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CBSE Class 12 Economics Important Case Study Based Questions for 2023 Board Exams

Cbse class 12 economics important case study based questions: class 12th economics exam is just a few hours away. get important case study questions to practice before cbse class 12 economics board examinations scheduled to be conducted on march 17, 2023. .

Important Case Study Based Questions for CBSE Class 12 Economics Board Exam 2023

Read the following case study paragraph carefully and answer the questions on the basis of the same..

Q1 The central bank of India i.e. Reserve Bank of India, is the apex institution that control the entire financial market. It's one of the major functions is to maintain the reserve of foreign

exchange. Also, it intervenes in the foreign exchange market to stabilise the excessive fluctuations in the foreign exchange rate.

In other words, it is the central bank's job to control a country's economy through monetary policy; if the economy is moving slowly or going backward, there are steps that central bank can take to boost the economy. These steps, whether they are asset purchases or printing more money, all Involve injecting more cash into the economy. The simple supply and demand economic projection occur and currency will devalue.

When the opposite occurs, and the economy is growing, the central bank will use various methods to keep that growth steady and in-line with other economic factors such as wages and prices.

Whatever the central bank does or in fact don't do, will affect the currency of that country.

Sometimes, it is within the central bank's interest to purposefully effect the value of a currency.

For example, if the economy is heavily reliant on exports and their currency value becomes too high, importers of that country's commodities will seek cheaper supply; hence directly effecting the economy.

1 Which of the following tools are used by the central bank to control the flow of money in domestic economy?

(a) Fiscal tools (b) Quantitative monetary tools

(c) Qualitative monetary tools (d) Both (b) and (c)

• a) Tighten the money supply in the economy
• b) Ease the money supply in the economy
• c) Allow commercial banks to work under less strict environment
• d) Both (b) and (c)

3 Which of the following steps should be taken by the central bank if there is an excessive rise in the foreign exchange rate?

(a) Supply foreign exchange from its stock

(b) Demand more of other foreign exchange

(c) Not intervene in the market as the exchange rate is determined by the market forces

(d) Help central government to stabilize the foreign exchange rate.

Answer: 

1(d) Both (b) and (c)

2(a) Tighten the money supply in the economy

3(a) Supply foreign exchange from its stock

Q2 Changes in aggregate demand bring about changes in the level of output, employment, income, and price. These changes are generally cyclical in nature. These changes, more generally, follow a cycle of four different stages namely boom, recession, depression and recovery. The cyclical nature of economic activity is known as trade cycle or business cycle. Boom is a stage of economic activity characterized by rising prices, rising employment, rising purchasing power.

• During the time of ‘excess demand’, Govt. should .................. the public expenditure.
• a) Reduce b) increase c) unchanged d) none of these.
• Investment depends on: a) Supply b) income c) saving d) Both (a) and (c)

Answer: Income.

Q3 In the modern world, govt. aims at maximizing the welfare of the people and the country. It

requires various infrastructure and economic welfare activities. These activities require huge govt. spending through appropriate planning and policy. Budget provides a solution to all these concerns. Budget is prepared by the government at all levels.

Estimated expenditure and receipts are planned as per the objectives of the government. In India, budget is prepared by the parliament on such a day as the president may direct. The parliament approves the budget before it can be implemented. The receipts and expenditures as shown in the budget are only the estimated values for the upcoming fiscal year, and not the actual figure.

• a) Reallocation of resources.
• b) Re distribution of income
• c) Reducing expenditure
• d) Economic stability.

Answer: c) Reducing expenditure

Answer: False

Q4 India’s balance of payments position improved dramatically in 2013-14 particularly in the last three quarters. this moved in large part to measure taken by the government and the Reserve Bank of India (RBI) and eat some part to the overall macro-economic slowdown that fed into the external sector. current account deficit (CAD) declined sharply from a record high of U.S. dollar 88.2 billion (4.7% of GDP) in 2012 -1/3 to U.S. dollars 32.4 billion (1.7% of GDP) in 2013 -14. After staying at perilously unsustainable levels off well over 4.0 percentage of GDP in 2011 -12 and 2012 -13, the improvement in BOP position is a welcome relief, and there is need to sustain the position going forward. This is because even as CAD came down, net capital flows moderated sharply from U.S. dollars 92.0 billion in 2012 -13 do U.S. dollar 47.9 billion in 2013-14, that two after a special swap window of

The RBI under the nonresident Indian (NRI) scheme / overseas borrowings of banks alone yielded U.S. dollar 3 4.0 billion. This led to some increase in the level of external debt, but it has remained at the manageable levels. the large depreciation of the rupee during the course of the year, note with standing sizable accretion to reserve in 2013 – 14, could partly be attributed to frictional forces and partly to the role of expectations in the forex market. the rupiah has stabilized the recently, reflecting an overall sense of confidence in the forex market as in the other financial markets of a change for better economic

prospects there is a need to nurture and build upon this optimism through creation of an enabling environment for investment inflows so as to sustain the external position in an as yet uncertain global milieu. --------- The Hindu, archives

• a) credit, capital account
• b) debit, capital account
• c) credit, current account
• d) debit, current account
• a) current account
• b) revenue account
• c) capital account
• d) official reserves
• a) outward flow of foreign exchange
• b) inward flow of foreign exchange
• c) decrease in the level of external debt
• d) decrease in future claims

Answers: 1.b 2. c 3. b 4. d

Q5 The green revolution for the third agricultural revolution is the set of research technology

e-transfer initiatives earring between GNE E and the late 1960 that increased agricultural

production worldwide beginning most markedly in the late 1960 the initiative resulted in

the adoption of new technologies including high yield varieties of CSR rules of cells

especially does wheat and rice it was associated with chemical fertilizers agrochemicals

and controlled water supply and newer methods of cultivation including machine isolation

National bank for agriculture and rural development is and apex development finance

institution fully owned by government of India the bank has been entrusted with Martyrs

concerning policy planning and operations in the field of credit for agriculture and other

economic activities in rural areas in India.

1 Who among the following is known as the father of green revolution

(a) Dr. M S Swaminathan

(b) Dadabhai Naoroji

(c) Vikram Sarabhai

(d) all of these

2 Green revolution is also known as ..................

(a) Golden revolution

(b) milk revolution

(c) Wheat revolution

(d) None of this

3 Which of the following institutions were setup as the apex body in rural areas to support the small farmers in the adoption of modern farming methods?

