marginal utility.
Thus, the concept paradox of value is very useful to understand the concepts of utility i.e., Total Utility & Marginal Utility.

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Economics Chapter 1 Question Answer Introduction to Micro and Macro Economics Maharashtra Board

Balbharti Maharashtra State Board Class 12 Economics Solutions Chapter 1 Introduction to Micro and Macro Economics Textbook Exercise Questions and Answers.

Class 12 Economics Chapter 1 Introduction to Micro and Macro Economics Question Answer Maharashtra Board

Economics Class 12 Chapter 1 Question Answer Maharashtra Board

1. Choose the correct option:

Question 1.
The branch of economics deals with the allocation of resources.
a) Microeconomics
b) Macroeconomics
c) Econometrics
d) None of these
Options:
1) a, b and c
2) a and b
3) only a
4) None of these
Answer:
3) only a

Question 2.
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
Answer:
4) c and d

Question 3.
Method adopted in micro economic analysis.
a) Lumping method
b)Aggregative method
c) Slicing method
d) Inclusive method
Options :
1) a, c and d
2) a. b and d
3) only c
4) only a
Answer:
3) only c

Question 4.
Concepts studied under Macro economics.
a) Whole economy
b) Economic development
c) Aggregate supply
d) Product pricing
Options:
1) a, b and c
2) b, c and d
3) only d
4) a, b, c and d
Answer:
1) a, b and c

2. Complete the correlation:

1) Micro economics : Slicing method : : Macro economics: ……………. 1
2) Micro economics: Tree : : Macro economics: …………….. 2
3) Macro economic theory : Income and employment:: Micro economics : ……………. 4
4) Makros : Macro economics:: Mikros : ……………… 3
5) General equilibrium : Macro economics :: …………….. : Micro economics 5
Answers:

1. Lumping method
2. Forest
3. Price theory
4. Micro economics
5. partial equilibrium

3. Identify and explain the concepts from the given illustrations:

Question 1.
Gauri collected the information about the income of a particular firm.
Answer:
Concept: Micro economics / Slicing method.
Explanation : Micro economics refers to the study of small unit from whole economy. Micro economics uses slicing method to split the whole economy into small individual units.
Gauri has used slicing method from micro economics to collect information about the income of a particular firm from various firms.

Question 2.
Ramesh decided to take all decisions related to production, such as what and how to produce?
Answer:
Concept: Free market economy.
Explanation : A free market economy is that economy where the economic decisions regarding production of goods are taken at individual level.

Eg. What to produce? How much to produce? How to produce? etc. decisions are taken by producers.
With the help of free market economy Ramesh has taken decision related to production such as What to produce? and How to produce?

Question 3.
Shabana paid wages to workers in her factory and interest on her bank loan.
Answer:
Concept : Factor Pricing.
Explanation : Theory of factor pricing refers to determining the factor rewards for land, labour, capital and entrepreneur in the form of rent, wages, interest and profit respectively.

Shabana is an entrepreneur who has paid wages to its worker in a factory for production of goods and also paid interest on her bank loan in form of rewards to the factors of production.

4. Answer the following:

Question 1.
Explain the features of Micro economics.
OR
Explain the characteristics or nature of micro economics.
Answer:
Features of Micro Economics :

• Based on certain ssumption : Micro economics is based on ‘ceteris paribus’ assumption i.e., other things remaining constant like full employment, laissez faire policy, perfect competition, pure capitalism, etc.
• Study of Individual units : Micro economics deals with the study of behaviour of small individual units of the economy such as individual units of the economy such as individual consumer, individual firm, individual industries, individual prices, etc.
• Slicing Method : It divides or slices the economy into small units and studies each unit in detail e.g. study of a particular household demand in detail.
• Analysis of Market Structures : Micro economics analyses different market structures such as perfect competition, monopoly, monopolistic competition, oligopoly, etc.
• Use of Marginalism Principle : The term ‘marginal’ means change brought in total by an additional unit. Marginal analysis helps to study a variable through the changes by which producers and consumers take economic decisions using this principle.
• Price Theory : Micro economics is known as price theory because it determines the prices of goods and services as well as prices of factors of production.
• Limited Scope : The study of micro economics is limited to individual economic unit only. It does not deal with macro problems like unemployment, inflation, deflation, poverty, unemployment, population, etc.
• Partial I quilibrium : Micro economics analysis deals with partial equilibrium which analyses equilibrium position of an individual economic unit i.e. individual consumer, individual firm, etc.

