Class 12 Micro Economics - Chapter Market Equilibrium NCERT Solutions | Explain through a diagram the effect of
Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.
(a) When demand and supply increase in the same proportion: E1 is the initial equilibrium with equilibrium price P1 and equilibrium output q1.Now, let us suppose that the demand increases to D2D2 and the supply increase to S2S2 by the same proportion. The new demand and new supply curve intersect at E2, which is the new equilibrium, with a new equilibrium output q2, but the same equilibrium price P1. Thus, an increase in the demand and the supply by the same proportion leaves the equilibrium price unchanged.
(b) When demand increases more than the increase in supply: The original demand and supply curves intersect each other at E1with initial equilibrium price P1 and initial equilibrium output q1. Now, let us suppose that the demand increases and thereby the demand curve shifts to D2D2; the supply curve also shifts rightwards to S2 S2 . However, the increase in supply is less than the increase in demand. The new supply curve and the new demand curve demand curve intersect each other at point E2 with higher equilibrium price P2 and higher equilibrium output q2.
(c) When the increase in demand is less than the increase in supply: Let the initial equilibrium be at E1with the equilibrium price P1 and equilibrium output 1q. Now, let us suppose that the demand increases to D2D2 and the supply increases to S2S2 ; where the increase in supply is more than that of demand. The new demand curve D2D2 and the new supply curve S2S2 intersect at E2. Thus, the greater increase in supply curve as compared to the demand curve will lead the equilibrium price to fall and equilibrium output to rise.
More Questions From Class 12 Micro Economics - Chapter Market Equilibrium
- Q:-
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.
- Q:-
When do we say that there is an excess demand for a commodity in the market?
- Q:-
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?
- Q:-
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?
- Q:-
How are equilibrium price and quantity affected when income of the consumers
a) Increase
b) Decrease
- Q:-
Explain market equilibrium.
- Q:-
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?
- Q:-
How is the optimal amount of labor determined in a perfectly competitive market?
- Q:-
Explain how price is determined in a perfectly competitive market with a fixed number of firms.
- Q:-
When do we say that there is an excess supply for a commodity in the market?
Popular Questions of Class 12 Micro Economics
- Q:-
Explain the concept of a production function
- Q:-
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?
- Q:-
Discuss the central problems of an economy.
- Q:-
What are the characteristics of a perfectly competitive market?
- Q:-
What do you mean by the budget set of a consumer?
- Q:-
What is the total product of input?
- Q:-
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
-
- Q:-
What do you mean by the production possibilities of an economy?
- Q:-
How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?
- Q:-
What is budget line?
Recently Viewed Questions of Class 12 Micro Economics
- Q:-
If a consumer has monotonic preferences, can she be indifferent between the
bundles (10, 8) and (8, 6)? - Q:-
Consider the demand curve D (p) = 10 – 3p. What is the elasticity at price 53?
- Q:-
There are three identical firms in a market. The following table shows the supply schedule of firm 1. Compute the market supply schedule.
Price (Rs.) SS1 (units) 0
1
2
3
4
5
6
7
80
0
2
4
6
8
10
12
14 - Q:-
Explain the relationship between the marginal products and the total product of an input.
- Q:-
A monopoly firm has a total fixed cost of Rs 100 and has the following demand schedule:
Quantity
1
2
3
4
5
6
7
8
9
10
Marginal
Revenue
100
90
80
70
60
50
40
30
20
10
Find the short run equilibrium quantity, price and total profit. What would be the equilibrium in the long run? In case the total cost is Rs.1000, describe the equilibrium in the short run and in the long run.
- Q:-
How does the imposition of a unit tax affect the supply curve of a firm?
- Q:-
What is a production possibility frontier?
- Q:-
The market demand curve for a commodity and the total cost for a monopoly firm producing the commodity are given in the schedules below.
Quantity
0
1
2
3
4
5
6
7
8
Price
52
44
37
31
26
22
19
16
13
Quantity
0
1
2
3
4
5
6
7
8
Price
10
60
90
100
102
105
109
115
125
Use the information given to calculate the following:
(a) The MIR and MC schedules
(b) The quantities for which MIR and MC are equal
(c) The equilibrium quantity of output and the equilibrium price of the commodity
(d) The total revenue, total cost and total profit in the equilibrium
- Q:-
Find out the maximum possible output for a firm with zero units of L and 10 units of K when its production function is Q = 5L = 2K.
- Q:-
Why is the total revenue curve of a price-taking firm an upward-sloping straight line? Why does the curve pass through the origin?
- All Chapters Of Class 12 Micro Economics
- All Subjects Of Class 12