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ECONOMICSCLASS–XII

Paper 1 100 Marks3 Hours

Units Marks Periods

Part A Introductory Microeconomics

Introduction 6 11

Consumer’s Equilibrium and Demand 16 34

Producer Behaviour and Supply 16 34

Forms of Market and Price Determination under perfect competition with simple applications

12 31

50 110

Part B Introductory Macroeconomics

National Income and Related Aggregates 15 32

Money and Banking 8 18

Determination of Income and Employment 12 27

Government Budget and the Economy 8 17

Balance of Payments 7 16

50 110

Part A: Introductory Microeconomics

Unit 1: Introduction 11 Periods

Meaning of microeconomics and macroeconomics

What is an economy? Central problems of an economy: what, how and for whom to produce; concepts of production possibility frontier and opportunity cost.

SYLLABUS

Unit 2: Consumer’s Equilibrium and Demand 34 Periods

Consumer’s equilibrium - meaning of utility, marginal utility, law of diminishing marginal utility, conditions of consumer’s equilibrium using marginal utility analysis.

Indifference curve analysis of consumer’s equilibrium-the consumer’s budget (budget set and budget line), preferences of the consumer (indifference curve, indifference map) and conditions of consumer’s equilibrium.

Demand, market demand, determinants of demand, demand schedule, demand curve and its slope, movement along and shifts in the demand curve; price elasticity of demand - factors affecting price elasticity of demand; measurement of price elasticity of demand - (a) percentagechange method and (b) geometric method (linear demand curve); relationship between price elasticity of demand and total expenditure.

Unit 3: Producer Behaviour and Supply 34 Periods

Production function – Short-Run and Long-Run Total Product, Average Product and Marginal Product. Returns to a Factor

cost, average variable cost and marginal cost-meaning and their relationships. Revenue - total, average and marginal revenue - meaning and their relationships. Producer’s equilibrium-meaning and its conditions in terms of marginal revenue-marginal cost.

Supply, market supply, determinants of supply, supply schedule, supply curve and its slope, movements along and shifts in supply curve, price elasticity of supply; measurement of price elasticity of supply - (a) percentage-change method and (b) geometric method.

Unit 4: Forms of Market and Price Determination under Perfect Competition with simple applications. 31 Periods

Perfect competition - Features; Determination of market equilibrium and effects of shifts in demand and supply.

Other Market Forms - monopoly, monopolistic competition, oligopoly - their meaning and features.

Part B: Introductory MacroeconomicsUnit 5: National Income and Related Aggregates 32 Periods

Expenditure method, Income method. Aggregates related to National Income: Gross National Product (GNP), Net National Product

(NNP), Gross and Net Domestic Product (GDP and NDP) - at market price, at factor cost; National Disposable Income (gross and net), Private Income, Personal Income and Personal Disposable

Income; Real and Nominal GDP. GDP and Welfare

Unit 6: Money and Banking 18 Periods

Money - its meaning and functions.

Supply of money - Currency held by the public and net demand deposits held by commercial banks.

Money creation by the commercial banking system. Central bank and its functions (example of the Reserve Bank of India): Bank of issue, Govt. Bank,

Banker’s Bank, Controller of Credit through Bank Rate, CRR, SLR, Repo Rate and Reverse Repo Rate, Open Market Operations, Margin requirement.

Unit 7: Determination of Income and Employment 27 Periods

Aggregate demand and its components.

Propensity to consume and propensity to save (average and marginal).

Short-run equilibrium output; investment multiplier and its mechanism.

Meaning of full employment and involuntary unemployment.

government spending, taxes and money supply.

Unit 8: Government Budget and the Economy 17 Periods

Government budget - meaning, objectives and components.

revenue expenditure and capital expenditure.

Unit 9: Balance of Payments 16 Periods

Determination of exchange rate in a free market.

Prescribed Books:

1. Statistics for Economics, Class XI, NCERT

2. Indian Economic Development, Class XI, NCERT

3. Introductory Micro Economics, Class XII, NCERT

4. Macro Economics, Class XII, NCERT

5. Supplementary Reading Material in Economics, Class XII, CBSE

Note: The above publications are also available in Hindi Medium.

Suggested Question Paper DesignEconomics (Code No. 030)

Class XIIMarks: 100 Duration: 3 hr

S. No. Typology of Questions

Very Short

Answer MCQ 1 Mark

Short Answer I 3 Marks

ShortAnswer II 4 Marks

Long Answer 6 Marks

Marks %

1

Remembering- (Knowledge based Simple recall questions, to know

or recite, information)

2 1 2 2 25 25%

2

Understanding- (Comprehension tobe familiar with meaning and to understand conceptually, interpret, compare, contrast, explain, paraphrase, or interpret information)

3 2 1 2 25 25%

3

Application- (Use abstract informationin concrete situation, to apply knowledge to new situations; Use given content to interpret a situation,provide an example, or solve a problem)

3 1 2 1 20 20%

4

High Order Thinking Skills- (Analysis& Synthesis- Classify, compare, contrast, or differentiate between different pieces of information, Organize and/or integrate unique pieces of information from a variety of sources

1 1 11 2 20 20%

5Evaluation- (Appraise, judge, and/or justify the value or worth of a decision or outcome, or to predict outcomes based on values)

1 1 - 1 10 10%

Total 10×1=10 6×3=18 6×4=24 8×6=48 100(30) 100%

Note: There will be Internal Choice in questions of 3 marks, 4 marks and 6 marks in both sections (A and B).(Total 3 internal choices in section A and total 3 internal choices in section B).

