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Class 12 Important Question

Economics

Micro Economics

CBSE Class 12 Micro Economics Important Questions

CBSE Class 12 Micro Economics Important Questions and Answers - FREE PDF Download

Vedantu provides Chapter-wise Important Questions for Class 12 Micro Economics to help students with their exam preparation. These questions are aligned with the CBSE Class 12 Micro Economics Syllabus, ensuring that students focus on key topics. By engaging with these Important Questions, students can improve their understanding and improve their learning outcomes.

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This resource is made to simplify the study process and increase confidence before exams. Practising these questions helps students identify essential concepts and apply their knowledge effectively. The questions are also closely related to the NCERT textbook, making it easier for students to connect their study materials. With Vedantu’s support, students can prepare thoroughly and perform well in their assessments, making their learning journey both enjoyable and successful.

CBSE Class 12 Micro Economics Chapter-wise Important Questions

CBSE Class 12 Micro Economics Chapter-wise Important Questions and Answers cover topics from all the chapters, helping students prepare thoroughly by focusing on key topics for easier revision.

S. No	Chapter-wise Important Questions for Class 12 Economics (Introductory Microeconomics)
1	Chapter 1 - Introductory Microeconomics Questions
2	Chapter 2 - Theory of Consumer Behaviour Questions
3	Chapter 3 - Production and Costs Questions
4	Chapter 4 - The Theory of The Firm Under Perfect Competition Questions
5	Chapter 5 - Market Equilibrium Questions

10 Most Important Questions From Class 12 Micro Economics Chapters

Below are 10 Important Questions from Class 12 Micro Economics chapters that are Important for preparing well and understanding concepts easily.

1. What is microeconomics?

Ans: Microeconomics is the branch of economics that studies individual units, such as households and firms, and their decision-making processes. It focuses on how these units interact in markets, how they allocate resources, and how they respond to changes in prices and policies. Key concepts include supply and demand, elasticity, and market structures. Understanding microeconomics is important for analysing specific economic issues and for making informed decisions in business and personal finance.

2. What are the main assumptions of the theory of consumer behaviour?

Ans: The theory of consumer behaviour is based on several key assumptions:

Rationality: Consumers aim to maximise their satisfaction with goods and services.
Preferences: Consumers have clear preferences that can be ranked based on satisfaction.
Budget Constraint: Consumers have limited income and must make choices within that budget.
Diminishing Marginal Utility: As a consumer consumes more of a good, the extra satisfaction gained from each additional unit decreases. This theory helps explain how consumers make choices based on their preferences and available resources.

3. What is the difference between fixed costs and variable costs?

Ans: Fixed costs are expenses that do not change with the level of output, such as rent, salaries of permanent staff, and insurance. They remain constant regardless of how much is produced. Variable costs, on the other hand, change with production levels, including costs for raw materials, direct labour, and utilities. Understanding the difference between these costs is crucial for businesses in budgeting, pricing strategies, and determining profitability.

4. What are the characteristics of a firm operating under perfect competition?

Ans: A firm operating under perfect competition has several key characteristics:

Many Buyers and Sellers: There are numerous participants in the market, none of whom can influence prices.
Homogeneous Products: The goods offered by different firms are identical, leading to no brand loyalty.
Perfect Information: All market participants have access to complete information about prices and products.
No Barriers to Entry or Exit: Firms can enter or leave the market freely, ensuring competition remains high. These conditions lead to firms being price takers, achieving allocative and productive efficiency.

5. How is market equilibrium achieved?

Ans: Market equilibrium is reached when the quantity of a good demanded by consumers equals the quantity supplied by producers at a specific price. At this point, there is neither a surplus nor a shortage of the goods in the market. If demand increases, prices may rise, leading to a new equilibrium. Conversely, if supply increases, prices may fall. Understanding market equilibrium helps analyse how various factors can affect prices and quantities in the market.

6. What is the law of demand?

Ans: The law of demand states that, all else being equal, when the price of a good decreases, the quantity demanded increases, and when the price increases, the quantity demanded decreases. This relationship reflects an inverse correlation between price and quantity demanded, which can be illustrated with a downward-sloping demand curve on a graph. Understanding this law is important for analysing consumer behavior and making pricing decisions.

7. What is the concept of elasticity in economics?

Ans: Elasticity measures how responsive the quantity demanded or supplied of a good is to changes in price or other factors. The main types of elasticity include:

Price Elasticity of Demand: Measures the responsiveness of quantity demanded to a change in price.
Price Elasticity of Supply: Measures the responsiveness of quantity supplied to a change in price.
Income Elasticity of Demand: Measures how quantity demanded changes as consumer income changes. Understanding elasticity helps businesses and policymakers make informed decisions about pricing and production.

