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.
- 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:-
When do we say that there is an excess demand for a commodity in the market?
- 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:-
Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.
- Q:-
When do we say that there is an excess supply for a commodity in the market?
- Q:-
Explain market equilibrium.
- Q:-
How are equilibrium price and quantity affected when income of the consumers
a) Increase
b) Decrease
- Q:-
In what respect do the supply and demand curves in the labor market differ from those in the goods market?
- Q:-
Explain how price is determined in a perfectly competitive market with a fixed number of firms.
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:-
Why is the short-run marginal cost curve 'U'-shaped?
- Q:-
What is the average product of an input?
- Q:-
What is the marginal product of an input?
- Q:-
What do you mean by a normal good?
- Q:-
Explain price elasticity of demand.
- Q:-
What is budget line?
- Q:-
Explain why the budget line is downward sloping.
- Q:-
The following table shows the total cost schedule of a firm. What is the total fixed cost schedule of this firm? Calculate the TVC, AFC, AVC, SAC and SMC schedules of the firm.
- Q:-
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?
- 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?
- All Chapters Of Class 12 Micro Economics
- All Subjects Of Class 12