Home
NCERT Soltions
Class 12
Micro Economics
The Theory of the Firm under Perfect Competition
The following table shows the total cost schedule of a competitive fir...

The following table shows the total cost | Class 12 Micro Economics Chapter The Theory of the Firm under Perfect Competition, The Theory of the Firm under Perfect Competition NCERT Solutions

Welcome to the NCERT Solutions for Class 12 Micro Economics - Chapter The Theory of the Firm under Perfect Competition. This page offers a step-by-step solution to the specific question from Exercise 1, Question 21: . With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.

Question 21:

The following table shows the total cost schedule of a competitive firm. It is given that the price of the good is Rs 10. Calculate the profit at each output level. Find the profit maximising level of output.

Output	TC (Rs.)
0 1 2 3 4 5 6 7 8 9 10	5 15 22 27 31 38 49 63 81 101 123

Answer:

Quantity Sold	Price	TC	TR = P x Q	Profit = TR - TC
0	10	5	10x0=10	0 - 5 = -5
1	10	15	10x1=10	10 - 15 = -5
2	10	22	10x2=20	20 - 22 = -2
3	10	27	10x3=30	30 - 27 = 3
4	10	31	10x4=40	40 - 31 = 9
5	10	38	10x5=50	50 - 38 = 12
6	10	49	10x6=60	60 - 49 = 11
7	10	63	10x7=70	70 - 63 = 7
8	10	81	10x8=80	80 - 81 = -1
9	10	101	10x9=90	90 - 101 = -11
10	10	123	10x10=100	100 - 123 = -23

Profit maximising output is where the difference between TR and TC is the maximum. This exists at 5 units of output, where firm is earning profit of Rs 12.

Other Questions of Chapter The Theory of the Firm under Perfect Competition

What is the ‘price line’?

What does the price elasticity of supply mean? How do we measure it?

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

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

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

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

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.

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 produce a positive level of output in the short run if the market price is less than the minimum of AVC? 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.

Popular questions of class 12 Micro Economics

Distinguish between a centrally planned economy and a market economy.

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.

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.

Suppose your friend is indifferent to the bundles (5, 6) and (6, 6). Are the preferences of your friend monotonic?

What is the total product of input?

What is budget line?

Suppose there are 20 consumers for a good and they have identical demand functions:

d(p)=10–3pd(p)=10–3p for any price less than or equal to 103103 and d1(p)=0d1(p)=0 at any price greater than 103.

List the three different ways in which oligopoly firms may have.

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

Explain why the budget line is downward sloping.

Recently Viewed Questions of Class 12 Micro Economics

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

What is a production possibility frontier?

Distinguish between microeconomics and macroeconomics.

What do you understand by normative economic analysis?

What do you understand by positive economic analysis?

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

What do the short-run marginal cost, average variable cost and short-run average cost curves look like?

How does the budget line change if the price of good 2 decreases by a rupee
but the price of good 1 and the consumer’s income remain unchanged?

If a consumer has monotonic preferences, can she be indifferent between the
bundles (10, 8) and (8, 6)?

Suppose the price elasticity of demand for a good is – 0.2. How will the expenditure on the good be affected if there is a 10 % increase in the price of the good?

Study Tips for Answering NCERT Questions:

NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:

Read the question carefully and focus on the core concept being asked.
Reference examples and data from the chapter when answering questions about The Theory of the Firm under Perfect Competition.
Review previous year question papers to get an idea of how such questions may be framed in exams.
Practice answering questions within the time limit to improve your speed and accuracy.
Discuss your answers with your teachers or peers to get feedback and improve your understanding.

Latest Blog Posts

Stay updated with our latest educational content and study tips

The Role of Parents in Digital Literacy – Guiding Kids for a Smarter Online Future

Kids today are surrounded by screens from the moment they wake up . Whether it’s smart classrooms, online lessons or video games with friends technology has quietly become a part of everything they do. It’s amazing how much they can learn, explore and create with just a tap or a click. But it also brings […]

How to Recognize and Prevent Online Scams Targeting Kids

The internet is full of entertaining apps, games and movies for kids of all ages. However not everything online is safe. Hidden among these entertaining platforms are internet frauds that target children with phony gifts, free game currencies or friendly looking people. As a parent, you may believe that scammers only target adults; yet children […]

How to Talk to Kids About Screen Time rules Without Conflict

Did you know? The average teenager spends 7 – 8 hours daily on screens . That’s almost like working a full – time job in front of a screen – except kids aren’t earning a paycheck; instead they’re often trading sleep, focus and health for digital time. In today’s world, screens are everywhere – TV, […]

10 Online Safety Rules Every Parent Should Teach Their Kids

Children are spending more time online than ever before in today’s digital world. The internet provides enjoyment and knowledge through social media and online education, but it also has unspoken risks. Parents frequently worry about harmful information, internet predators and cyberbullying. The good news is that most problems can be avoided by teaching children basic […]

View All Blog Posts