4 Green revolution was the ............... set of agricultural reforms brought in India

Answer: 1 (a) 2 (c) 3 (d) 4(c)

• Narasimha Rao. This policy opened the door of the India Economy for the global exposure for the first time. In this New Economic Policy P. V. Narasimha Rao governmentreduced the import duties, opened reserved sector for the private players, devalued the Indian currency to increase the export. This is also known as the LPG Model of growth. New Economic Policy refers to economic liberalization or relaxation in the import tariffs, deregulation of markets or opening the markets for private and foreign players, and reduction of taxes to expand the economic wings of the country. Former Prime Minister Manmohan Singh is considered to be the father of New Economic Policy (NEP) of India. Manmohan Singh introduced the NEP on July 24,1991. Main Objectives of New Economic Policy – 1991, July 24 The main objectives behind the launching of the New Economic policy (NEP) in 1991 by the union Finance Minister Dr. Manmohan Singh are stated as follows:

The main objective was to plunge Indian Economy in to the arena of ‘Globalization and to give it a new thrust on market orientation. The NEP intended to bring down the rate of inflation.

1 New Economic Policy of India was launched in the year 1991 under the

• P. V. Narasimha Rao
• Atal Bihari Bajpayi
• Sharad Pawar
• None of these

2 .................................. is also known as the LPG Model of growth. ((choose

the correct alternative)) (New Economic Policy / New Education Policy)

Answer: New Economic Policy

3 State whether the given statement is true or false:

Former Prime Minister Manmohan Singh is considered to be the father of New Economic Policy (NEP) of India. ((choose the correct alternative))

True / False

Answer: True

Q7 Both forms of capital formation are the outcomes of conscious investment decisions. The decision regarding investment in physical capital is taken on the basis of one’s knowledge in this regard. The ownership of physical capital is the outcome of the conscious decision of the owner the physical capital formation is mainly an economic and technical process.

Human capital formation takes place in one’s life when she/he is unable to decide whether it would maximize her/his earnings. Children are given different types of school education and health care facilities by their parents and society. Moreover, the human capital formation at this stage is dependent upon the already formed human capital at the school level. Human capital formation is partly a social process and partly a conscious decision of the possessor of the human capital.

• a) Human capital is intangible whereas physical capital is tangible.
• b) Human capital can cope up with the changing technology whereas physical cannot.
• c) Human capital generates both personal and societal benefits whereas physical capital generates only personal benefit.
• d) Human capital gets obsolete with time whereas physical capital does not.
• In the context of the paragraph, it can be argued that human capital depreciates faster than the physical capital. The given statement is:
• c) Partially true
• d) can’t comment due to lack of proper estimation mechanism
• Machines and industrial tools are examples of _
• a) Physical capital
• b) Human capital
• c) Both physical and human capital
• d) Natural capital
• Investment in education by parents is the same as_______
• a) Investment in intermediate goods by companies
• b) Investment in CSR activity by companies
• c) Investment in capital goods by companies
• d) None of the above

Answer: – c) Investment in capital goods by companies

Q8 The central government will spend Rs. 9800 crores on livestock development over the next five years in a bid to leverage almost Rs. 55000 crore of outside investment into the Animal Husbandry Sector. It would do this by merging a slew of schemes of the Department of Animal Husbandry and Dairying into three main programmes, focused on indigenous cows and dairy development, livestock health and infrastructure development, an official statement said. The Cabinet Committee on Economic Affairs approved the implementation of the special livestock sector package by revising and realigning the various components of the existing schemes in order to boost growth and make animal husbandry more remunerative for the 10 crore farmers engaged in it.

1) Livestock production provides ------------- for the family without disrupting other food producing activities

(a)Increased stability in income 

(b) food security

(c)transport and fuel 

Answer: (d) all of these

2) The central bank undertakes to invest on livestock development in ----------- (horticulture/ animal husbandry) sector

Answer: animal husbandry

3) State one limitation of livestock sector in India

Answer: The livestock productivity is quite low as compared to other countries

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Macroeconomics →

• 07 Jan 2019
• Research & Ideas

The Better Way to Forecast the Future

We can forecast hurricane paths with great certainty, yet many businesses can't predict a supply chain snafu just around the corner. Yael Grushka-Cockayne says crowdsourcing can help. Open for comment; 0 Comments.

• 04 Mar 2016
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Credit-Market Sentiment and the Business Cycle

Using United States data from 1929 to 2013, Jeremy C. Stein and colleagues emphasize the role of credit-market sentiment as an important driver of the business cycle.

• 10 Feb 2016

Land Institutions and Chinese Political Economy: Institutional Complementarities and Macroeconomic Management

This paper shows the ways in which the Chinese Communist Party (CCP) has used land as a policy tool. CCP leaders intentionally reorganized fiscal, financial, and land institutions to put land at the center of local government finances in the mid-1990s. Since the late 1990s, the CCP has used the land supply as a key tool of macroeconomic expansion and contraction. Local officials act as agents of the center: pursuing land development when pushed to so do by central authorities concerned about managing economic growth.

• 10 Dec 2015

The Probability of Rare Disasters: Estimation and Implications

Emil Siriwardane analyzes the probability for risk of large-scale financial disasters.

• 24 May 2010

Stimulus Surprise: Companies Retrench When Government Spends

Research from Harvard Business School suggests that federal spending in states appears to cause local businesses to cut back rather than grow. A conversation with Joshua Coval. Closed for comment; 0 Comments.

• 25 Jan 2010

A Macroeconomic View of the Current Economy

Concerned or confused by the economic environment? Take some lessons from history and concepts from macroeconomics to get a better understanding of how the economy works. A Q&A with HBS professor David A. Moss, author of A Concise Guide to Macroeconomics: What Managers, Executives, and Students Need to Know. Closed for comment; 0 Comments.

• 05 Jun 2009
• What Do You Think?

What Does Slower Economic Growth Really Mean?

Respondents to this month's column by HBS professor Jim Heskett came close to general agreement on the proposition that economic growth is not measured properly by GDP, calling for new indicators. Jim sums up. (Online forum now closed. Next forum begins July 6.) Closed for comment; 0 Comments.

• 22 Aug 2005

Restoring a Global Economy, 1950–1980

In his recent book Multinationals and Global Capitalism, professor Geoffrey Jones dissects the influence of multinationals on the world economy. This excerpt recalls the rebuilding of the global economy following World War II. Closed for comment; 0 Comments.

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AP®︎/College Macroeconomics

Course: ap®︎/college macroeconomics   >   unit 1.

