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:-
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:-
Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.
- 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.
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:-
What do you understand by normative economic analysis?
- Q:-
Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?
- Q:-
Will the monopolist firm continue to produce in the short run if a loss is incurred at the best short run level of output?
- Q:-
Explain why the demand curve facing a firm under monopolistic competition is negatively sloped.
- 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:-
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.
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