CONTENTS

INTRODUCTORY MICROECONOMICS1 Introduction 2 – 31

2 Theory of Consumer Behaviour 32 – 110

3 Production and Cost 111 – 152

4 The Theory of the Firm under Perfect Competition 153 – 215

5 Market Equilibrium 216 – 252

6 Non-competitive Markets 253 – 274

INTRODUCTORY MACROECONOMICS7 Introduction 276 – 281

8 National Income Accounting 282 – 343

9 Money and Banking 344 – 370

10 Income Determination 371 – 437

11 Government Budget and the Economy 438 – 462

12 Open Economy Macroeconomics 463 – 494

Model Question Papers M-1 – M-8

PART–A

PART–B

All chapters as per

Syllabus and NCERT Textbooks

CBSE

Chapter in a Nutshell

provides a complete and

comprehensive summary

of the chapter

Every chapter divided

into Sub-topics

Super Refresher

NCERT Textbook

Exercises with answers

Each sub-topic dealt with

as a complete unit

Economics

Variety of

Value Based Questions

Self Evaluation Test at the

end of each chapter

HOTS

questions with answers

in every chapter

Two Model Question Papers

for practice equalling 100 marks

(Based on CBSE pattern)

P tP t

Introductory Microeconomics

Introduction

Theory of Consumer Behaviour

Production and Cost

The Theory of the Firm under Perfect Competition

Market Equilibrium

Non-competitive Markets

2

1.1 Scarcity and Choice

Scarcity is a situation when demand for a good exceeds its supply even at a zero price. Scarcity occurs when there are limited resources in relation to unlimited wants.Choice is the act of selecting among restricted alternatives.Resources are the inputs or factors of production used to produce economic goods that people want. Four major resources are land, labour, capital and entrepreneur.Productionutility.

More scarce resources like diamonds or precious stones have high prices.Less scarce resources like water have low price.Absence of scarcity implies zero price. For example: There is no price of ice in the snow covered area.

1.2 Economic Problem

Economics is a science of human behaviour concerned with allocation of scare resources in such a manner

maximise its social welfare.Economic problem is the problem arising from the necessity of choice. Economic problems arise because:

(i) resources are scarce, and(ii) resources have alternative uses.

Every individual, society, state, country and nation faces economic problem.

CHAPTER IN A NUTSHELL

Introduction11.1 Scarcity and Choice1.2 Economic Problem1.3 Economy and its Central Problems1.4 Production Possibility Curve and

Opportunity Cost1.5 Microeconomics and Macroeconomics

CONCEPTS

Introduction 3

1.3 Economy and its Central Problems

Economy refers to the system of production, distribution and consumption of economic goods and services by different agents in a country or region.Economic activities are those human activities, which are related to the production, distribution and

Market economy is a free economy in which economic activities are carried out through free price mech-anism independent of any intervention by the central authority.Centrally planned economy is an economy in which the economic activities are planned by the central government with an objective of maximising social welfare.Mixed economy is an economic system in which production, distribution and consumption decisions are left to the free play of the market forces. However, a large part of economic activities are regulated by the government to maximise the social welfare along with individual welfare or self-interest.Central problems of an economyEvery economy faces three central problems.

(i) ‘What to Produce and in What Quantities’ refers to the problem relating to the choice of what goods and services are to be produced by an economy and the quantity of each of these.

(ii) ‘How to Produce’ refers to the problem of choice between combinations of factors of production in producing a good or service.

among different individuals.

1.4 Production Possibility Curve (PPC) and Opportunity Cost

Production Possibility Curve (PPC) is a curve that shows different combinations of two goods that

Possibility Frontier (PPF) or transformation curve.Opportunity cost is the value of the next best alternative foregone.Marginal opportunity cost is the loss of output of good 2 when an additional unit of good 1 is produced by shifting the resources from the production of good 2 to the production of good 1.Some Diagrammatic Presentation(a) Shape of PPC

(i) PPC is a downward sloping curve.(ii) PPC is concave to the origin because of increasing marginal opportunity cost.

Fig. 1

MBD Super Refresher Economics - XII4

(b) Growth of resources leads to a rightward shift in the Production Possibility Curve (Fig.2). Causes of Growth of Resources

(ii) Technological advancement (c) Reduction of resources leads to a leftward shift in the Production Possibility Curve (Fig.3). Causes of Reduction of Resources

(i) Decrease in the supply of economy resources(ii) Technological degradation

Fig. 2 Fig. 3

(d) Point On and Inside PPC: A point on PPC shows full utilisation of resources and a point inside PPC shows under utilisation of resources.

Fig. 4

1. 5 Microeconomics and Macroeconomics

Microeconomics is that branch of economics which studies the behaviour of individual economic unit, such as a consumer or a producer.Macroeconomics is that branch of economics which studies the behaviour of the economy as a whole. Level of output and employment are the principal macroeconomic issues.

MBD Super Refresher IntroductoryMicroeconomics & Macroeconomics

Class-XII CBSE /NCERT

Publisher : MBD GroupPublishers

ISBN : 9789385905377 Author : Neera Sharma

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