HSC 12th Economics March 2026 Board Paper Solution | Maharashtra Board

HSC 12th Economics March 2026 Board Paper Solution

Q. 1. (A) Complete the correlation:

1. Micro economics : Slicing method :: Macro economics : Lumping method
2. Price rises : Expansion of supply :: Price falls : Contraction of supply
3. Salt : Essential good :: Diamond : Prestige good / Luxurious good
4. P0 : Base year price :: P1 : Current year price
5. Money market : Short term funds :: Capital market : Long term funds

Q. 1. (B) Give economic terms:

1. Capacity of a commodity to satisfy human want: Utility
2. A branch of economics which does microscopic study of the economy: Micro Economics
3. Cost incurred on fixed factors: Fixed Cost (Total Fixed Cost)
4. The cost incurred by the firm to promote sales: Selling Cost
5. A budget in which estimated revenue and expenditure of the government are equal: Balanced Budget

Q. 1. (C) Find the odd word:

1. Types of utility: Place utility, Form utility, Time utility, Commodity utility
   Odd word: Commodity utility
2. Exceptions to the Law of supply: Giffen's goods, Supply of labour, Perishable goods, Rare goods
   Odd word: Giffen's goods
3. Selling cost: Free gifts, Patents, Hoardings, Window display
   Odd word: Patents
4. Determinants of demand: Income, Cost of production, Size of population, Price
   Odd word: Cost of production
5. Types of Index Numbers: Selection Index Number, Price Index number, Value Index Number, Quantity Index Number
   Odd word: Selection Index Number

Q. 1. (D) Choose the correct option:

1. Demand curve is parallel to 'Y'-axis

   Answer: (4) only a (Perfectly inelastic demand)

2. Revenue per unit of output sold

   Answer: (3) only c (Average revenue)

3. Statements that are incorrect in relation to index numbers

   Answer: (2) a, b (Index number is a geographical tool, Index numbers measure changes in the air pressure)

4. Obligatory functions of the government

   Answer: (3) only b (Maintaining internal law and order)

5. Examples of competitive demand are

   Answer: (2) a, c (Tea - Coffee, Sugar - Jaggery)

Q. 2. (A) Identify and explain the following concepts (Any THREE):

1. Shabana paid wages to workers in her factory.

   Identified Concept: Wages (Reward for Labour / Factor payment)

   Explanation: Labour is an active human factor of production. Wages are the financial reward or remuneration paid to labourers for their physical and mental contribution to the production process.

2. India purchased petroleum from Iran.

   Identified Concept: Import Trade

   Explanation: Import trade refers to the purchase of goods and services by one country from another country. It involves the inflow of goods from a foreign country into the home country.

3. Gopal collected information about output of rice, wheat, cotton and jowar produced in 2016 and 2020 and derived Index Number.

   Identified Concept: Quantity Index Number

   Explanation: A quantity index number measures the changes in the level of output or physical volume of production of goods in the economy over a specific period of time.

4. 40% fall in price of a commodity leads to 40% rise in quantity demanded.

   Identified Concept: Unitary Elastic Demand (Ed = 1)

   Explanation: Unitary elastic demand occurs when the percentage change in the quantity demanded is exactly equal to the percentage change in the price of the commodity.

5. Tina deposited a lumpsum amount of ₹ 50,000 in the bank for a period of one year.

   Identified Concept: Fixed Deposit (Time Deposit)

   Explanation: A fixed deposit refers to a lump sum amount deposited by a customer in a bank for a specific, predetermined period of time. It earns a higher and fixed rate of interest compared to other deposits.

Q. 2. (B) Distinguish between (Any THREE):

1. Micro Economics and Macro Economics

Points of Difference	Micro Economics	Macro Economics
Meaning	Micro economics is that branch of economics which studies the behaviour of individual economic units such as an individual consumer, firm, or industry.	Macro economics is that branch of economics which studies the behaviour of aggregates of the economy as a whole, such as total employment, national income, etc.
Scope	The scope of micro economics is narrow, as it deals only with individual economic variables.	The scope of macro economics is much wider, as it deals with overall macroeconomic variables.
Tools	Individual demand and individual supply are the main tools of micro economics.	Aggregate demand and aggregate supply are the main tools of macro economics.
Alternative Name	It is also known as Price Theory.	It is also known as Income and Employment Theory.