Question 2.
Explain the importance of Macro economics.
Answer:
Importance of Macro Economics :

• Functioning of an Economy : It gives an idea of functioning of an economic system and help us to understand the behavioural pattern of aggregate variables.
• Economic fluctuations : It helps to analyse the causes of fluctuation in income, output and employment.
• National Income : It helps to study about National Income and makes possible to formulate correct economic policies.
• Economic Development : It helps us to understand the problems of the developing countries such as poverty, difference in the standards of living, etc., and suggest important steps to achieve economic development.
• Performance of an Economy : It helps us to analyse the performance of an economy where National Income estimates are used to measure the same.
• Study of Macro-economic Variables :
  Study of macro economic variables are important to understand the working of the economy.
• Level of Employment : Macro economics helps to analyse the general level of employment and output in an economy.

Question 3.
Explain the scope of Macro economics.
OR
“Scope of Macro Economics is wide.” Explain.
OR
Macro Economics is comprehensive in nature.
OR
Explain the subject matter of macro economics.
Answer:
Scope of Macro Economics:
The given chart helps us to understand the scope of macro economics.

1. Theory of Income and Employment : It explains which factors determine the level of National Income and employment and what j causes fluctuations in the level of income, output and employment.
To understand how the level of employment is determined, we have to study the consumption function. It includes theory of business cycles.

2. Theory of General Price Level and Inflation: Macro economics analyses shows how the general price level is determined and the causes for fluctuations in it. This study is important for understanding the  problems created by inflation and deflation.

3. Theory of Economic Growth and Development : Macro economics studies the causes of under development and poverty in poor countries and suggests strategies for accelerating growth and development in the country.

4.  Macro theory of Distribution : Macro theory of distribution deals with the relative share of rent, wages, interest and profit in j the total national income of various classes.

5. State with reasons whether you agree or disagree with the following statements:

Question 1.
The scope of micro economics is unlimited.
Answer:
No, I do not agree with this statement.

• Micro economics deals with small or individual units.
• Micro economics is the study of particular firm, particular household, individual prices, wages, incomes, individual industries, particular commodities.
• Micro economics deals with small part of National economy. It does not deal with whole economy like National income, Aggregate demand, Aggregate supply, poverty, inflation, etc.
• Hence, the scope of micro economics is limited.

Question 2.
Macro economics deals with the study of individual behaviour.
OR
Macro economics studies small units.
Answer:
No, I do not agree with this statement.
OR
Macro Economics is the study of I aggregate.
OR
Macro economics is concerned with macro economic variables.
Yes, I agree with this statement.

• Macro Economics studies the behaviour ofthe economy as a whole and not individual behaviour.
• It studies about larger economic units or aggregate economic variables like aggregate demand, aggregate supply, total investment, total savings, total employment, etc.
• It studies the general price level and macro theory of distribution.
• Whereas Micro Economics deals with individual behaviour of the people in the economy. It studies about individual demand, market demand, individual income, price of particular commodity etc.
• According to Prof. Kenneth E. Boulding “Macro Economics deals not with individual; quantities as such, but with aggregates of these quantities, not with individual income but with National Income, not with individual prices but with general price level, not with individual output but with National Output.

Question 3.
Macro economics is different from micro economics.
OR
Macro economics is wider than Micro economics.
OR
There is difference between micro economics and macro economics.
Answer:
Yes, I agree with this statement.