• Production possibilities curve
• Opportunity cost
• Increasing opportunity cost
• PPCs for increasing, decreasing and constant opportunity cost
• Production Possibilities Curve as a model of a country's economy
• Lesson summary: Opportunity cost and the PPC

Opportunity cost and the PPC

• (Choice A)   From U ‍   to Z ‍   A From U ‍   to Z ‍  
• (Choice B)   From U ‍   to Y ‍   B From U ‍   to Y ‍  
• (Choice C)   From U ‍   to W ‍   C From U ‍   to W ‍  
• (Choice D)   From Z ‍   to V ‍   D From Z ‍   to V ‍  
• (Choice E)   X ‍   to Z ‍   E X ‍   to Z ‍  

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Topic 7: Producer Theory

Some hate it and some love it, but regardless of how you feel oil is still a key part of our daily lives. The average Canadian uses about 20 barrels of oil each year, equivalent to about one and a half swimming pools. Since it is such a major part of our expenses, oil is a product where, when price changes, we really notice.

In 2008, China’s expansion sparked  a  long period of high prices. In this case study, we will analyze what has happened to these prices over time and the impact this has had on oil producers from the lens of producer theory. 

To simplify our case study, let’s assume that the oil market is perfect competition.

1. Consider the following producer theory model for a single firm producing oil, and the aggregate supply and demand. What is the firm’s equilibrium price and quantity?

2. What is the firm’s profit at this level?

3. What will occur in the long-run for this market? Show this on the new graph below.

The period of high prices indeed incentivized private firms to search farther than ever before –  in the Arctic, Brazil’s pre-salt fields, deep waters off Angola, and Canada’s oil sands to ever expand the supply of oil. Investors encouraged this activity, rewarding future growth as much as profitability.

Oil prices have been quite volatile. Recently, from mid 2014 to early 2016 oil prices plummeted from $110 a barrel to around $27. This sharp decline has been due to a number of causes. A key cause was when sanctions were lifted from Iran, a new producer entered the market with large quantities of oil. In addition, growing fears about action on climate change, coupled with the emergence of alternative-energy technologies, caused producers to pump as hard as they can, while they can.

Read more about the reasons for changing oil prices

3. Use the producer theory model from above to show the impact of Iran’s entry, assume this brings the market from long-run equilibrium to a price of $27.

4. What are the firms profits at this price?

In the industry at large, the incentive is to keep producing “as flat out as you can”, once investment costs have been sunk into the ground, says Simon Henry, Shell’s chief financial officer. He says it is sometimes more expensive to stop production than to keep pumping at low prices, because of the high cost of mothballing wells. He suggested that firms  will not pack up so long as prices cover day-to-day costs, in some cases as low as $15 a barrel.

It may be uneconomic to drill new deepwater wells at prices under $60 a barrel, he says, but once they are built it may still make economic sense to keep them running at prices well below that. Such resilience is used by some to justify why they expect prices to remain “lower for longer”.

Read more about the impact of price changes on oil firms

6. What does this excerpt suggest about how firms will behave in the short run?

7. Based on the information given about this market, what do you think the time horizon will be for this industries ‘long run’? What will happen in the long run?

Notice that in our model when prices fall, even in the short run individual firms will decrease production. In reality, firms part of the Organization of Petroleum Exporting Countries (OPEC) made a pact to keep production high, to try to retain market share and keep out competitors.

In his book “The Prize”, Daniel Yergin quotes an American academic writing as far back as 1926 about the “spectacle” of massive overproduction. “All saw the remedy but would not adopt it. The remedy was, of course, a reduction in the production.”

8. Comment on the effects of OPEC’s actions on the market.

In this case study we have shown how microeconomic concepts of monopoly and monopolistic competition can be used to understand current events in the news. Do you have a story you think would make a good case study? Contact [email protected] to propose your own case.

Principles of Microeconomics Copyright © 2017 by University of Victoria is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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NCERT Solutions for Class 12 Macroeconomics Chapter 4 Case Study

NCERT Solutions for Class 12 Macroeconomics Chapter 4 Case Study Questions with answers in English Medium designed for session 2024-25. The Case Study MCQ of class 12 Economics chapter 4 Determination of Income and Employment are given here to understand Case Studies and to prepare the Case based questions.

Class 12 Macroeconomics Chapter 4 Case Studies Question Answers

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Aggregate call for refers to the overall cost of very last items and offerings which all of the sectors of an economic system are making plans to shop for at a given stage of profits in the course of a duration of 1 accounting year. In different words, AD is the mixture expenditure that unique sectors of the economic system are inclined to incur in the course of a given duration. It approaches, AD and mixture expenditure imply the equal. It is vital to notice that mixture expenditure refers back to the deliberate expenditure and now no longer the real expenditure. So, AD is the overall costs that each one family, companies, authorities and the relaxation of the arena are making plans to incur in the course of a given duration of time. AD is a go with the drift idea as its miles normally measured during an accounting year.

Components of mixture call for: The diverse additives of mixture call for are:

• Private intake expenditure – It refers to the overall expenditure incurred through families on buy of products and offerings in the course of an accounting year. Consumption expenditure is without delay prompted through the extent of disposable profits i.e., better the disposable profits, extra is the intake expenditure and vice versa. Disposable profits refer back to the profits from all sources that is to be had to families for spending on intake and saving.
• Investment expenditure – It refers to the overall expenditure incurred through all non-public companies on capital items. It consists of addition to the inventory of bodily capital belongings inclusive of machinery, equipment, homes etc. and alternate in stock.
• Government expenditure – It refers to the overall expenditure incurred through authorities on purchaser items and capital items to meet the not unusual place desires of the economic system. It approaches, authorities incur intake expenditure in addition to funding expenditure. Consumption expenditure is incurred to satisfy public desires like regulation and order, education, health, transport, defence, etc. Investment expenditure entails production of highways, roads, energy plants, etc.
• Net Exports – Export suggest call for items produced in the home territory of a rustic through the relaxation of the arena. Imports consult with needs of the citizens of a rustic for the products which have been produced abroad. The distinction among exports and imports is named as NET Exports.
• Question 1: Name the 4 additives of mixture call for.
• Question 2: State whether or not True or False. (a) AD and mixture expenditure imply the equal. (b) AD is the overall costs that each one family, companies, authorities and the relaxation of the arena are making plans to incur in the course of a given duration of time. (c) Imports consult with needs of the citizens of a rustic for the products which have been produced in a rustic. (d) The distinction among exports and imports is named as Gross Exports. (e) AD is a go with the drift idea as its miles normally measured during an accounting year. (f) Investment expenditure consists of addition to the inventory of bodily capital belongings inclusive of machinery, equipment, homes etc. and alternate in stock.
• Question 3: What is Government expenditure?
• Question 4: What is mixture call for and marketplace call for?
• Question 5: Fill with inside the blanks: (a) AD and mixture expenditure imply the _________. (b) Consumption expenditure is incurred to satisfy _________ like regulation and order, education, health, transport, defence, etc. (c) ________ entails production of highways, roads, energy plants, etc. (d) AD is a _________ as its miles normally measured during an accounting year. (e) Export suggests call for items produced in the _________ territory of a rustic through the relaxation of the arena.
• Answer 1: Private intake expenditure, Investment expenditure, Government expenditure and Net exports.
• Answer 2: (a) True, (b) True, (c) False, (d) False, (e) True, (f) True
• Answer 3: Government expenditure refers to the overall expenditure incurred through authorities on purchaser items and capital items to meet the not unusual place desires of the economic system. It approaches, authorities incur intake expenditure in addition to funding expenditure.
• Answer 4: Aggregate call for is the overall call for all items and offerings inside the complete economic system. Whereas, marketplace call for is the overall call for one commodity within the marketplace.
• Answer 5: (a) equal, (b) public desires, (c) Investment expenditure, (d) go with the drift idea, (e) home.