2. Increase in demand and Expansion of demand

Points of Difference	Increase in Demand	Expansion of Demand
Meaning	It refers to a rise in quantity demanded due to favourable changes in other factors, while the price remains constant.	It refers to a rise in quantity demanded strictly due to a fall in price alone, while other factors remain constant.
Cause	It is caused by changes in factors like increase in income, favourable changes in tastes and preferences, etc.	It is caused solely by a decrease in the price of the given commodity.
Effect on Demand Curve	The original demand curve shifts entirely to the right (outward shift) to form a new demand curve.	There is a downward movement along the same existing demand curve.
Concept Base	It is a part of 'Changes in Demand'.	It is a part of 'Variations in Demand'.

3. Average cost and Average revenue

Points of Difference	Average Cost (AC)	Average Revenue (AR)
Meaning	Average cost refers to the cost of production incurred per unit of output produced.	Average revenue refers to the revenue generated per unit of output sold.
Formula	AC = Total Cost (TC) / Total Quantity (TQ)	AR = Total Revenue (TR) / Total Quantity (TQ)
Significance	It helps a firm determine the minimum price required to cover the production expenses of a single unit.	It basically represents the price of the commodity, as price per unit is equal to average revenue.
Calculation Example	If Total Cost is ₹ 500 for 10 units, then AC = 500 / 10 = ₹ 50 per unit.	If Total Revenue is ₹ 800 from 10 units, then AR = 800 / 10 = ₹ 80 per unit.

4. Simple Index Number and Weighted Index Number

Points of Difference	Simple Index Number	Weighted Index Number
Meaning	In a simple index number, every commodity is given equal importance while constructing the index.	In a weighted index number, different commodities are given different weights based on their relative importance in the group.
Method of Construction	The method of constructing a simple index number is relatively easier and straightforward.	The method of constructing a weighted index number is relatively complex due to the assignment of weights.
Accuracy and Reliability	It is considered less accurate as it ignores the real-life relative importance of different commodities.	It is highly accurate and reliable as it reflects the true importance of various commodities through weights.
Use of Quantities	Quantities are usually not used as weights in the simple method.	Quantities of the base year or current year (e.g., Laspeyres' or Paasche's method) are explicitly used as weights.

5. Direct tax and Indirect tax

Points of Difference	Direct Tax	Indirect Tax
Meaning	It is a tax which is paid directly by the same person on whom it is legally imposed. The impact and incidence are on the same person.	It is a tax imposed on one person (like a producer/seller) but paid partly or wholly by another person (consumer). The impact and incidence are on different persons.
Burden / Shiftability	The burden of a direct tax cannot be shifted to any other person.	The burden of an indirect tax can easily be shifted to the final consumers in the form of higher prices.
Nature	Direct taxes are generally progressive in nature, meaning the tax rate increases as income increases.	Indirect taxes are mostly proportional or regressive in nature, affecting all income groups uniformly.
Examples	Income Tax, Wealth Tax, Corporate Tax, etc.	Goods and Services Tax (GST), Custom Duty, Excise Duty, etc.

Q. 3. Answer the following (Any THREE):

1. Explain any four features of utility.

Utility is the capacity of a commodity to satisfy human wants. Any four features of utility are as follows:

• Relative Concept: Utility is related to time and place. It changes from time to time and place to place. For example, woollen clothes have more utility in winter than in summer, and sand has more utility at a construction site than on a sea shore.
• Subjective Concept: Utility is a psychological concept and differs from person to person. It depends on the individual's likes, dislikes, nature, habits, and profession. For example, a stethoscope has utility for a doctor but not for a layman.
• Ethically Neutral Concept: The concept of utility has no ethical consideration. A commodity should satisfy any want of a person, regardless of whether it is good or bad, moral or immoral. For example, a knife has utility to cut vegetables for a housewife and can also be used to harm someone by a killer.
• Utility differs from Usefulness: Utility is the want-satisfying power of a commodity, whereas usefulness indicates value in use or benefit derived from it. A commodity may have utility but not usefulness. For example, liquor has utility for a drunkard but it is not useful as it harms health.

