Class 12 Micro Economics - Chapter Production and Costs NCERT Solutions | Explain the relationship between the mar

What is the total product of input?

Let the production function of a firm be Q=5L1/2K1/2Q=5L1/2K1/2 Find out the maximum possible output that the firm can produce with 100 units of LL and 100 units of KK.

When does a production function satisfy decreasing returns to scale? 

Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve? 

What do the long-run marginal cost and the average cost curves look like? 

What does the average fixed cost curve look like? Why does it look so? 

What are the average fixed cost, average variable cost and average cost of a firm? How are they related? 

Why is the short-run marginal cost curve 'U'-shaped? 

The following table gives the total product schedule of labour. Find the corresponding average product and marginal product schedules of labour.

What is the law of variable proportions? 

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?

Explain market equilibrium.

Discuss the central problems of an economy.

What are the characteristics of a perfectly competitive market?

What do you mean by the budget set of a consumer?

From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:

When do we say that there is an excess demand for a commodity in the market?

What do you mean by the production possibilities of an economy?

How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?

What is budget line?

What do you mean by a normal good?

Will a profit-maximising firm in a competitive market produce a positive level of output in the long run if the market price is less than the minimum of AC? Give an explanation.

How does the imposition of a unit tax affect the supply curve of a firm?

How is the wage rate determined in a perfectly competitive labor market?

Can you think of any commodity on which the price ceiling is imposed in India? What may be the consequence of price-ceiling?

A shift in demand curve has a larger effect on price and smaller effect on quantity when the number of firms is fixed compared to the situation when free entry and exits is permitted. Explain.

What is budget line?

Considering the same demand curve as in exercise 22, now let us understand for free entry and exit of the firms producing commodity X. Also assume the market consists of identical firms producing commodity X. Let the supply curve of a single firm be explained?

q*= 8+3p for p ≥ 20

= 0 for 0 ≤ p ≤ Rs 20

(a) What is the significance of p =20?

(b) At what price will the market for X be in equilibrium? State the reason for your answer.

(c) Calculate the equilibrium quantity and number of firms. 

Why is the total revenue curve of a price-taking firm an upward-sloping straight line? Why does the curve pass through the origin?

What is the relation between market price and average revenue of a price-taking firm?