Class 12 Micro Economics - Chapter The Theory of the Firm under Perfect Competition NCERT Solutions | A firm earns a revenue of Rs 50 when the

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.

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

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

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.

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

Can there be a positive level of output that a profit-maximising firm produces in a competitive market at which market price is not equal to marginal cost? Give an explanation.

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.

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?

At what level of price do the firms in a perfectly competitive market supply when free entry and exit is allowed in the market? How is the equilibrium quantity determined in such a market?

Suppose a consumer’s preferences are monotonic. What can you say about her preference ranking over the bundles (10, 10), (10, 9) and (9, 9)?

Distinguish between microeconomics and macroeconomics.

When does a production function satisfy constant returns to scale?

Explain the concepts of the short run and the long run. 

A consumer wants to consume two goods. The prices of the two goods are Rs 4
and Rs 5 respectively. The consumer’s income is Rs 20.
(i) Write down the equation of the budget line.
(ii) How much of good 1 can the consumer consume if she spends her entire
income on that good?
(iii) How much of good 2 can she consume if she spends her entire income on
that good?
(iv) What is the slope of the budget line?
Questions 5, 6 and 7 are related to question 4.

What is meant by prices being rigid? How can oligopoly behavior lead to such an outcome? 

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

What is the average product of an input? 

Find out the maximum possible output for a firm with zero units of L and 10 units of K when its production function is Q = 5L = 2K.