2. Explain the Ratio method of measuring elasticity of demand.

The Ratio method, also known as the Percentage method or Arithmetic method, was developed by Prof. Alfred Marshall. In this method, price elasticity of demand is measured by dividing the percentage change in quantity demanded by the percentage change in price.

Formula:

Ed = Percentage change in Quantity Demanded / Percentage change in Price

Ed = % ∆Q / % ∆P

Where:

• ∆Q = Change in quantity demanded (New Quantity - Original Quantity)
• ∆P = Change in price (New Price - Original Price)
• Q = Original quantity demanded
• P = Original price

Mathematically, it can be expressed as: Ed = (∆Q / Q) × (P / ∆P)

Depending on the numerical value obtained, elasticity can be classified as unitary elastic (Ed = 1), relatively elastic (Ed > 1), or relatively inelastic (Ed < 1).

3. Explain any four sources of non-tax revenue of the government.

Non-tax revenue refers to the public revenue received by the government from sources other than taxes. Any four sources are as follows:

• Fees: A fee is a charge imposed by the government for certain specific services rendered to the citizens. It is not paid voluntarily but is compulsory for those who utilize the service. Examples include education fees, registration fees, etc.
• Fines and Penalties: The government imposes fines and penalties on individuals who violate the laws of the country. The main objective of imposing fines is not to earn revenue but to deter people from breaking the laws. For example, fines for violating traffic rules.
• Prices of Public Goods and Services: The government sells various goods and services to the public through public sector enterprises. The revenue generated from the sale of these goods (e.g., railway fares, postal charges, toll taxes) is a major source of non-tax revenue.
• Gifts, Grants and Donations: The government receives financial assistance in the form of grants and gifts from foreign governments and international organizations (like the IMF or World Bank). Citizens also provide donations during times of natural calamities or emergencies.

4. Explain the concept of foreign trade and its types.

Concept of Foreign Trade: Foreign trade refers to the buying and selling of goods and services across the political and geographical boundaries of different countries. It is also known as international trade or external trade.

Types of Foreign Trade:

• Import Trade: It refers to the purchase of goods and services by one country from another country. It involves the inflow of goods into the home country from foreign countries. For example, India purchasing petroleum from Iraq.
• Export Trade: It refers to the sale of goods and services by one country to another country. It involves the outflow of goods from the home country to foreign countries. For example, India selling tea to the USA.
• Entrepot Trade: It refers to the purchase of goods and services from one country and then selling them to another country after some processing or repacking. In this trade, goods are imported not for domestic consumption but for the purpose of exporting them to a third country. For example, Japan importing raw materials from India and exporting the finished electronic goods to Europe.

5. Calculate Price Index Number from the given data:

Given Data and Calculation Table:

Commodity	Base Year Price (p0) in ₹	Current Year Price (p1) in ₹
A	6	18
B	16	8
C	24	28
D	4	6
Total	Σp0 = 50	Σp1 = 60

Formula for Price Index Number (P₀₁):

P₀₁ = (Σp₁ / Σp₀) × 100

Where:

• Σp₁ = Sum total of current year prices = 60
• Σp₀ = Sum total of base year prices = 50

Calculation:

P₀₁ = (60 / 50) × 100

P₀₁ = 1.2 × 100

P₀₁ = 120

Answer: The calculated Price Index Number is 120.

Q. 4. State with reasons whether you agree or disagree with the following statements (Any THREE):

(i) Perfect competition means monopolistic competition.

Answer: No, I disagree with this statement.