Aggregate deliver refers to cash cost of very last items and offerings that each one the manufacturers are inclined to deliver in an economic system in a given duration of time. It has to be mentioned that AS refers handiest to deliberate manufacturing or preferred output in the course of a given time duration. Aggregate deliver is equals to country wide profits. When AS is expressed in bodily phrases, it refers to general output of products and offerings in an economic system. We recognise that cost of general output is shipped to elements of manufacturing within the shape of rent, wages, hobby and income. The sum general of those element earning at home and country wide stage is named as country wide profits. So, we will say that mixture deliver and country wide profits, are one and the equal thing.

The primary part of country wide profits is spent on intake of products and offerings and the stability is stored. It approaches, profits are both fed on or stored. Consumption expenditure refers to that part of profits that is spent on the acquisition of products and offerings on the given stage of profits. Consumption feature refers to purposeful courting among intake and country wide profits. It represents the willingness of families to buy items and offerings at a given stage of profits in the course of a given time duration. It additionally indicates the intake stage at unique degrees of profits in an economic system. It is a mental idea as its miles prompted through subjective elements like customer’s options and habits, etc.

• Question 1: What is mixture deliver?
• Question 2: What do you recognize through intake feature?
• Question 3: State whether or not True or False. (a) Aggregate deliver and country wide profits, are one and the equal thing. (b) The primary part of country wide profits is spent on intake of products and offerings and the stability is stored. (c) When AS is expressed in bodily phrases, it refers to general output of products and offerings in an economic system. (d) Aggregate deliver isn’t always equals to country wide profits. (e) The sum general of the element earning at home and country wide stage is named as country wide profits.
• Question 4: Fill with inside the blanks: (a) It is a mental idea as its miles prompted through _____________ elements like customer’s options and habits, etc. (b) When AS is expressed in bodily phrases, it refers to ______________ of products and offerings in an economic system. (c) Consumption feature refers to _______________ among intake and country wide profits. (d) It has to be mentioned that AS refers handiest to _______________ or preferred output in the course of a given time duration. (e) Aggregate deliver refers to ______________ of very last items and offerings that each one the manufacturers are inclined to deliver in an economic system in a given duration of time.
• Question 5: How can we calculate country wide profits?
• Answer 1: Aggregate deliver refers to cash cost of very last items and offerings that each one the manufacturers are inclined to deliver in an economic system in a given duration of time.
• Answer 2: Consumption feature refers to purposeful courting among intake and country wide profits. It represents the willingness of families to buy items and offerings at a given stage of profits in the course of a given time duration.
• Answer 3: (a) True, (b) True, (c) True, (d) False, (e) False
• Answer 4: (a) subjective, (b) general output, (c) purposeful courting, (d) deliberate manufacturing, (e) cash cost
• Answer 5: The cost of general output is shipped to elements of manufacturing inside the shape of rent, wages, hobby and income. The sum general of those element earning at home and country wide stage is named as country wide profits.

There are technical factors of propensity to devour: 1. Average propensity to devour (APC) 2. Marginal propensity to devour (MPC) Average propensity to devour refers back to the ratio of intake expenditure to the corresponding stage of profits. Some vital factors approximately APC are: As lengthy as intake is extra than country wide profits, APC is extra than 1. At the break-even factor intake is same to country wide profits, so APC is equals to 1. Beyond the break-even factor, intake is much less than country wide profits. APC Falls constantly with the growth in profits due to the fact the share of profits spent on intake continues on decreasing. APC may be 0 handiest while intake turns into 0. However, intake is in no way 0 at any stage of profits. Even at 0 stage of country wide profits, there’s self-sustaining intake. Marginal propensity to devour refers back to the ratio of alternate in intake expenditure to alternate in general profits. MPC explains what percentage of alternate in profits is spent on intake. Some vital factors approximately MPC: We recognise, incremental profits are both spent on intake or stored for destiny use. In everyday conditions cost of MPC varies among zero to 1.

MPC of negative is extra than that of wealthy due to the fact negative human beings spend an extra percent in their multiplied profits on intake as maximum in their simple desires continue to be unsatisfied. On the alternative hand, which human beings spend a smaller percentage as they already experience a better popular of living. MPC Falls with successive growth in profits due to the fact as an economic system turns into richer, it has the tendency to devour smaller percent of every increment to its profits.

• Question 1: When does APC turns into 0?
• Question 2: Why does MPC falls with successive growth in profits?
• Question 3: Fill with inside the blanks: (a) In everyday conditions cost of MPC varies among ____________. (b) APC Falls constantly with the ___________in profits due to the fact the share of profits spent on intake continues on decreasing. (c) Incremental profits are both spent on intake or _____________ for destiny use. (d) Average propensity to devour refers back to the ratio of ______________ to the corresponding stage of profits. (e) As lengthy as intake is extra than country wide profits, APC is ______________ than 1. (f) Marginal propensity to devour refers back to the _____________ in intake expenditure to alternate in general profits. (g) Even at 0 stage of country wide profits, there’s ______________ intake.
• Answer 1: APC may be 0 handiest while intake turns into 0. However, intake is in no way 0 at any stage of profits. Even at 0 stage of country wide profits, there’s self-sustaining intake.
• Answer 2: MPC Falls with successive growth in profits due to the fact as an economic system turns into richer, it has the tendency to devour smaller percent of every increment to its profits.
• Answer 3: (a) zero to 1, (b) growth, (c) stored, (d) intake expenditure, (e)extra, (f) ratio of alternate, (g) self-sustaining

Investment refers back to the expenditure incurred on advent of New Capital belongings. It consists of the expenditure incurred on belongings like machinery, building, equipment, uncooked material, etc. This caused growth inside the effective ability of an economic system. The funding expenditure is assessed below heads: Induced funding and self-sustaining funding. Induced funding refers back to the funding which relies upon at the income expectancy and is without delay prompted through profits stage. IT will increase with growth in profits and reduces with the lower in profits. Autonomous funding refers back to the funding which isn’t always suffering from modifications within the stage of profits and isn’t always caused totally through income motive. It isn’t always prompted through alternate in profits.