• Micro economics is a study of a particular unit of an economy. On the other hand macro economics is the study of entire economy.
• Micro economics studies individual demand, individual supply, individual income, price determination of particular product, etc. On the other hand macro economics studies aggregate demand, aggregate supply, national income, etc.
• Micro economics follows partial equilibrium analysis and macro economics follows general equilibrium analysis.
• Micro economics uses slicing method for study of small unit and macro economics uses lumping method for study of large unit.
• Therefore, macro economics is different from micro economics.

Question 4.
Micro economics uses slicing method.
Answer:
Yes, I agree with this statement.

• Micro economics deals with small or individual units.
• Micro economics divides or slices the economy into small units and studies each unit in detail.
• It is concerned with microscopic study of these units.
• It is the study of particular firm, particular household, individual prices, wages, incomes, etc.
• Hence, micro economics uses slicing method.

Question 5.
Micro economics is known as Income theory.
Answer:
No, I do not agree with this statement.
OR Micro economics is also known as price theory.
Yes, I agree with this statement.

• Micro Economics is known as ‘Price Theory’.
• The scope of micro economics includes the study of product pricing and factor pricing.
• The theory of product pricing explains how the price of food grains, vegetables, clothes, etc., are determined.
• They are determined by the interaction of market demand and supply forces.
• The theory of factor pricing explains the distribution of factor income such as rent on land, wages to labourers, interest on capital and profit to entrepreneurs.
• The factor prices are also determined by the demand and supply forces.
• Therefore, Micro Economics is also known as ‘Price Theory’.

6. Answer in detail :

Question 1.
Explain the importance of Micro economics.
Answer:
Introduction : Micro economics is the Js branch of economics that studies the behaviour of individuals.
It includes individual prices, wages, income, individual industries, particular commodities, particular household, etc.
(1) Definition :
(a) According to Maurice Dobb – “Micro economics is in fact a microscopic study of l the economy.
(b) According to Prof. A. P. Lerner – “Micro economics consists of looking at the economy ? through a microscope as it were to see how the millions of cell in the body of economy – the individuals or households as consumers and individuals or firms as producers play their part in the working of the whole economics organism.

(2) Meaning:
Micro economics deals with small individual economics units such as an individual ( consumer, individual producer, the price of a particular commodity or factor etc.

(3) Importance :
(a) Price Determination : Micro economics j explains how the prices of different products < and various factprs of production are determined.

(b) Free Market Economy : A free market economy is that economy where the economic decisions are taken at individual levels without intervention by the government. Decisions are regarding production of goods such as What to produce? How much to produce? How to produce? etc.

(c) Foreign Trade : Micro economics also explains gains from foreign trade, effects of tarrifs, factors affecting exchange rate, etc.

(d) Economic Model Building : Micro
economics helps in understanding various complex economic situations with the help of economic models.

(e) Business Decision : Micro economics theories are helpful to businessman for taking important business decision related to determination of cost of production and prices of goods, maximization of output & profit, etc.

(f) Useful to Government : It is useful in formulating and evaluating economic policies including pricing and distribution policies that promote economic welfare. It is useful in determining tax policy, public, expenditure policy, etc.

(g) Basis of Welfare Economics : It explains how optimum use of resources can be made to increase the welfare of the society. It also studies how taxes affect social welfare.

Question 2.
Explain the concept of Macro economics and its features.
Answer:
Introduction : Macro economics is the branch of economics that studies the behaviour and performance of an economy as a whole. It includes inflation, unemployment, working of the monetary system, business cycles, economic policies, etc.

(1) Definition:
(a) J. L. Hansen : “Macro economics is that branch of economics which considers the relationship between large aggregates such as the volume of employment, total amount of savings, investment, national income, etc”.
(b) Prof. Carl Shapiro : “Macro economics deals with the functioning of the economy as a whole. ”

(2) Meaning:
Macro economics is the study of aggregates national income, total employment, total consumption, inflation, total saving, etc.

