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Read the following statements… (Economics 2026 58/5/1 Q7)

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EconomicsCBSE Class 12 · Board exam 2026, set 58/5/1 · 1 mark · MCQ

CBSE Class 12 Economics 2026: question 7

Set in the CBSE Class 12 board exam of 2026, paper 58/5/1, section A, question 7, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q7 · 1 mark · MCQCompetency-basedNational Income Accounting

Read the following statements carefully :
Statement I : Positive externalities refer to the benefits a firm/an individual provides to another for which they are paid.
Statement II : In case of positive externalities, Gross Domestic Product (GDP) of an economy might lead to an overestimation of the actual welfare.

In the light of the given statements, choose the correct option from the following :

  1. (A)Statement I is true and Statement II is false.
  2. (B)Statement I is false and Statement II is true.
  3. (C)Both Statements I and II are true.
  4. (D)Both Statements I and II are false.

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 58/5/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Is anyone paid for an externality?

Hint 2

If a benefit is left out of GDP, is welfare under- or overstated?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Statement I is false: positive externalities are benefits one person or firm gives to others without being paid for them (e.g. a beekeeper's bees pollinating a nearby orchard).

  2. Statement II is false: such benefits are not counted in GDP, so with positive externalities GDP underestimates welfare, not overestimates it (negative externalities cause overestimation). Option (D).

    1 mark

Answer: (D) Both Statements I and II are false.

Where the marks are

  • Externalities are unpaid; positive ones mean GDP underestimates welfare (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from National Income Accounting, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 58/5/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.