According to a well-known economist, the selection to spend money on a brand-new task relies upon elements: Marginal performance of funding and Rate of hobby. Marginal performance of funding – It refers back to the anticipated price of go back from an extra funding. It is decided through elements:

• Supply rate refers back to the price of manufacturing a brand-new asset of that kind. It is the rate at which the New Capital Asset may be furnished or replaced.
• Prospective yield refers to internet go back, anticipated from the Capital Asset over its lifetime.
• Rate of hobby – it refers to price of borrowing cash for financing the funding. There exists an inverse courting among ROI and the quantity of funding. At an excessive ROI, the funding spending could be much less and at a low ROI, the funding spending could be extra.
• Question 1: What is ROI?
• Question 2: State whether or not True or False. (a) Induced funding refers back to the funding which relies upon at the income expectancy and is without delay prompted through profits stage. (b) Prospective yield refers to gross go back, anticipated from the Capital Asset over its lifetime. (c) Marginal performance of funding refers back to the anticipated price of go back from an extra funding. (d) Autonomous funding isn’t always suffering from modifications within the stage of profits and isn’t always caused totally through income motive. (e) At an excessive ROI, the funding spending could be extra and at a low ROI, the funding spending could be much less.
• Question 3: Fill with inside the blanks: (a) Rate of hobby refers to price of _____________ cash for financing the funding. (b) The funding expenditure is assessed below heads: ____________ and self-sustaining funding. (c) Supply rate is the rate at which the new _____________ may be furnished or replaced. (d) ___________ funding isn’t always prompted through alternate in profits. (e) ___________ funding will increase with growth in profits and reduces with the lower in profits.
• Question 4: What is funding?
• Answer 1: Rate of Interest refers to price of borrowing cash for financing the funding. There exists an inverse courting among ROI and the quantity of funding. At an excessive ROI, the funding spending could be much less and at a low ROI, the funding spending could be extra.
• Answer 2: (a) True, (b) False, (c) True, (d) True, (e) False
• Answer 3: (a) borrowing, (b) Induced funding, (c) capital asset, (d) Autonomous, (e) Induced.
• Answer 4: Investment refers back to the expenditure incurred on advent of New Capital belongings. It consists of the expenditure incurred on belongings like machinery, building, equipment, uncooked material, etc. This caused growth within the effective ability of an economic system.

Ex-ante variable is the deliberate or anticipated cost of variable, whereas, ex-publish variable is the real or found out cost of the variable. Both those phrases are normally utilized in context of saving and funding. There are factors of saving and Investments: 1) Ex-ante saving and ex-ante funding 2) Ex-publish saving and ex-publish funding Ex-ante saving refers to quantity of financial savings, which families deliberate to keep at unique degrees of profits in the economic system. In different words, ex-ante saving are the deliberate financial savings of an economic system at unique degrees of profits. The quantity of ex-ante or deliberate saving is given through the saving feature. Ex-ante funding refers to quantity of funding which companies plans to make investments at unique degrees of profits within the economic system. The quantity of ex-ante or deliberate funding is decided through the relation among funding call for and price of hobby, i.e., through funding call for feature.

Ex-publish financial savings consult with the real or found out saving in an economic system in the course of a year. Ex-publish or real saving is the sum general of deliberate saving and unplanned saving. Ex-publish funding refers back to the found out or real funding in an economic system in the course of a year. Ex-publish or real funding is the sum general of deliberate funding and unplanned funding. Planned cost of the variables are their ex-ante measures, whereas, found out cost of the variables are their ex-publish measures. The importance of difference among Ex-ante and Ex-publish is that each one the variables inside the principle of profits dedication are ex-ante valuables, i.e., ex-ante variables shape the premise of principle of country wide profits dedication.

• Question 1: What is the difference among ‘ex-ante’ and ‘ex-publish’?
• Question 2: What is ex-publish saving?
• Question 3: Fill with inside the blanks: (a) Ex-publish or real funding is the ______________ of deliberate funding and unplanned funding. (b) Ex-ante saving refers to quantity of financial savings, which families deliberate to keep at unique _____________ with inside the economic system. (c) The quantity of ex-ante or deliberate funding is decided through the _____________ among funding call for and price of hobby. (d) The quantity of ex-ante or deliberate saving is given through the ______________. (e) __________ funding refers back to the found out or real funding in an economic system in the course of a year.
• Question 4: State whether or not True or False (a) Planned cost of the variables are their ex-ante measures, whereas, found out cost of the variables are their ex-publish measures. (b) There are factors of saving and Investments: 1) Ex-ante saving and ex-ante funding. 2) Ex-publish saving and ex-publish funding (c) The quantity of ex-publish saving is given through the saving feature. (d) Ex-publish or real saving is the sum general of deliberate saving and unplanned saving. (e) The quantity of ex-ante or deliberate funding isn’t always decided through the relation among funding call for and price of hobby. (f) Ex-ante variable is the deliberate or anticipated cost of variable, whereas, ex-publish variable is the real or found out cost of the variable.
• Answer 1: The importance of difference among Ex-ante and Ex-publish is that each one the variables with inside the principle of profits dedication are ex-ante valuables, i.e., ex-ante variables shape the premise of principle of country wide profits dedication.
• Answer 2: Ex-publish financial savings consult with the real or found out saving in an economic system in the course of a year. Ex-publish or real saving is the sum general of deliberate saving and unplanned saving.
• Answer 3: (a) sum general; (b)degrees of profits; (c)relation; (d) saving feature; (e)Ex-publish.
• Answer 4: (a) True; (b) True; (c)False; (d) True; (e) False; (f) True.

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Review Questions

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What are three reasons to study economics?

What is the difference between microeconomics and macroeconomics?

What are examples of individual economic agents?

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How did John Maynard Keynes define economics?