(3) Features:
(a) Study of Aggregate : Macro economics deals with the study of entire economy. It studies the overall condition in the economy, such as National Income, National Output, Total Employment, General Price levels, etc.

(b) General Price Level : Macro economic studies the determination and changes in general price level which is the average of all prices of goods and services currently being produced in the economy.

(c) policy Oriented : Macro economics is a policy oriented science which is useful in formulating economic policies to promote economic growth, to control inflation and depression, to generate employment, etc.

(d) Lumping Method : Lumping method is the study of the whole economy rather than in part. It considers aggregates like National Income, Total consumption, etc. instead of personal income, PCC, etc.

(e) General Equilibrium Analysis : Macro Economics analysis is based on general equilibrium which deals with the economic system as a whole and studies the inter relationships between the various macro variables in an economy. General equilibrium deals with the behaviour of demand, supply and prices in the whole economy.

(f) Income Theory : Macro economics studies the concept of National Income and its causes of fluctuations that lead to business cycles i.e. inflation and deflation.

(g) Growth Models : Macro economics studies various factors that contribute to economic growth and development. These growth models are used for studying economic development.

(h) Interdependence : There is an element of interdependence among the macro economic variables such as income, output, employment, investment, price level, etc.

Intext Questions

Try this (Textbook Page 6)

Visit the vegetable market in the nearest area and try to get information about income and expenditure items of a particular seller.
Answer:
[Note : Students should do this activity by themselves.]

Maharashtra State Board 12th Std Economics Textbook Solutions

• Introduction to Micro and Macro Economics Class 12 Economics Textbook Solutions
• Utility Analysis Class 12 Economics Textbook Solutions
• Demand Analysis Class 12 Economics Textbook Solutions
• Elasticity of Demand Class 12 Economics Textbook Solutions
• Supply Analysis Class 12 Economics Textbook Solutions
• Forms of Market Class 12 Economics Textbook Solutions
• Index Numbers Class 12 Economics Textbook Solutions
• National Income Class 12 Economics Textbook Solutions
• Public Finance in India Class 12 Economics Textbook Solutions
• Money Market and Capital Market in India Class 12 Economics Textbook Solutions
• Foreign Trade of India Class 12 Economics Textbook Solutions

Std 12 Geography Chapter 8 Question Answer Geography: Nature and Scope Maharashtra Board

Balbharti Maharashtra State Board Class 12 Geography Solutions Chapter 8 Geography: Nature and Scope Textbook Exercise Questions and Answers.

Class 12 Geography Chapter 8 Geography: Nature and Scope Question Answer Maharashtra Board

Geography Class 12 Chapter 8 Question Answer Maharashtra Board

1. Identify the correct group.

Question 1.

Answer:
B

Question 2.

Answer:
A

2. Give geographical reasons.

Question 1.
Human Geography is multidisciplinary in nature.
Answer:

• Human geography is the branch of geography dealing with human activities and their influence on culture, communities and economies.
• In human geography every social science studies separately has interface with branch of human geography; because of their spatial attributes.
• Social sciences like sociology, political science, economics, history and demography are very closely related with branches of human geography, such as social geography, political geography, economic geography and historical geography, respectively.
• Since, we study varied branches of geography in human geography, it is said to be multidisciplinary in nature.

Question 2.
Geography is dynamic in nature.
Answer:

• Most geographical phenomena whether physical or human are not static and can change overtime.
• In economic geography, we study economic activities as well as factors affecting their distribution and changes.
• In climatology we study changes in temperature and rainfall due to global warming. Depending upon the changes in climate, changes are made in cropping patterns.
• Geographers study relationship between production, distribution and geographical factors.
• For example, tea is grown on a large scale in the State of Assam due to high temperature, heavy rainfall, red soil, hilly relief, cheaper water transportation due to the Brahmaputra River and cheap and skilled labour supply from nearby States of Bihar and Orissa.
• We study weather over a period of about 30 years and decide climate of that place or population of a country or the world over a period of time. Since, changes occur time to time.
  Thus, geography is dynamic in nature.

