NEB Class 12 · Past paper
The complete NEB Class 12 2082 exam paper for Economics, all 25 questions with solved model answers.
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Mention any two causes to arise problem of choice.
Two causes that give rise to the problem of choice are: (i) unlimited human wants, which multiply endlessly and can never all be satisfied; and (ii) the scarcity of resources together with their alternative uses, since limited resources can be put to more than one use, so a society must choose which wants to satisfy and how to use its resources.
If total cost of producing 7th and 8th unit of goods are Rs. 624 and Rs. 727 respectively, find marginal cost of producing 8th unit of goods.
Given: total cost of producing the 7th unit $TC_7 = 624$ and total cost of producing the 8th unit $TC_8 = 727$.
Formula: marginal cost of the 8th unit is the addition to total cost from producing it.
$$ \begin{aligned} MC_8 &= TC_8 - TC_7 \ MC_8 &= 727 - 624 \ &= 103 \end{aligned} $$
Answer: the marginal cost of producing the 8th unit is Rs $103$.
Which bank is called lender of last resort?
The central bank (in Nepal, Nepal Rastra Bank) is called the lender of last resort, because when commercial banks are unable to obtain funds from any other source in times of financial difficulty, the central bank provides them credit by rediscounting their bills and advancing loans against approved securities, thereby maintaining confidence and stability in the banking system.
State any one difference between money market and capital market.
One difference between the money market and the capital market is the duration of funds dealt in: the money market is the market for short-term funds (for a period of one year or less), dealing in instruments such as treasury bills and commercial paper, whereas the capital market is the market for long-term funds (for more than one year), dealing in shares, debentures and long-term bonds.
Mention any two indicators of human development.
Two indicators of human development, as used in the Human Development Index (HDI), are: (i) a long and healthy life, measured by life expectancy at birth; and (ii) knowledge, measured by the mean and expected years of schooling (education). A third dimension is a decent standard of living, measured by income per head.
Name the international organisation dealing with global rules of trade between nations.
The international organisation that deals with the global rules of trade between nations is the World Trade Organisation (WTO), which frames and enforces the rules of international trade and works to reduce trade barriers among its member countries. Nepal became a member in 2004.
Write any two objectives of sixteenth plan.
Two objectives of the Sixteenth Plan (2024/25 to 2028/29) of Nepal are: (i) to achieve rapid, sustainable and employment-oriented economic growth so as to graduate Nepal from the least developed country category and move towards middle-income status; and (ii) to ensure good governance and social justice, so that ordinary citizens feel the results of development in daily life.
Which sustainable development goal ensures availability of water and sanitation for all?
The sustainable development goal that ensures the availability of water and sanitation for all is Goal 6: Clean Water and Sanitation, which aims to ensure availability and sustainable management of water and sanitation for all.
Define statistics in a singular sense.
In the singular sense, statistics is the science (and art) of collecting, organising, presenting, analysing and interpreting numerical data so that valid conclusions can be drawn and sound decisions taken. In this sense it refers to statistical methods, as distinct from the plural sense in which statistics means the numerical data themselves.
Why is primary data preferred over secondary data in research work? Mention any one reason.
Primary data are preferred over secondary data in research work because they are collected first-hand for the specific purpose of the study, so they are more reliable, accurate and directly relevant to the problem, and their method of co...
Interpret the result of coefficient of range if difference and sum of largest and smallest value of series are 25 and 85 respectively.
Given: difference of the largest and smallest values $L - S = 25$ and their sum $L + S = 85$. Formula: the coefficient of range is a relative measure of dispersion. $$ \begin{aligned} \text{Coefficient of range} &= \frac{L - S}{L + S} \...
Describe any five differences between capitalist and socialist economy. [5]
The main differences between a capitalist and a socialist economy are: Basis Capitalist economy Socialist economy --------- Ownership of resources Means of production are privately owned Means of production are owned by the state Decisio...
What is division of labour? Explain its any four advantages. [1+4] (Or of Q12)
Division of labour means splitting the process of production into a number of small tasks, with each task performed by a separate worker or group of workers who specialise in it. Adam Smith illustrated it with the example of a pin factory. Its main advantages are:
Explain the classical theory of interest. [5]
Interest is the reward paid for the use of capital, or the price paid for the use of borrowed money, usually expressed as a percentage per annum.