8. What is the relationship between total cost, average cost, and marginal cost?

Ans: Total cost is the sum of fixed and variable costs incurred in the production of goods. Average cost is calculated by dividing total cost by the quantity of output produced, providing an idea of the cost per unit. Marginal cost is the additional cost incurred by producing one more unit of output. The relationship among these costs is important for firms in determining pricing strategies and optimising production levels to maximize profits.

9. What are the factors that affect consumer behaviour?

Ans: Several factors influence consumer behaviour, including:

Price: Changes in the price of goods can affect demand.
Income Levels: Higher income can lead to increased purchasing power and changes in consumption patterns.
Preferences and Tastes: Changes in consumer preferences can shift demand for certain products.
Advertising and Marketing: Promotional activities can influence consumer choices and perceptions. Understanding these factors helps businesses tailor their strategies to meet consumer needs.

10. How do government policies affect market equilibrium?

Ans: Government policies can influence market equilibrium through various mechanisms, including:

Taxes and Subsidies: Taxes can increase costs for producers, shifting the supply curve to the left, while subsidies can lower costs and shift the supply curve to the right.
Price Controls: Price ceilings (maximum prices) and price floors (minimum prices) can create shortages or surpluses, disrupting the natural market equilibrium.
Regulations: Government regulations can impact production costs and market dynamics, influencing supply and demand. Understanding these effects is crucial for analysing market behaviour and policy implications.

Here are Important Questions for Class 12 Micro Economics. For a better understanding of each chapter, please refer to the Chapter-wise Important Questions table. This resource will assist you in understanding the key concepts and Important Questions in each chapter and preparing effectively for your exams.

How do Micro Economics Important Questions Class 12 Help you with Exams?

Micro Economics Important Questions for Class 12 highlight specific topics frequently tested, helping students focus their study efforts effectively.
Engaging with these questions clarifies complex concepts, such as demand and supply, and enhances overall understanding.
Practising Important Questions exposes students to various formats, preparing them for different types of exam questions.
This practice improves time management skills, allowing students to use their time wisely during the exam.
Regular practice increases confidence, making students feel more prepared and less anxious on exam day.
Important Questions encourage the application of knowledge to real-world situations, strengthening analytical skills.
They align with resources like NCERT textbooks and previous year's papers, ensuring students study relevant material for their exams.

Vedantu's CBSE Class 12 Chapter-wise Micro Economics Important Questions are a valuable resource for students aiming to excel in their studies. By focusing on key concepts and topics from textbooks like NCERT, these questions improve understanding and help students prepare effectively for exams. Engaging with these Important Questions develops critical thinking and increases confidence, ensuring that students are well-prepared for their assessments. Using this resource will not only support academic success but also encourage a greater interest in microeconomics as a subject.

Additional Study Materials for Class 12 Economics

S. No	Study Materials for Economics class 12
1	CBSE Class 12 Economics NCERT Solutions
2	CBSE Class 12 Economics Revision Notes
3	CBSE Class 12 Economics NCERT Book
4	CBSE Class 12 Economics Previous year Question Paper
5	CBSE Class 12 Economics Sample Papers

FAQs on CBSE Class 12 Micro Economics Important Questions

1. What are the most important questions for the CBSE Class 12 Micro Economics board exam for the 2025-26 session?

For the 2025-26 CBSE board exam, the most important questions in Micro Economics are concentrated around core concepts that are frequently tested. Key areas to focus on include:

Theories of consumer behaviour, including utility analysis and indifference curves.
The concept of elasticity of demand and supply, including numerical problems.
Production functions and the law of variable proportions.
Relationships between cost curves (TC, AC, MC).
Features of different market structures, especially perfect competition and its long-run equilibrium.
Determination of market equilibrium and the effects of shifts in demand and supply.

Practising 3-mark and 5-mark questions from these topics is crucial for scoring well.

2. Which chapters in Class 12 Micro Economics have the highest weightage for important questions as per the latest CBSE pattern?

Based on the CBSE syllabus and previous board trends for 2025-26, the chapters with the highest concentration of important questions are:

Theory of Consumer Behaviour: This chapter is fundamental and often features multiple questions, including long-answer types.
Production and Costs: This is a high-yield area, especially for questions involving cost curves and producer equilibrium.
Forms of Market and Price Determination: This unit, covering market structures and equilibrium, consistently holds high weightage and often includes HOTS (Higher Order Thinking Skills) questions.

3. Explain the key characteristics of a firm under perfect competition and its long-run equilibrium condition.

A firm under perfect competition operates in a market with several distinct characteristics that are frequently asked in board exams:

Large number of buyers and sellers: No single entity can influence the market price.
Homogeneous product: All firms sell identical products, making them perfect substitutes.
Freedom of entry and exit: Firms can enter or leave the industry without any barriers.
Perfect knowledge: All participants have complete information about market conditions.