Question 3.
Geography is dualistic in nature.
Answer:

• There are two contrasting approaches to study the subject of geography. They are possibilism and environmental determinism. This contrast in approaches is called as dualism in geography.
• Some geographers are of the view that nature is more dominant than man. It is called environmental determinism. According to them, when we study geography, we study the earth. We study how natural resources have influence on economic activities, as well as food habits of people.
• For example, in coastal areas fishing activity is more developed and fish is the main food of the people.
• Some geographers are of opinion that man dominates the nature. It is called possibilism. According to them man can make changes in nature due to his intelligence.
• For example, there are polyhouses even in polar areas, in which temperature is controlled artificially and vegetables are grown.
• There are many other thinkers who have different approaches in geography.
  Thus, the study of geography is dualistic in nature.

3. Write short notes on.

Question 1.
Physical Geography is related to various branches of science.
Answer:

• Almost every discipline, under natural and social sciences is linked with geography.
• Geomorphology, Climatology, Oceanography and Biogeography are the branches of physical geography.
• Geomorphology studies landforms, rock types, processes of formation of rocks, landforms, etc. Therefore, it is related to geology.
• Climatology studies elements of atmosphere such as temperature, winds, rainfall, humidity, natural disasters like cyclones, anticyclones, storms, etc. Therefore, it is related to meteorology.
• Oceanography studies oceans and seas on the surface of the earth, ocean currents, ocean routes, etc. Therefore, it is related to Hydrology.
• Biogeography studies the distribution of plants and animals, their species, ecosystems, etc. Therefore, it is related to biology.
• Knowledge of mathematics is important for cartographic techniques, such as drawing of maps and diagrams. Similarly, knowledge of statistics is useful to do data analysis since various statistical techniques and hypotheses testing are used in data analysis.
• Thus, physical geography is related to various branches of sciences.

Question 2.
Branches of Geography.
Answer:

• There are three major branches of Geography – Physical Geography, Human Geography and Geographic Techniques.
• Geography has various sub-branches; however, the four major sub-branches of Physical Geography are Geomorphology, Climatology, Biogeography and Oceanography.
• Human geography comprises of six sub-branches, Historical Geography, Political Geography, Economic Geography, Behavioural Geography, Social Geography and Population Geography.
• Geographic Techniques have four branches, namely, remote sensing, quantification methods in geography, cartography and Geographic Information System (GIS).

Question 3.
Latest trends in Geography.
Answer:

• Currently, the explanation of all geographic phenomena depends upon the cause and effect relationship.
• Geographers developed number of disciplines within its boundaries.
• Number of techniques for analysis and prediction through data collection and modelling are also developed by geographers.
• Due to the dynamic nature of geography, new things are added in the subject.
• Use of audio-visual media and information technology has enriched the database.
• The latest technology of software has brought about better opportunities in data collection, interpretation, analysis and presentation.
• Presently, the Use of GIS and GPS has become essential. Therefore, maps are made by using GIS software and have proved to be more accurate.
• Nowadays the use of mathematical modelling and computer models in applied geography has increased. They are used for prediction of weather changes or natural calamities.
• The above mentioned are all the latest trends in Geography.

Question 4.
Skills required for studying geography.
Answer:

• The skills required to study the methods and techniques used in geography have made the study of geography empirical and practical in nature.
• The study of geography is based on theory and observation. It is supported by the scientific study like data collection and data analysis through number of tools and techniques.
• The geographers developed skills for conducting surveys with the help of advanced technology. They have also acquired the skills to make use of satellite images for data collection.
• The geographers have attained the skills for experiments, data collection, data organisation, observation patterns, data analysis, research findings, etc.
• The geographers have learnt analytical techniques of data with the help of statistical techniques and representation of statistical data using graphs and maps.