Reasons:

• Perfect competition and monopolistic competition are two distinct and entirely different market structures.
• Perfect competition is an ideal and theoretical market concept where there are a large number of buyers and sellers selling a perfectly homogeneous (identical) product at a single uniform price.
• On the other hand, monopolistic competition is a realistic market structure where there are many sellers, but they sell closely related and differentiated products (e.g., different brands of soaps).
• In perfect competition, sellers are pure price takers and there is an absence of selling cost. In monopolistic competition, sellers have partial control over the price and incur heavy selling costs (like advertisement) to promote their products.

(ii) Scope of micro economics includes only the theory of product pricing.

Answer: No, I disagree with this statement.

Reasons:

• The scope of micro economics is not limited merely to the theory of product pricing; its scope is much wider.
• Apart from product pricing, the scope of micro economics includes the Theory of Factor Pricing, which explains how the rewards for the factors of production (rent for land, wages for labour, interest for capital, and profit for entrepreneur) are determined.
• Furthermore, it also encompasses the Theory of Economic Welfare, which deals with efficiency in the allocation of resources. This involves efficiency in production, efficiency in consumption, and overall economic efficiency.
• Therefore, micro economics is a comprehensive study that covers product pricing, factor pricing, and economic welfare.

(iii) There are many features of National Income.

Answer: Yes, I agree with this statement.

Reasons:

• National income is a vital macroeconomic concept that studies the aggregate economy rather than individual economic units.
• It is a flow concept because it shows the flow of goods and services produced in an economy during a specific period of time, generally a financial year.
• It represents the money value of goods and services, as only those goods and services exchanged for money are included in its calculation.
• It strictly accounts for the value of final goods and services only. The value of intermediate goods or raw materials is excluded to avoid the error of double counting.
• It focuses on current production, meaning goods produced in the previous years are not included in the current year's national income.

(iv) Public expenditure includes only revenue expenditure.

Answer: No, I disagree with this statement.

Reasons:

• Public expenditure refers to the expenses incurred by the public authorities (Central, State, and Local governments) for the protection of their citizens, for satisfying their collective needs, and for promoting economic and social welfare.
• While public expenditure does include revenue expenditure (which is incurred for the regular, day-to-day running of government departments and administrative services), it is not restricted to it.
• It also includes capital expenditure, which is the huge investment made for the economic progress and development of the country, such as building dams, roads, and hospitals.
• Additionally, it encompasses developmental expenditure (productive expenses on health, education, and industry) and non-developmental expenditure (unproductive expenses like war costs and administrative overheads).

(v) The concept of total utility and marginal utility is the same.

Answer: No, I disagree with this statement.

Reasons:

• Total utility and marginal utility are closely interrelated but are distinctly different concepts in consumer behaviour.
• Total Utility (TU) refers to the aggregate or total amount of utility derived by a consumer from the consumption of all available units of a given commodity. It is the sum of all marginal utilities.
• Marginal Utility (MU) refers to the additional utility derived by a consumer from the consumption of an extra or additional unit of that commodity.
• As a consumer goes on consuming successive units of a commodity, Total Utility goes on increasing at a diminishing rate (until the point of maximum satisfaction), whereas Marginal Utility goes on diminishing continuously, and can even become zero or negative.

Q. 5. Study the following table, figure, passage and answer the questions given below it (Any TWO):

(i) Observe the following table and answer the questions given below it:

(a) Complete the above supply schedule.

Answer: The completed supply schedule is as follows, showing a direct relationship between price and quantity supplied (an increase of ₹5 in price leads to an increase of 50 units in supply):

Price in ₹	Qty. supplied in units
10	200
15	250
20	300
25	350
30	400
35	450
40	500

(b) Draw a diagram for the above supply schedule.

Answer: (For the exam, students must draw the graph based on the table)

• X-axis: Represents Quantity Supplied in units (Scale: 1 cm = 50 units, starting from 200 to 500).
• Y-axis: Represents Price in ₹ (Scale: 1 cm = ₹ 5, starting from 10 to 40).
• Curve: Plot the points (10,200), (15,250), (20,300), (25,350), (30,400), (35,450), and (40,500). Join these points to form a straight line 'SS' sloping upwards from left to right, indicating a positive relationship between price and quantity supplied.