Are households primarily buyers or sellers in the goods and services market? In the labor market?

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What are the three ways that societies can organize themselves economically?

What is globalization? How do you think it might have affected the economy over the past decade?

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• Class 11 Economics Case...

Class 11 Economics Case Study Questions

Table of Contents

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Economics is the most preferred subject of class 11 students who opt for the Commerce or Humanities stream. CBSE has introduced the format of class 11 Economics case study questions in the syllabus for the new academic session. It is a well-integrated program that highlights the general economic terms and their utility in our daily lives.

Economics class 11 plays a vital role in constructing and strengthening the foundation of major economic theories and concepts that are studied in depth at an advanced level in class 12 Economics. Class 11 Economics is not very easy but with practice and proper guidance, students can ace the subject. 

Case Study Questions in Class 11 Economics

CBSE introduced case-based questions in class 11 Economics question paper last year i.e-  2021 to uplift analytical reasoning in students. CBSE introduced a few changes in the Economics class 11 question paper so as to enhance and develop analytical and reasoning skills among students. The questions would be based on real-life situations encountered by the students.

The Purpose

The sole purpose of introducing case-based questions in the class 11 curriculum by CBSE was to drift from rote learning to competency and situation-based learning.

NEP 2020 and Case Studies

Sanyam Bhardwaj, controller of examinations, CBSE focussed on the fact that case-based questions would enhance the critical reasoning skills of the students. He highlighted the fact that adding such questions to the examination was a step towards achieving the goals of the National Education Policy (NEP) 2020.

Implementation in class 11

According to the new examination guidelines released by CBSE for the current academic year, case study-based questions would be asked in the class 11 Economics exam too. Initially, when CBSE introduced case-based questions, a panic situation was created among the teachers as well as students. The concept was new and unexplored.

Format of Case Studies in Economics

A comprehensive passage is provided in the question paper, on the basis of which the student is required to solve the given case-based question asked in the Economics class 11 exam. Initially, the case-based questions appeared to be puzzling and tricky for both the students and the teachers. Perhaps, they were not willing to experiment with the new pattern but now a lot more clarity is there that has made the question paper quite favorable for the students.

You can Score High

Economics is a subject of paramount importance for the students who have opted for the Commerce / Humanities stream in class 11. The subject is high scoring and facilitates the students to increase their percentile and excel in academics.

Economics syllabus of class 11 

The entire Economics Syllabus is divided into 2 parts:

• Part A, Statistics
• Part B,  Microeconomics

Syllabus Design

CBSE has designed the entire syllabus for Economics , grade 11 in such a way that it enables the students to analyze various economic issues and develop the ability to deal with them. The complete syllabus is categorized into 7 units, so as to facilitate the students as well as teachers to clearly visualize and comprehend all the listed topics in the NCERT textbooks for class 11 Economics.

NCERT Books

It is recommended to go through the textbooks rigorously. Two books have been published by NCERT. Economics is a vast subject and the class 11 syllabus cannot be taken lightly as it forms the base for the CBSE class 12 board exam too. Students need to follow and practice other reference books but  NCERT textbooks need to be read in-depth in order to excel in this commerce stream subject.

CBSE Class – 11 Economics (Code No. 030)

Theory: 80 Marks (3 Hours) Project: 20 Marks

Case Study Passage (Economics class 11)  

As part of these questions, the students would be provided with a hypothetical situation or text, based on which reasoning questions will have to be answered by them. It is a must for the students to read the passage carefully prior to attempting the questions. These questions can be based on each chapter in the NCERT textbooks for Economics class 11. Students must prepare well for the case-based questions before appearing for their Economics exam as these questions demand complete knowledge of the various concepts in their syllabus. CBSE plans to increase the weightage of such questions in the upcoming years.

Kind of case-based Questions in Economics

Economics is one of the fundamental subjects for commerce students that opens the various ways of achieving social welfare and getting maximum satisfaction with the limited resources available in the economy. The subject is demanding and definitely requires a greater effort from the students in order to strive for a perfect score. CBSE plans to increase the weightage of case-based questions in class 11 economics question papers that are prepared by the schools on the guidelines issued by CBSE itself. 

The case-based questions asked in the Economics question paper for class 11 can be formulated in 2 ways:

• Objective: these will be asked in the MCQ format
• Subjective: these would be answered briefly or might require some calculations /formula application.

As per the latest circular issued by CBSE on Assessment and Evaluation practices of the board for the session 2022-23, CBSE has clearly mentioned that competency-based questions including case studies will be different from subjective questions. 

Case-based  questions can be segregated in terms of their difficulty level too:

• Direct questions: such questions can be easily solved as their answers are there in the given passage itself.
• Indirect/ analytical questions: these questions demand complete and thorough knowledge of the concepts. Their solution is not visible in the passage, but it would be based on the theory that would be highlighted in the text provided in the question paper. The student is expected to read the passage carefully, analyze it and then solve it.

How To Prepare For Case-based Questions? 

Students need to prepare well for the case-based questions before appearing for their class 11 Economics exams. Here are some tips which will help the student to solve the case-based questions at ease:

• Read the provided text carefully
• Try to comprehend the situation and focus on the question asked
• Analyze and carefully answer the question asked
• Students may follow a reversal pattern, especially Microeconomics questions, i.e read the asked questions first and then look for the solutions in the given passage. The process will definitely save time.
• Do not neglect the theoretical concepts of Statistics, this is vital for achieving a perfect score.
• Practice extensively, especially for the numerical. This would help the student to memorize formulas. 
• Provide to the point responses
• Master all major concepts of your NCERT textbooks 

Students need to strengthen their fundamentals in order to ace the Economics class 11 CBSE  exam. Case studies can be easily solved if your key concepts are crystal clear. These simple points if kept in mind will definitely help the students to fetch good marks in case study questions in class 11 Economics. 

Case Study Question Examples in Economics

Here a re some given case study questions for CBSE class 11 Economics. If you wish to get more case study questions and other study material, download the myCBSEguide app now. You can also access it through our student dashboard.

Class 11 Economics Case Study 1

Read the following Case Study carefully and answer the questions on the basis of the same:

If our income rises, we generally tend to buy more of the goods. More income would mean more pens, more shirts, more shoes,  more cars and so on. But there are exceptions. If initially, you are buying coarse grain, how would you take your increase in income now? Perhaps, as a first step, you would discard the consumption of inferiors. Surely, this happens in the deserts of Rajasthan where the rich minority eats wheat while the poor majority eats Bajra as their staple food. 