The classical theory of interest, associated with economists such as Marshall and Pigou, holds that the rate of interest is determined by the demand for and the supply of capital (savings), and it is fixed where the two are equal.
The equilibrium rate of interest is determined at the point where the demand for capital (investment) equals the supply of capital (saving).
$$\text{Saving} = \text{Investment}$$
Criticism: the theory assumes full employment and that saving depends mainly on the rate of interest, whereas Keynes showed that saving depends chiefly on the level of income, so the theory is regarded as indeterminate.
Answer based on the given table (TFC = 20 with some TVC and TC given for output 0 to 5): complete the table and draw the total variable and total cost curves. [3+2]
Given: $TFC = 20$ at every level of output, with the relation $TC = TFC + TVC$. Filling in the missing values:
| Output (Q) | TFC (Rs) | TVC (Rs) | TC (Rs) |
|---|---|---|---|
| 0 | 20 | 0 | 20 |
| 1 | 20 | 20 | 40 |
| 2 | 20 | 30 | 50 |
| 3 | 20 | 45 | 65 |
| 4 | 20 | 80 | 100 |
| 5 | 20 | 145 | 165 |
(Each blank TVC is found as $TC - TFC$ and each blank TC as $TFC + TVC$.)
Drawing the curves: with output on the horizontal axis and cost on the vertical axis, the TVC curve starts from the origin (zero at zero output) and rises, first at a decreasing rate and then at an increasing rate, taking an inverse-S shape. The TC curve has the same shape but starts from Rs 20 on the vertical axis (the TFC) and lies above the TVC curve, the vertical gap between them being constant and equal to TFC (Rs 20) throughout.
Let cost function (TC) = 60+7Q^2 and revenue function (TR) = 120Q-5Q^2. Find out equilibrium level of output and profit. [3+2]
Given: $TC = 60 + 7Q^2$ and $TR = 120Q - 5Q^2$.
Formula: equilibrium output is where marginal revenue equals marginal cost, $MR = MC$; profit is $\pi = TR - TC$.
$$ \begin{aligned} MR &= \frac{d(TR)}{dQ} = 120 - 10Q \ MC &= \frac{d(TC)}{dQ} = 14Q \end{aligned} $$
Setting $MR = MC$:
$$ \begin{aligned} 120 - 10Q &= 14Q \ 120 &= 24Q \ Q &= 5 \end{aligned} $$
Now find profit at $Q = 5$:
$$ \begin{aligned} TR &= 120(5) - 5(5)^2 = 600 - 125 = 475 \ TC &= 60 + 7(5)^2 = 60 + 175 = 235 \ \pi &= TR - TC = 475 - 235 = 240 \end{aligned} $$
Answer: the equilibrium level of output is $5$ units and the profit is Rs $240$.
Describe any five features of direct tax. [5]
A direct tax is a tax whose money burden and real burden fall on the same person, so it cannot be shifted, such as income tax and property tax. Its main features are: - Non-shiftability: the person on whom it is levied has to bear it and...
You are residing in a village. If asked to advise by the Rural Municipality to suggest for employment generation, what kinds of five activities would you suggest for the improvement of your village to generate employment? Explain. [5]
If asked by the rural municipality to suggest activities for employment generation in the village, the following five activities can be recommended: - Commercial and modern agriculture: promote vegetable farming, livestock, dairy, poultr...
Why is foreign employment useful for Nepal? Explain any five reasons. [5]
Foreign employment is useful for Nepal for the following reasons: - Source of foreign currency (remittance): it is the largest single source of foreign exchange and supports the balance of payments and reserves. - Reduction of unemployme...