4. Answer the following questions in detail.

Question 1.
Explain how the knowledge of Geography is important in our day-to-day life. Give examples.
Answer:

• The knowledge of geography is important in our day-to-day life because with geographical knowledge we can understand the basic physical systems that affect our everyday life.
  For example, the earth-sun relationship, water cycle, wind, ocean currents, etc.
• For the effective functioning of different places, we learn the physical and cultural characteristics of places.
• With the help of geography, we can understand the geography of the past, how geography had played an important role in the evolution of people, their ideas, places and environment.
• We can prepare a map of a province or territory, country and the world, so that one can understand the location of various countries. For example, the political map of the Asian continent gives idea about location of Asian countries.
• With the help of various distribution maps, we can understand distribution of minerals, crops, population, etc., in the world. For example, with the help of dot map we can understand spatial distribution of population in the world.
• With the help of economic geography, we can understand the development of economic activities in different countries of the \yorld and their correlation with physical and economic factors. For example, we can study the world’s leading areas in fishing activities and their reasons.
• With the help of climatology, we understand atmospheric phenomenon, such as cyclones, global warming, etc.
• The study of sustainable development in geography teaches us to appreciate the earth as humankind’s homeland and provide an insight for wise management decisions about the usage of the earth’s resources.
• With the help of geography, we can understand global inter-dependence to become a better global citizen.
• Thus, with the help of geography, we can study physical features, economic activities, trade, people, etc., in the world.

Question 2.
Discuss the relationship between Geography and other subjects.
Answer:

• Geography is related to almost every discipline under natural and social sciences. There are three major branches of Geography, namely, Physical Geography, Human Geography and Geographic Techniques.
• Geography has various sub-branches; however, the four major sub-branches of Physical Geography are Geomorphology, Climatology, Biogeography and Oceanography.
• In Geomorphology we study the formation and types of landforms, gradient, rock structure, etc. This is related to the subject of geology.
• In Climatology we study the atmospheric elements such as temperature winds, rainfall, humidity, natural disasters like cyclones, anticyclones, storms, etc. This it is related to the subject of meteorology.
• In Oceanography we study the ocean currents, ocean routes, coastal features, submarine relief, etc., of oceans and seas. This it is related to the subject of hydrology.
• In geography of soil, we study the components, layers, texture, and fertility of the soil, etc. This is related to the subject of pedology.
• Human geography comprises of six sub-branches, Historical Geography, Political Geography, Economic Geography, Behavioural Geography, Social Geography and Population Geography. In historical geography, we study the correlation of historical events with geographical factors. This is related to the subject of history.
• In Political Geography, we study the effect of geographical factors on political events. This is related to the subject of political science.
• In Economic Geography, we study the correlation of geographical factors and economic activities. This is related to the subject of economics.
• Similarly, Behavioural Geography, Social Geography and Population Geography are related to the subjects of psychology, sociology and demography respectively.
• Thus, it can be concluded by saying that geography has a strong relationship with other subjects in natural as well as human or social sciences.

Question 3.
Explain the nature of Geography in detail.
Answer:

• Geography is the study of the earth as a home of man, and various phenomena related to it.
• Therefore, geography is the study of the physical environment in relation to man. The physical environment has direct effect on cultural and social environments.
• The earth is dynamic in nature. Hence, we find variations in its physical and cultural/social environments.
• In geography we study the relation between the physical environment and production, distributions and their patterns and variations.
• Geographers study the location, geographical phenomena, whether physical or human, which are highly dynamic and its causes.
• Since geography is the study of space and time it makes geography dynamic in nature.
• In geographical study, the geographer tries to answer questions like what, why, where and when.