• The law of demand does not apply to __________________ goods. (Normal/ Giffen)
• Inferior goods are those whose income effect is_____________. (Negative/ Positive)
• upward movement on the demand curve.
• downward movement on the demand curve
• rightward shift of the demand curve
• leftward shift of the demand curve
• becomes a horizontal straight line
• becomes a vertical straight line
• shifts to the right
• shifts to the left

Answer Key:

• Leftward shift of the demand curve
• Shifts to the left

 Class 11 Economics Case Study 2

Census of India is a decennial publication of the Government of India. It is published by Registrar General and Census Commissioner, Under Ministry of Home Affairs, Government of India. It is a very comprehensive source of secondary data. It relates to population size and various aspects of demographic changes in India. Under the Ministry of Home Affairs, Government of India. It may be of historical interest that though the population census of India is a major administrative function; the Census Organisation was set up on an ad-hoc basis for each Census till the 1951 Census. The Census Act was enacted in 1948 to provide for the scheme of conducting population census with duties and responsibilities of census officers. The Government of India decided in May 1949 to initiate steps for developing systematic collection of statistics on the size of the population, its growth, etc., and established an organisation in the Ministry of Home Affairs under Registrar General and ex-Officio Census Commissioner, India.

• Data originally collected in the process of investigation are known as ________ (Primary data/ Secondary data).
• The problem of double conclusion arises in ________ (indirect oral investigation/ direct personal interview).
• Post independence, the first census of India was conducted in ________ (1949/1951)
• Census of India is carried out once in ________ years. (10/ 5)
• Primary data
• Indirect oral investigation

Class 11 Economics Case Study 3

Read the following  Case Study carefully and answer the questions on the basis of the same: Unpublished data or literature is known as grey literature in research. (The term ‘grey literature’ also includes data published in a non-commercial form, such as a conference proceeding.) These data are collected by the government organisations and others, generally for their self-use or office record. Unpublished data is useful mainly in secondary research, such as literature reviews and systematic reviews. It provides pointers to new research and perhaps also research paths to avoid. Preprints are a growing form of unpublished data these days and have proved very useful in guiding research in critical areas such as COVID-19.  Published sources of secondary data are government publications, semi-government publications, publications of research institutions, international publications etc.

• ________ data are collected from published or unpublished reports. (Primary/ Secondary)
• In the case of a ________, answers are to be written by the enumerators specifically hired for the purpose. ( Questionnaire/ Schedule)
• ________ publish data relating to education, health, births and deaths. (Government publications/ Semi- Government Publications)
• 76th round of NSSO was on ________ (Persons with disabilities and drinking water/ density of population)
• Secondary Data
• Semi- Government Publications
• Persons with disabilities and drinking water

Advantages of case study questions in Economics

Class 11 Economics syllabus is divided into 2 books and CBSE can ask case study questions from any of them. Students are expected to prepare themselves thoroughly for both books. They ought to practice class 11 Economics case-based questions from the various options available to them, so as to excel in the subject.

• Enhance the analytical skills of students
• Provide a complete and detailed understanding of the concepts
• Inculcate intellectual capabilities in students
• Help students retain knowledge for a longer period of time
• The questions would help to discard the concept of rote learning
• Case studies promote and strengthen practical learning.

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Case/Source Based MCQs of Money and Banking chapter class 12

• October 31, 2021
• MCQS , Money & Banking

Looking for Case study or Source-Based MCQs (Multiple Choice Questions) of Money and Banking chapter of Macroeconomics Class 12 CBSE, ISC and other state Board.

I have made a collection of important MCQs

Lets Practice.

Case/Source Based Multiple Choice Questions of Money and Banking Chapter Class 12

Following are the MCQs

1. Based on the passage below, answer the following questions.

The Reserve Bank of India (RBI) is India’s Central Bank, also known as the banker’s bank. The RBI controls the monetary and other banking policies of the Indian government. The Reserve Bank of India (RBI) was established on April 1, 1935, in accordance with the Reserve Bank of India Act, 1934. The role of RBI has undergone a significant change after the introduction of the new Economic Policy in 1991.

The Reserve Bank of India (RBI) is India’s central bank and regulatory body under the jurisdiction of the Ministry of Finance, the RBI is responsible for the issue and supply of the Indian rupee and the regulation of the Indian Banking system. It also manages the country’s main payment systems and works to promote its economic development.

On 8 November 2016, the government of India announced the demonetization of all ₹ 500 and ₹ 1000 banknotes of the Mahatma Gandhi Series on the recommendation of the Reserve Bank of India (RBI).

Answer the following Questions.

1. Why RBI is said to be a banker of the bank. Choose the correct option

a) Lender’s of last resort b) controller of credit c) Decide LRR d) None of the above.

Ans – a)

2. ‘RBI is responsible for issue and supply of Indian Rupee in the economy’. Identify the function of RBI and explain.

a) Central bank has the authority to issue currency in the economy. b) This develops the public faith in the system of note circulation. c) It allows the central bank to supervise and control the money supply. d) All of the above.

Ans – d)

3. Define Demonetisation.

a) it refers to selling the public sector to the private. b) It refers to the release of new coins. c) It refers to the process where currency notes of certain denominations are declared no longer as legal tender. d) None of the Above.

Ans – c)

4. How the role of RBI has changed after the 1991 New Economic Policy.

a) Its role changes from the regulator to facilitator b) Interest rates decision are left with financial institutions c) It only formulates the guidelines and decision-making rights are left with financial institutions d) All of the above.

The Monetary Policy Committee of the Reserve Bank of India kept interest rates on hold Thursday even as it vowed to keep policy sufficiently loose to help revive the coronavirus battered economy. Accepting a key demand of lenders and the corporate sector, the central bank cleared a one-time restructuring of loan accounts to bail out stressed borrowers, including personal, small, and medium loans.

The details of the loan restructuring scheme – expected to kick in after the moratorium on loan repayments ends. August 31 – will be worked out by a committee headed by former ICICI Bank Chairman KV Kamath. The RBI also continued to provide support on the liquidity front and opened a new targeted window for small lenders.

The central bank kept the repo rate unchanged at 4 percent and reduced the reverse repo rate to 3:35 percent.

Answer the following questions on the basis of the above Case.