Find the Standard Deviation from the given data (income classes 10-20 to 50-60 with labour frequencies 8, 12, 17, 14, 9) and interpret the result. [4+1]
Given: the grouped frequency distribution of income against number of labourers:
| Income (class) | Mid-value ($m$) | Labour ($f$) | $fm$ | $f(m-\bar{x})^2$ |
|---|---|---|---|---|
| 10-20 | 15 | 8 | 120 | 3417.4 |
| 20-30 | 25 | 12 | 300 | 1365.7 |
| 30-40 | 35 | 17 | 595 | 7.6 |
| 40-50 | 45 | 14 | 630 | 1219.0 |
| 50-60 | 55 | 9 | 495 | 3363.6 |
| Total | 60 | 2140 | 9373.3 |
Mean:
$$ \begin{aligned} \bar{x} &= \frac{\sum fm}{\sum f} \ &= \frac{2140}{60} \ &= 35.67 \end{aligned} $$
Standard deviation:
$$ \begin{aligned} \sigma &= \sqrt{\frac{\sum f(m-\bar{x})^2}{\sum f}} \ &= \sqrt{\frac{9373.3}{60}} \ &= \sqrt{156.22} \ &= 12.50 \end{aligned} $$
Interpretation: the standard deviation of income is about Rs $12.50$ around the mean income of about Rs $35.67$. This measures the absolute spread of incomes about the average; the larger the standard deviation, the more unequal (scattered) the distribution of income among the labourers.
Find the index number by using Paasche's method from the given data (2078 and 2080) and interpret the result. [4+1] (Or of Q19)
Given: prices and quantities for the base year 2078 ($p_0, q_0$) and the current year 2080 ($p_1, q_1$):
| Commodity | $p_0$ | $q_0$ | $p_1$ | $q_1$ | $p_1 q_1$ | $p_0 q_1$ |
|---|---|---|---|---|---|---|
| A | 6 | 12 | 10 | 15 | 150 | 90 |
| B | 5 | 10 | 8 | 10 | 80 | 50 |
| C | 3 | 8 | 5 | 12 | 60 | 36 |
| D | 8 | 5 | 7 | 3 | 21 | 24 |
| Total | 311 | 200 |
Formula: Paasche's price index uses current-year quantities as weights.
$$ \begin{aligned} P_{01}^{P} &= \frac{\sum p_1 q_1}{\sum p_0 q_1} \times 100 \ P_{01}^{P} &= \frac{311}{200} \times 100 \ &= 155.5 \end{aligned} $$
Answer: the Paasche price index is $155.5$, which means that on average prices in 2080 are about $55.5%$ higher than in the base year 2078.
Answer based on the given table (units of goods with price/AR 12 to 5): complete the table for TR and MR, draw the total, average and marginal revenue curves, and identify the structure of market. [4+3+1]
Completing the table: here price equals average revenue, $TR = P \times Q$ and $MR = \dfrac{\Delta TR}{\Delta Q}$.
| Units (Q) | Price = AR (Rs) | TR (Rs) | MR (Rs) |
|---|---|---|---|
| 1 | 12 | 12 | 12 |
| 2 | 11 | 22 | 10 |
| 3 | 10 | 30 | 8 |
| 4 | 9 | 36 | 6 |
| 5 | 8 | 40 | 4 |
| 6 | 7 | 42 | 2 |
| 7 | 6 | 42 | 0 |
| 8 | 5 | 40 | -2 |
Drawing the curves: total revenue rises, reaches a maximum of Rs 42 (where MR = 0, at the 6th-7th unit) and then falls. The AR curve slopes downward, and the MR curve also slopes downward, lies below AR, falls twice as fast, becomes zero when TR is maximum and turns negative thereafter.
Identification of market: because average revenue (price) falls as more is sold and MR lies below AR, the firm faces a downward sloping demand curve. Hence the market is one of imperfect competition (a monopoly-type market), not perfect competition.
What is free trade? Why are developing countries not always benefited from the expansion of free trade? Explain. [1+7]
Free trade is a policy under which goods and services move between countries without restrictions such as tariffs and quotas, allowing international specialisation according to comparative advantage.
Why developing countries are not always benefited by the expansion of free trade:
For these reasons developing countries like Nepal usually adopt selective protection rather than complete free trade.
Evaluate the causes of increasing trade deficit in Nepal. [8]
The causes of the increasing trade deficit in Nepal are:
Together these factors make imports rise much faster than exports, widening the trade deficit year after year.
Evaluate the achievement of fifteenth periodic plan of Nepal. [8] (Or of Q22)
The Fifteenth Plan (2019/20 to 2023/24) of Nepal aimed at rapid, sustainable and employment-oriented growth under the long-term vision of Prosperous Nepal, Happy Nepali. Achievements: - Expansion of infrastructure such as roads, electric...
Given: total cost of producing the 7th unit and total cost of producing the 8th unit .
Formula: marginal cost of the 8th unit is the addition to total cost from producing it.
