Class 12 Micro Economics - Chapter Introduction to Micro Economics NCERT Solutions | What is a production possibility frontie

Distinguish between a centrally planned economy and a market economy.

Distinguish between microeconomics and macroeconomics.

Discuss the subject matter of economics.

What do you mean by the production possibilities of an economy?

What do you understand by normative economic analysis?

What do you understand by positive economic analysis?

Discuss the central problems of an economy.

Explain the concept of a production function

What would be the shape of the demand curve so that the total revenue curve is?

(a) A positively sloped straight line passing through the origin?

(b) A horizontal line?

Explain market equilibrium.

What are the characteristics of a perfectly competitive market?

What do you mean by the budget set of a consumer?

What is the total product of input?

From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:

When do we say that there is an excess demand for a commodity in the market?

How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?

What is budget line?

Explain why the demand curve facing a firm under monopolistic competition is negatively sloped.

Suppose the price at which the equilibrium is attained in exercise 5 is above the minimum average cost of the firms constituting the market. Now if we allow for free entry and exit of firms, how will the market price adjust to it?

What is the average product of an input? 

The following table gives the total product schedule of labour. Find the corresponding average product and marginal product schedules of labour.

Why is the short-run marginal cost curve 'U'-shaped? 

What are the average fixed cost, average variable cost and average cost of a firm? How are they related? 

What is the reason for the long run equilibrium of a firm in monopolistic competition to be associated with zero profit?

Suppose the demand and supply curve of commodity XX in a perfectly competitive market are given by:

qD =700 - p

qs = 500 + 3p for p ≥ 15

= 0 or 0 ≤ p <15

Assume that the market consists of identical firms. Identify the reason behind the market supply of commodity X being zero at any price less than Rs 15. What will be the equilibrium price for this commodity? At equilibrium, what quantity of X will be produced?

What is the total product of input?

If the monopolist firm of Exercise 3 was a public sector firm. The government set a rule for its manager to accept the government fixed price as given (i.e. to be a price taker and therefore behave as a firm in a perfectly competitive market). And the government has decided to set the price so that demand and supply in the market are equal. What would be the equilibrium price, quantity and profit in this case?