Q.1 Suppose you are a member of the Monetary Policy Committee of the RBI. You have suggested the ___________ of the money supply be ensured to help revive the coronavirus battered economy.

a) restriction b) release c) doubling d) no change

Ans – b)

Q.2 “The Monetary Policy Committee of the RBI kept interest rates on hold—-“. Which of the following is highlighted above by the term ‘interest rates’?

a) Bank Rate and Repo Rate b) Bank Rate and Lending Rate c) Repo Rate and Reverse Repo Rate d) Bank Rate and Reverse Repo Rate

Q.3 What does the ‘Repo Rate’ mean?

a) Rate at which banks borrow from the RBI for short term b) Rate at which banks borrow from the RBI for long term c) Rate at which banks deposit excess funds with the RBI d) Rate at which banks lend funds to the public

Q.4 ‘Reduction in Repo Rate by RBI’ is likely to _ the demand for goods and services in the economy.

a) increase b) decrease c) double d) not effect

The key indicators of RBI Monetary Policy along with their current rates in the table given below:

On 9th October 2020, RBI has kept the Repo Rate unchanged at 4.00% and reduced reverse repo rate to 3.35%. In addition to that, the bank rate stands at 4.65%. This has been done to limit the damage to the economy caused by the Covid-19 and subsequent lockdowns.

Q.1 What does RBI Monetary Policy 2020 mean?

a) It is the policy formulated by the RBI in 2020 related to expenditure and taxation of the government. b) It is the policy formulated by the RBI in 2020 realted to money matters of the country. c) It is the policy formulated by the RBI in 2020 related to the government budget. d) It is the policy formulated by the RBI in 2020 realted to the distribution of credit among users as well as the rate of interest on borrowing and lending.

Ans – b), d)

Q.2 What does the ‘Bank Rate’ mean?

a) Rate at which banks borrow from the RBI for short term b) Rate at which banks borrow from the RBI for long term c) Rate at which banks deposit excess funds with the RBI d) Rate at which banks lend funds to the public.

Q.3 Which of the following is a quantitative credit control technique of RBI?

a) CRR b) SLR c) Repo Rate d) All of these

Q.4 Cut in Reverse Repo Rate is likely to _ the demand for goods and services in the economy during Covid – 19 lockdowns.

Case Study – 3

Keeping in view the continuing hardships faced by banks in terms of social distancing of staff and consequent strains on reporting requirements, the Reserve Bank of India has extended the relaxation of the minimum daily maintenance of the CRR of 80% for up to September 25, 2020. Currently, CRR is 3% and SLR is 18.50%.

“As announced in the Statement of Development and Regulatory Policies of March 27, 2020, the minimum daily maintenance of CRR was reduced from 90% of the prescribed CRR to 80% effective the fortnight beginning March 28, 2020 till June 26, 2020, that has now been extended up to September 25, 2020,” said the RBI.

Q.1 The full forms of CRR and SLR are:

a) Current Reserve Ratio and Statutory Legal Reserves b) Cash Reserve Ratio and Statutory Legal Reserves c) Current Required Ratio and Statutory Legal Reserves d) Cash Reserve Ratio and Statutory Liquidity Ratio

Q.2 What will be the value of money multiplier?

a) 33.33 b) 5.4 c) 4.65 d) None of these

Q.3 SLR implies:

a) Certain percentage of the total banks’s deposits has to be kept in the current account with RBI b) Certain percentage of net total demand and time deposits has to be kept by the bank with themselves. c) Certain percentage of net demand deposits has to be kept by the banks with RBI d) None of the above

Decrease in CRR will lead to __ .

a) fall in aggregate demand in the economy. b) rise in aggregate demand in the economy c) no change in aggregate demand in the economy d) fall in general price level in the economy

Case Study – 4

Due to Covid – 19, the Reserve Bank of India (RBI), cut Repo Rate to 4.4% the lowest in at least 15 years. Also, it reduced the CRR by 100 basis points. Previously, it was 4%. RBI governor Dr. Shaktikanta Das predicted a big global recession and said India will not be immune. It all depends on how India responds to the situation. Aggregate demand may weaken and ease core inflation.

Q.1 CRR stands for:

a) Cash Reserve Ratio b) Current Reserve Ratio c) Cash Required Rate d) Current Required Rate

Q.2 Cut in Repo Rate by RBI is likely to __ the aggregate demand in the Indian Economy.

“ reduced the CRR by 100 basis points. Previously, it was 4%.” Thus, CRR is reduced to ___ .

a) 5% b) 3% c) 96% d) 104%

Besides reduction in CRR and Repo Rate, What other measures can be taken by the Government of India through its budgetary policy to combat recession?

a) Decrease the bank rate b) Sell government securities in the open market c) Increase margin requirements on secured loans d) Decrease taxes and increase government expenditure

Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

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Class 12th Economics - Market Equilibrium Case Study Questions and Answers 2022 - 2023

By QB365 on 09 Sep, 2022

QB365 provides a detailed and simple solution for every Possible Case Study Questions in Class 12th Economics Subject - Market Equilibrium, CBSE. It will help Students to get more practice questions, Students can Practice these question papers in addition to score best marks.

QB365 - Question Bank Software

Market equilibrium case study questions with answer key.

12th Standard CBSE

Final Semester - June 2015

 Case Study 

We commonly come across instances where government fixes a maximum allowable price for certain goods. The government imposed upper limit on the price of a good or service is called 'price ceiling'. It is imposed on generally necessary items like wheat, rice, sugar etc. It is fixed below the market-determined price, as at the market determined price some section of the population will not be able to afford these goods. The government imposed lower limit on the price that may be charged for a particular good/service is called 'Price floor'. Some popular examples of imposition of price floor are agricultural price support programmes and the minimum wage legislation. Through the 'agricultural price-support programme' the floor is normally set at a level higher than the market-determined price for these goods. Similarly through the 'Minimum Wage Legislation' the government ensures that the minimum wage rate is set above the equilibrium wage rate. (a) Give another name for 'market-determined price'? (b) Explain the concept of 'price-ceiling'. (c) Throw light on the concept of 'Price-floor' with suitable examples.

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Market equilibrium case study questions with answer key answer keys.

(a) It is also known as the 'equilibrium price'. (b) The government imposed upper limit on the price of a good or service is called 'price ceiling'. It is generally imposed on necessary items like wheat, rice, sugar etc. It is also fixed below the market-determined price as some sections of the population will not be able to afford these goods at the market-determined price. (c) The government imposed lower limit on the price that may be charged for a particular good/service is called 'Price floor'. Some of the popular examples of imposition of price floor are' Agricultural Price Support-Programmes' and the 'Minimum Wage Legislation'. Through the Agricultural Price-Support Programme the floor is normally set a level higher than the market determined price for these goods. Similarly, through the 'Minimum Wage Legislation', the government ensures that the Minimum Wage Rate is set above the equilibrium wage rate.

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