Class 12 Micro Economics - Chapter Market Equilibrium NCERT Solutions | Explain how price is determined in a per
Explain how price is determined in a perfectly competitive market with a fixed number of firms.
When the number of firms in a perfectly competitive market is fixed, the firms are operating in the short-run. The equilibrium price is determined by the intersection of market demand curve and supply curve. It is the price at which the market demand equals market supply. If at any price below Pe, let us say Rs 12, there will be an excees supply, which will increases the competition among the sellers and they will reduce the price in order to sell more output. This causes a fall in them price, finally to Rs (Pe), where the demand equals supply. If at any price
lower than Pe, let us say RS 2, there will be an excees demand that will raise the competition among the buyers or consumers and they will be ready to pay higher price for the given output. This will increase the price to Rs 8 (equilibrium price), where the market will reach the equilibrium thus, the invisible hands of market operate automatically whenever there exist excees demand and excees supply; ensuring equilibrium in the market.
More Questions From Class 12 Micro Economics - Chapter Market Equilibrium
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How will a change in the price of coffee affect the equilibrium price of tea? Explain the effect on equilibrium quantity also through a diagram.
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When do we say that there is an excess demand for a commodity in the market?
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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?
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Suppose the market determined rent for apartments is too high for common people to afford. If the government comes forward to help those seeking apartments on rent by imposing control on rent, what impact will it have on the market for apartments?
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When do we say that there is an excess supply for a commodity in the market?
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Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.
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How are equilibrium price and quantity affected when income of the consumers
a) Increase
b) Decrease
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Explain market equilibrium.
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In what respect do the supply and demand curves in the labor market differ from those in the goods market?
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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?
Popular Questions of Class 12 Micro Economics
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(a) A positively sloped straight line passing through the origin?
(b) A horizontal line?
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What is the total product of input?
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From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity
1
2
3
4
5
6
7
8
9
Marginal
Revenue
10
6
2
2
2
0
0
0
-
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What do you mean by the production possibilities of an economy?
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How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?
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What is budget line?
Recently Viewed Questions of Class 12 Micro Economics
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Consider the demand for a good. At price Rs 4, the demand for the good is 25 units. Suppose the price of the good increases to Rs 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity.
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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.
p
d1
d2
1
9
24
2
8
20
3
7
18
4
6
16
5
5
14
6
4
12
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