Class 12 Micro Economics - Chapter The Theory of the Firm under Perfect Competition NCERT Solutions | What is the ‘price line’?

The market price of a good changes from Rs 5 to Rs 20. As a result, the quantity supplied by a firm increases by 15 units. The price elasticity of the firm’s supply curve is 0.5. Find the initial and final output levels of the firm.

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?

What is the supply curve of a firm in the long run?

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

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

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

How does an increase in the number of firms in a market affect the market supply curve?

How does an increase in the price of an input affect the supply curve of a firm?

Compute the total revenue, marginal revenue and average revenue schedules in the following table. Market price of each unit of the good is Rs 10.

How does technological progress affect the supply curve of a firm?

Explain the concept of a production function

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 do you mean by the budget set of a consumer?

What is the total product of input?

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?

What is budget line?

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

How is the optimal amount of labor determined in a perfectly competitive market?

Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.

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

In what respect do the supply and demand curves in the labor market differ from those in the goods market?

What will happen if the price prevailing in the market is?

i. Above the equilibrium price

Ii. Below the equilibrium price

What is the average product of an input? 

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. 

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

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.