CBSE Class 12 Economics Sample Paper 2025 (With Answers)
Total Marks: 80 (Theory) + 20 (Project) | Time: 3 Hours
Section A – Objective Type Questions (1 × 10 = 10 Marks)
1. Who is known as the Father of Modern Economics?
Answer: Adam Smith
2. Which approach of economics was given by Lionel Robbins?
Answer: Scarcity approach
3. What does opportunity cost mean?
Answer: The benefit of the next best alternative that is forgone.
4. Name the income derived from land.
Answer: Rent
5. What is PPC?
Answer: Production Possibility Curve – a curve showing possible combinations of two goods using limited resources.
6. In which economy are all resources owned by private individuals?
Answer: Capitalist economy
7. What are the four basic problems of an economy?
Answer: What to produce, How to produce, For whom to produce, and How much to produce.
8. “Inflation in India is currently 5%” – this is an example of which type of economics?
Answer: Positive economics
9. Give one example of normative economics.
Answer: “The government should provide free education to all.”
10. Define Microeconomics.
Answer: The branch of economics that studies the behavior of individual units like firms and consumers.
Section B – Short Answer Questions (2 × 5 = 10 Marks)
11. Differentiate between microeconomics and macroeconomics.
| Microeconomics | Macroeconomics |
|---|---|
| Studies individual units like consumers and firms. | Studies the entire economy as a whole. |
| Deals with price and output of specific goods. | Deals with national income, employment, and inflation. |
12. State the four factors of production and their rewards.
| Factor | Reward |
|---|---|
| Land | Rent |
| Labour | Wages |
| Capital | Interest |
| Entrepreneur | Profit |
13. Explain the importance of opportunity cost in decision-making.
Answer: It helps producers or consumers decide which alternative gives maximum benefit with minimal loss by understanding the cost of forgone opportunities.
14. Why is the PPC concave to the origin?
Answer: Because resources are not equally efficient in producing all goods, increasing one good’s production requires sacrificing more of the other (increasing opportunity cost).
15. Distinguish between capitalist, socialist, and mixed economies.
| Type | Main Feature | Example |
|---|---|---|
| Capitalist | Private ownership of resources | United States |
| Socialist | Government ownership of resources | Former USSR |
| Mixed | Combination of both sectors | India |
Section C – Long Answer Questions (4 × 3 = 12 Marks)
16. Discuss the definitions of economics given by Adam Smith, Alfred Marshall, Lionel Robbins, and Paul Samuelson.
Smith emphasized wealth, Marshall focused on human welfare, Robbins on scarcity and choice, and Samuelson on dynamic growth and resource allocation.
17. Explain equilibrium price using demand and supply diagrammatically.
When demand equals supply, the intersection point determines equilibrium price and quantity; above it is surplus, below it is shortage.
18. Why is efficient allocation of resources essential for economic development?
Efficient allocation ensures maximum output with minimum wastage, leading to balanced growth and higher welfare.
Section D – Application-Based Questions (4 × 2 = 8 Marks)
19. In which situation will opportunity cost be highest?
Answer: When resources are scarce and used for the most valuable alternative.
20. Draw the shape of the PPC for a farmer producing wheat and rice if the land is more suited for wheat.
Answer: The PPC will be concave to the origin and steeper for rice, indicating increasing opportunity cost.