Class 12 Micro Economics - Chapter Market Equilibrium NCERT Solutions | How is the wage rate determined in a per
How is the wage rate determined in a perfectly competitive labor market?
Similar to a goods market, wage rate in a labour market is determined by the intersection of demand for labour and supply of labour. The rate at which the demand equals the supply is called the equilibrium wage rate. Corresponding hours of labour are demanded and supplied in the labour market at the equilibrium wage rate. The demand for labour is derived from the value of marginal product of labour ( VMPL) . We know that a particular firm will employ labour up to a point where marginal cost of employing the last unit of labour hired equals the marginal benefit earned by the firm by hiring that unit of labour. Labour is supplied by those households, who need to trade-off between working hours (labour) or leisure. The supply of labour is a positive function of wage up to a point beyond which the supply curve becomes backward bending supply curve. The intersection of demand for labour and the supply of labour occur at the wage rate w. Here, the equilibrium takes place at E where DLDL equals SLSL and the equilibrium units of labour supplied and demanded is L.
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.
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When do we say that there is an excess demand for a commodity in the market?
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When do we say that there is an excess supply 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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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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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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In what respect do the supply and demand curves in the labor market differ from those in the goods market?
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Explain how price is determined in a perfectly competitive market with a fixed number of firms.
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Explain market equilibrium.
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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?
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?
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Discuss the central problems of an economy.
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What are the characteristics of a perfectly competitive market?
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What do you mean by the budget set of a consumer?
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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
-
- 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:-
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.
- Q:-
Let the production function of a firm be Q=2 L2 K2Q=2 L2 K2
Find out the maximum possible output that the firm can produce with 5 units of LL and 2 units of KK. What is the maximum possible output that the firm can produce with zero units of LL and 10 units of KK?
- Q:-
Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?
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How does an increase in the number of firms in a market affect the market supply curve?
- Q:-
Why is the short-run marginal cost curve 'U'-shaped?
- Q:-
Consider a market with two firms. The following table shows the supply schedules of the two firms: the SS1 column gives the supply schedule of firm 1 and the SS2 column gives the supply schedule of firm 2. Compute the market supply schedule.
Price (Rs.) SS1 (units) SS2 (units) 0
1
2
3
4
5
60
0
0
1
2
3
40
0
0
1
2
3
4 - Q:-
What do you mean by complements? Give examples of two goods which are complements of each other.
- Q:-
The following table shows the total revenue and total cost schedules of a competitive firm. Calculate the profit at each output level. Determine also the market price of the good.
Quantity Sold TR (Rs.) TC (Rs.) Profit 0
1
2
3
4
5
6
70
5
10
15
20
25
30
355
7
10
12
15
23
33
40 - Q:-
What does the average fixed cost curve look like? Why does it look so?
- Q:-
What is budget line?
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