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.

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

Discuss the subject matter of economics.

What do you understand by normative economic analysis?

Discuss the central problems of an economy.

What do you understand by positive economic analysis?

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?

If the price of a substitute Y of good X increases, what impact does it have on the equilibrium price and quantity of good X?

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 curves of salt are given by:

(a) Find the equilibrium price and quantity.

(b) Now, suppose that the price of an input that used to produce salt has increased so, that the new supply curve is qs = 400 + 3p

How does the equilibrium price and quantity change? Does the change conform to your expectation?

(a) Suppose the government has imposed at ax of Rs 3 per unit of sale on salt. How does it affect the equilibrium rice quantity? 

Consider a market where there are just two consumers and suppose their demands for the good are given as follows:

Calculate the market demand for the good.

Suppose a consumer’s preferences are monotonic. What can you say about her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?

Using supply and demand curves show how an increase in the price of shoes affects the price of a pair of socks and the number of pairs of socks bought and sold.

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

A consumer wants to consume two goods. The prices of the two goods are Rs 4
and Rs 5 respectively. The consumer’s income is Rs 20.
(i) Write down the equation of the budget line.
(ii) How much of good 1 can the consumer consume if she spends her entire
income on that good?
(iii) How much of good 2 can she consume if she spends her entire income on
that good?
(iv) What is the slope of the budget line?
Questions 5, 6 and 7 are related to question 4.

A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increases to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?

Compute the total revenue, marginal revenue and average revenue schedules in the following table. Market price of each unit of the good is Rs 10.