5. Differentiate between.

Question 1.
Physical Geography and Human Geography
Answer:

Question 2.
Possibilism and Determinism.
Answer:

6. Draw a neat and well-labelled diagrams

Question 1.
Relationship between Geography and other subjects.
Answer:

Question 2.
Skills required to study Geography.
Answer:

Class 12 Geography Chapter 8 Geography: Nature and Scope Intext Questions and Answers

Let’s recall

Question 1.
Dear students, you have been studying geography either as a part of Environmental Studies since Standard III or as Social Studies since Standard VI and as an independent subject since Standard XI. Your journey to understand our homeland earth began with the study of the cardinal directions in Standard III. In the consecutive academic years, you learnt various geographical concepts. Now just recall the various concepts that you have learnt till now and make a list of them. Also classify them under different categories given in the table 8.3. (Textbook Page No. 75)
Answer:

Can you tell?

Discuss the following points in class with reference to its importance in the subject matter of Geography. (Textbook Page No. 77)
Question 1.
Environment vs. Man
Answer:
Man and environment are inter-related. The environment influences the life of human beings who in-turn modifies the environment as a result of their growth, dispersal, activities, death, etc. Thus, all living beings including man and their environment are mutually reactive affecting each other in a number of ways and a dynamic equilibrium is possible between the two, i.e., human beings and environment are interdependent. If the natural environment helped in the development of different structures of the society on the one hand, the existence and quality of environment now rests on the responses of these social structures to the environment on the other hand.

The burning issues like quality of environment, disruption of earth’s natural ecosystems, environmental degradation and pollution, ecological imbalances, depletion of resources, etc., can be approached and solved only after considering the value judgments which may be determined by taking into account the consequences of ‘Environmental Improvement Programme’ on the entire society and society’s response towards the programme. However, all these depend on the interest and desire of the society in improving the quality of environment.

The interaction between the environment and man depends largely on the social and political system. The differential interactions are due to the uneven distribution of natural resources, uneven economic and social development, dissimilarities of demographic factors, varying view points of the governments and individuals towards the environment, etc.

Continuous and exceedingly increasing rate of exploitation of natural resources, industrialisation, technological growth, unplanned urbanisation and profit-oriented capitalism by the developed western world are responsible for grave environmental crisis and ecological imbalance not confined to their own countries but to the whole world.

The changes in the relationship between man and environment depend upon the change in organisation and attitude of man. To improve environmental stand and to maintain ecological balance, the following remedies are important

• Rapid growth of population
• Rational use of non-polluted water resources
• Use of organic fertilizers for agricultural growth
• To check soil erosion
• Restoration of forest resources
• To check pollution

Question 2.
Complete study of India vs. Study of only agriculture in India.
Answer:
[Note: In India, it is not possible to provide a complete study of India and agriculture within the scope of a book.]

Try These

Question 1.
Given here are some of the concepts or subject matter we study in Geography. Write the name of subjects or disciplines you think they are also studied in. Complete the table 8.2. (Textbook Page No. 78)

Answer:

Question 2.
In Fig 8.5, a newspaper item is given. A list of job opportunities is given. Go through all the entries and see which ones are suitable for a geographer as a career. (Textbook Page No. 80)

Answer:
The following is the list of jobs opportunities suitable for a geographer as a career.
(i) National Atlas of Thematic Mapping Organisation of India.
(ii) Mumbai Mahanagar Palika, Department of Urban Planning, Mumbai, as Urban Planner
(iii) Assistant Professor in the subject of Geography
For all above posts basic qualification is minimum M.A./M.Sc. in Geography.

Maharashtra State Board 12th Std Geography Textbook Solutions

• Population Part 1 Class 12 Geography Textbook Solutions
• Population Part 2 Class 12 Geography Textbook Solutions
• Human Settlements and Land Use Class 12 Geography Textbook Solutions
• Primary Economic Activities Class 12 Geography Textbook Solutions
• Secondary Economic Activities Class 12 Geography Textbook Solutions
• Tertiary Economic Activities Class 12 Geography Textbook Solutions
• Region and Regional Development Class 12 Geography Textbook Solutions
• Geography: Nature and Scope Class 12 Geography Textbook Solutions