(ii) Observe the following figures and answer the questions given below them:

(1) Identify and explain the degree of elasticity of demand in figure 'A'.

Answer:

• Identification: Perfectly Inelastic Demand (Ed = 0).
• Explanation: When a percentage change in price has absolutely no effect on the quantity demanded of a commodity, it is called perfectly inelastic demand. In Figure 'A', the demand curve is a vertical straight line parallel to the Y-axis, showing that demand remains perfectly constant regardless of changes in price.

(2) Identify and explain the degree of elasticity of demand in figure 'B'.

Answer:

• Identification: Relatively Elastic Demand (Ed > 1).
• Explanation: When a percentage change in price leads to a more than proportionate percentage change in quantity demanded, the demand is said to be relatively elastic. In Figure 'B', a small change in price (from P to P1) leads to a larger change in quantity demanded (from Q to Q1). The resulting demand curve is flatter in shape.

(iii) Study the following passage and answer the questions given below it:

(1) What is Digital marketing?

Answer: Digital marketing, also called online marketing, refers to marketing campaigns that appear on a computer, phone, tablet, or other devices. It involves connecting with probable customers by using the internet and other digital communication media such as social media, web-based advertising, and email.

(2) What percentage of Americans are online more than once?

Answer: According to the passage, 43% of Americans go online more than once a day.

(3) Write your opinion from the above passage.

Answer: In my opinion, digital marketing is a highly effective and essential strategy in today's digital era. With a vast majority of the population constantly online, it offers businesses an incredibly convenient way to reach a larger, targeted audience. Unlike traditional marketing, digital channels like social media and search engines allow businesses to directly connect with interested individuals, build a strong brand presence, and ultimately deliver a highly personalized and superior customer experience.

Q. 6. Answer the following questions in detail (Any TWO):

(i) State and explain the law of demand with exceptions.

Introduction: The Law of Demand is one of the important and basic laws of consumption. It was introduced by Prof. Alfred Marshall in his book, "Principles of Economics", published in 1890. The law explains the functional relationship between price and quantity demanded.

Statement of the Law: According to Prof. Alfred Marshall, "Other things being equal, higher the price of a commodity, smaller is the quantity demanded and lower the price of a commodity, larger is the quantity demanded." In simple words, other factors remaining constant, if the price of a commodity rises, demand for it falls, and when the price of a commodity falls, demand for the commodity rises. Thus, there is an inverse relationship between price and quantity demanded.

Symbolic Representation: D_x = f (P_x)
[Where D = Demand for a commodity, x = Commodity, f = function, P_x = Price of a commodity x]

Exceptions to the Law of Demand: There are certain situations where the law of demand does not operate. In these cases, a rise in price leads to a rise in demand, and a fall in price leads to a fall in demand. The demand curve slopes upwards from left to right. The exceptions are:

1. Giffen's Paradox: Inferior goods or low-quality goods are those whose demand does not rise even if their price falls. Sir Robert Giffen observed this behaviour in England in relation to bread. When the price of bread declined, people did not buy more because of an increase in their real income or purchasing power. They preferred to buy superior goods like meat. This is known as Giffen's paradox.
2. Prestige Goods: Expensive goods like diamond, gold, etc., are status symbols. So rich people buy more of it, even when their prices are high, to display their wealth.
3. Speculation: The law of demand does not hold true when people expect prices to rise still further. In this case, although the prices have risen today, consumers will demand more in anticipation of further rise in price. For example, prices of essential goods rise before a festival, yet people go on purchasing more.
4. Price Illusion: Consumers have an illusion that high-priced goods are of a better quality. Therefore, the demand for such goods tends to increase with a rise in their prices. For example, branded products.
5. Ignorance: Sometimes, due to ignorance, people may buy more of a commodity at a higher price. This may happen when the consumer is unaware of the price of that commodity at other places.
6. Habitual Goods: Due to habit of consumption, certain goods like tea, coffee, cigarettes, etc., are purchased in required quantities even at higher prices.

(ii) Explain the practical difficulties involved in the measurement of national income.

