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?
At price P1 = Rs 10
TR1 = P1 × Q1 = 50
Total revenue,
=
=
= Q1 = 5 units
At price, P2 = Rs 15
Total revenue, TR2 = P2 × Q2 = 150
= Q2 =
= Q2 =
= Q2 = 10 units
es =
Elasticity of supply,
∆Q = Q2 – Q1 = 10 – 5 =5
P = P1 – P2 = 15 – 10 = 5
es =
es = 2
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.
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?
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.
Quantity Sold | TR | MR | AR |
---|---|---|---|
0 1 2 3 4 5 6 |
How does an increase in the price of an input affect the supply curve of a firm?
Will a profit-maximising firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.
Will a profit-maximising firm in a competitive market produce a positive level of output in the short run if the market price is less than the minimum of AVC? Give an explanation.
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:
Quantity |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
Marginal Revenue |
10 |
6 |
2 |
2 |
2 |
0 |
0 |
0 |
- |
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?
When does a production function satisfy increasing returns to scale?
How are equilibrium price and quantity affected when income of the consumers
a) Increase
b) Decrease
Suppose there was a 4 % decrease in the price of a good, and as a result, the expenditure on the good increased by 2 %. What can you say about the elasticity of demand?
What will happen if the price prevailing in the market is?
i. Above the equilibrium price
Ii. Below the equilibrium price
Consider a market where there are just two consumers and suppose their demands for the good are given as follows:
Calculate the market demand for the good.
p |
d1 |
d2 |
1 |
9 |
24 |
2 |
8 |
20 |
3 |
7 |
18 |
4 |
6 |
16 |
5 |
5 |
14 |
6 |
4 |
12 |
What do you mean by ‘monotonic preferences’?
Explain price elasticity of demand.
What is the law of variable proportions?
What do the long-run marginal cost and the average cost curves look like?
What are the total fixed cost, total variable cost and total cost of a firm? How are they related?