Answer: the marginal cost of producing the 8th unit is Rs .
Given: difference of the largest and smallest values and their sum . Formula: the coefficient of range is a relative measure of dispersion. $$ \begin{aligned} \text{Coefficient of range} &= \frac{L - S}{L + S} \...
Interest is the reward paid for the use of capital, or the price paid for the use of borrowed money, usually expressed as a percentage per annum.
The classical theory of interest, associated with economists such as Marshall and Pigou, holds that the rate of interest is determined by the demand for and the supply of capital (savings), and it is fixed where the two are equal.
The equilibrium rate of interest is determined at the point where the demand for capital (investment) equals the supply of capital (saving).
Criticism: the theory assumes full employment and that saving depends mainly on the rate of interest, whereas Keynes showed that saving depends chiefly on the level of income, so the theory is regarded as indeterminate.
Given: at every level of output, with the relation . Filling in the missing values:
| Output (Q) | TFC (Rs) | TVC (Rs) | TC (Rs) |
|---|---|---|---|
| 0 | 20 | 0 | 20 |
| 1 | 20 | 20 | 40 |
| 2 | 20 | 30 | 50 |
| 3 | 20 | 45 | 65 |
| 4 | 20 | 80 | 100 |
| 5 | 20 | 145 | 165 |
(Each blank TVC is found as and each blank TC as .)
Drawing the curves: with output on the horizontal axis and cost on the vertical axis, the TVC curve starts from the origin (zero at zero output) and rises, first at a decreasing rate and then at an increasing rate, taking an inverse-S shape. The TC curve has the same shape but starts from Rs 20 on the vertical axis (the TFC) and lies above the TVC curve, the vertical gap between them being constant and equal to TFC (Rs 20) throughout.
Given: and .
Formula: equilibrium output is where marginal revenue equals marginal cost, ; profit is .
Setting :
Now find profit at :
Answer: the equilibrium level of output is units and the profit is Rs .
Given: the grouped frequency distribution of income against number of labourers:
| Income (class) | Mid-value () | Labour () | ||
|---|---|---|---|---|
| 10-20 | 15 | 8 | 120 | 3417.4 |
| 20-30 | 25 | 12 | 300 | 1365.7 |
| 30-40 | 35 | 17 | 595 | 7.6 |
| 40-50 | 45 | 14 | 630 | 1219.0 |
| 50-60 | 55 | 9 | 495 | 3363.6 |
| Total | 60 | 2140 | 9373.3 |
Mean:
Standard deviation:
Interpretation: the standard deviation of income is about Rs around the mean income of about Rs . This measures the absolute spread of incomes about the average; the larger the standard deviation, the more unequal (scattered) the distribution of income among the labourers.
Given: prices and quantities for the base year 2078 () and the current year 2080 ():
| Commodity | ||||||
|---|---|---|---|---|---|---|
| A | 6 | 12 | 10 | 15 | 150 | 90 |
| B | 5 | 10 | 8 | 10 | 80 | 50 |
| C | 3 | 8 | 5 | 12 | 60 | 36 |
| D | 8 | 5 | 7 | 3 | 21 | 24 |
| Total | 311 | 200 |
Formula: Paasche's price index uses current-year quantities as weights.
Answer: the Paasche price index is , which means that on average prices in 2080 are about higher than in the base year 2078.
Completing the table: here price equals average revenue, and .
| Units (Q) | Price = AR (Rs) | TR (Rs) | MR (Rs) |
|---|---|---|---|
| 1 | 12 | 12 | 12 |
| 2 | 11 | 22 | 10 |
| 3 | 10 | 30 | 8 |
| 4 | 9 | 36 | 6 |
| 5 | 8 | 40 | 4 |
| 6 | 7 | 42 | 2 |
| 7 | 6 | 42 | 0 |
| 8 | 5 | 40 | -2 |
Drawing the curves: total revenue rises, reaches a maximum of Rs 42 (where MR = 0, at the 6th-7th unit) and then falls. The AR curve slopes downward, and the MR curve also slopes downward, lies below AR, falls twice as fast, becomes zero when TR is maximum and turns negative thereafter.
Identification of market: because average revenue (price) falls as more is sold and MR lies below AR, the firm faces a downward sloping demand curve. Hence the market is one of imperfect competition (a monopoly-type market), not perfect competition.