In practice, a number of difficulties arise in the collection of required statistical data for estimating national income. The practical or statistical difficulties are as follows:

1. Problem of Double Counting: The greatest difficulty in calculating national income is of double counting. It arises from the failure to distinguish properly between a final and an intermediate product. For example, flour used by a bakery is an intermediate product, but it is a final product when used by a household. Doing so might lead to counting the value of the same product more than once.
2. Existence of Non-monetized Sector: In India, especially in rural areas, there exists a non-monetized sector. Agriculture is mostly for self-consumption. Therefore, a major part of the agricultural produce does not enter the market and is exchanged for other goods and services (barter system). This makes national income estimation difficult.
3. Inadequate and Unreliable Data: Adequate and reliable data are not available in respect of agriculture and allied activities. Besides this, data relating to unearned incomes, consumption, and investment expenditure of rural and urban population are not available. This does not reveal the exact size of national income.
4. Depreciation: The calculation of depreciation on capital goods is another practical difficulty. Depreciation refers to wear and tear of capital assets, due to their use in the process of production. There are no uniform, common, or accepted standard rates of depreciation applicable to the various capital assets.
5. Capital Gains or Losses: Capital gains or capital losses, which accrue to the property owners by increases or decreases in the market value of their capital assets or changes in demand, are not included in the national income because these changes do not result from current economic activities.
6. Illiteracy and Ignorance: Due to ignorance and illiteracy, small producers do not keep an account of their production. Hence, they cannot give information about the quantity or value of their output.
7. Difficulties in the Classification of Working Population: In India, working population is not clearly defined. For instance, farmers in India are not engaged in agriculture round the year. Obviously, in the off-season, they engage themselves in alternative occupations. In such a case, it is very difficult to identify their incomes from a particular occupation.
8. Valuation of Inventories: Raw materials, intermediate goods, semi-finished, and finished products in the stock of the producers are known as inventories. Any mistake in measuring the value of inventory will distort the value of the final production of the producer.

(iii) Explain the functions of Reserve Bank of India.

Introduction: The Reserve Bank of India (RBI) is the central bank of the country. It was established on April 1, 1935, under the RBI Act of 1934, and was nationalised on January 1, 1949. It acts as the apex monetary authority.

Functions of the Reserve Bank of India:

1. Issue of Currency Notes: RBI has the sole right to issue currency notes of all denominations, except one rupee note and coins (which are issued by the Ministry of Finance). As per the Minimum Reserve System of 1957, RBI is required to maintain a minimum reserve of ₹ 200 crores (comprising gold worth ₹ 115 crores and foreign securities worth ₹ 85 crores) to back the currency issuance.
2. Banker to the Government: RBI acts as a banker, agent, and advisor to the Government of India and State Governments. It transacts the business of both the Central and State Governments. It accepts money and makes payments on behalf of the government and undertakes the management of public debt.
3. Banker's Bank: RBI exercises statutory control over all commercial banks in India. All scheduled banks are required to maintain a certain minimum cash reserve with the RBI. It also provides financial assistance to banks in the form of discounting of eligible bills. RBI is known as the 'Lender of the Last Resort' for commercial banks in times of financial crisis.
4. Custodian of Foreign Exchange Reserves: RBI acts as a custodian of the country's foreign exchange reserves. It has to maintain the official rate of exchange of the rupee and ensure its stability. RBI also undertakes to buy and sell the currencies of all the member countries of the International Monetary Fund (IMF).
5. Controller of Credit: As a supreme banking authority, the RBI has the power to influence the volume of credit created by commercial banks. It controls credit through quantitative methods (like Bank Rate, Open Market Operations, Cash Reserve Ratio, Statutory Liquidity Ratio) and qualitative methods (like margin requirements, moral suasion, direct action).
6. Collection and Publication of Data: RBI collects and compiles statistical information related to banking and other financial sectors of the economy. It publishes reports and bulletins to inform the public about economic changes.
7. Promotional and Developmental Functions: RBI performs various developmental functions such as extending banking services to semi-urban and rural areas, providing security to depositors, developing specialized institutions for agricultural and industrial finance, and promoting financial inclusion.