In the long run, a firm under perfect competition earns only normal profits. The equilibrium condition is achieved when Price (P) = Average Revenue (AR) = Marginal Revenue (MR) = Long-run Average Cost (LAC) = Long-run Marginal Cost (LMC).

4. What is the relationship between Total Cost (TC), Average Cost (AC), and Marginal Cost (MC)?

The relationship between these three cost concepts is a frequently tested 3 or 5-mark question:

Total Cost (TC) is the sum of Total Fixed Cost (TFC) and Total Variable Cost (TVC).
Average Cost (AC) is the per-unit cost, calculated as TC divided by quantity (Q).
Marginal Cost (MC) is the additional cost of producing one more unit of output.

Key relationships to mention in an exam answer are:

Both AC and MC curves are U-shaped due to the Law of Variable Proportions.
The MC curve cuts the AC curve at its lowest point.
When MC is less than AC, AC falls.
When MC is greater than AC, AC rises.

5. How do government interventions like price ceilings and price floors affect market equilibrium?

Government interventions disrupt the natural market equilibrium, a common topic for application-based questions.

A price ceiling is a maximum price set below the equilibrium price. It is intended to protect consumers but often leads to a shortage of the good, as quantity demanded exceeds quantity supplied. This can also lead to black markets.
A price floor is a minimum price set above the equilibrium price. It is meant to protect producers (e.g., minimum support price for crops) but typically results in a surplus, where quantity supplied is greater than quantity demanded.

Answering these questions requires drawing and explaining the relevant demand-supply diagrams.

6. Why is the topic of 'Market Equilibrium' considered a high-priority area for 5-mark and HOTS questions?

Market equilibrium is a high-weightage topic because it synthesizes multiple core concepts of microeconomics. Answering questions on this topic requires students to demonstrate their understanding of:

The laws of demand and supply.
The mechanism of price determination.
The impact of shifts in demand and supply curves due to various factors.
The application of these concepts to real-world scenarios, such as government policies (taxes, subsidies, price controls).

This integration makes it an ideal topic for assessing a student's analytical and application skills, which is the focus of HOTS questions.

7. What are HOTS (Higher Order Thinking Skills) questions in Micro Economics, and how can they be identified?

HOTS questions in Micro Economics are not based on direct recall from the textbook. They require students to analyse, evaluate, and apply economic concepts to new or unfamiliar situations. You can identify them by looking for:

Questions that ask you to predict the outcome of a policy change (e.g., 'What will happen to the market for cars if the government increases the subsidy on electric vehicles?').
Questions requiring comparison and contrast under specific conditions (e.g., 'Compare the implications of a price ceiling on wheat versus luxury watches.').
Numerical problems with a twist or missing variable that requires logical deduction.

8. What are some common 'conceptual traps' to avoid when answering Class 12 Micro Economics important questions?

Students often lose marks by falling into common conceptual traps. Be careful to avoid:

Confusing a 'movement along a curve' (due to a price change) with a 'shift in the curve' (due to other factors).
Mixing up the features of different market structures, especially perfect competition and monopolistic competition.
Incorrectly applying the conditions for consumer or producer equilibrium.
Forgetting to state the assumptions when explaining an economic law, like the Law of Demand or the Law of Diminishing Marginal Utility.

Being aware of these traps is essential for answering important questions accurately.

9. What is the best way to structure a 5-mark long-answer question in the Micro Economics board exam?

To maximise marks in a 5-mark question, follow a clear structure:

Introduction: Start with a precise definition of the main concept.
Explanation: Elaborate on the concept with its components, assumptions, or features using bullet points or short paragraphs.
Diagram/Schedule: Include a fully labelled diagram (like cost curves or market equilibrium) or a schedule (like a demand schedule) where relevant. This is crucial for scoring full marks.
Conclusion: Briefly summarise the key point or state the final condition or implication.

This structured approach ensures you cover all aspects required by the CBSE marking scheme.

10. What are some typical application-based important questions that can be expected from the concepts of demand and supply?

Application-based questions test your ability to use theory in real-world contexts. From demand and supply, expect questions like:

How will a sharp increase in consumer income affect the market equilibrium for a normal good versus an inferior good?
Analyse the impact of a new tax on sugary drinks on its market price and quantity.
Explain the effect of a technological advancement in farming on the market for rice.
What will be the effect on the demand for petrol if the price of electric cars falls significantly?

These questions require you to explain the shift in the respective curve and its effect on equilibrium price and quantity.