Class 12 Micro Economics - Chapter Market Equilibrium NCERT Solutions | Explain through a diagram the effect of
Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.
(a) When demand and supply increase in the same proportion: E1 is the initial equilibrium with equilibrium price P1 and equilibrium output q1.Now, let us suppose that the demand increases to D2D2 and the supply increase to S2S2 by the same proportion. The new demand and new supply curve intersect at E2, which is the new equilibrium, with a new equilibrium output q2, but the same equilibrium price P1. Thus, an increase in the demand and the supply by the same proportion leaves the equilibrium price unchanged.
(b) When demand increases more than the increase in supply: The original demand and supply curves intersect each other at E1with initial equilibrium price P1 and initial equilibrium output q1. Now, let us suppose that the demand increases and thereby the demand curve shifts to D2D2; the supply curve also shifts rightwards to S2 S2 . However, the increase in supply is less than the increase in demand. The new supply curve and the new demand curve demand curve intersect each other at point E2 with higher equilibrium price P2 and higher equilibrium output q2.
(c) When the increase in demand is less than the increase in supply: Let the initial equilibrium be at E1with the equilibrium price P1 and equilibrium output 1q. Now, let us suppose that the demand increases to D2D2 and the supply increases to S2S2 ; where the increase in supply is more than that of demand. The new demand curve D2D2 and the new supply curve S2S2 intersect at E2. Thus, the greater increase in supply curve as compared to the demand curve will lead the equilibrium price to fall and equilibrium output to rise.
More Questions From Class 12 Micro Economics - Chapter Market Equilibrium
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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.
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When do we say that there is an excess demand for a commodity in the market?
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Suppose the price at which the equilibrium is attained in exercise 5 is above the minimum average cost of the firms constituting the market. Now if we allow for free entry and exit of firms, how will the market price adjust to it?
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How are equilibrium price and quantity affected when income of the consumers
a) Increase
b) Decrease
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Suppose the market determined rent for apartments is too high for common people to afford. If the government comes forward to help those seeking apartments on rent by imposing control on rent, what impact will it have on the market for apartments?
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Explain market equilibrium.
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Explain how price is determined in a perfectly competitive market with a fixed number of firms.
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How is the optimal amount of labor determined in a perfectly competitive market?
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Suppose the demand and supply curves of salt are given by:
(a) Find the equilibrium price and quantity.
(b) Now, suppose that the price of an input that used to produce salt has increased so, that the new supply curve is qs = 400 + 3p
How does the equilibrium price and quantity change? Does the change conform to your expectation?
(a) Suppose the government has imposed at ax of Rs 3 per unit of sale on salt. How does it affect the equilibrium rice quantity?
- Q:-
When do we say that there is an excess supply for a commodity in the market?
Popular Questions of Class 12 Micro Economics
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(a) A positively sloped straight line passing through the origin?
(b) A horizontal line?
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Discuss the central problems of an economy.
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What is the total product of input?
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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
-
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What do you mean by the production possibilities of an economy?
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How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?
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What is budget line?
Recently Viewed Questions of Class 12 Micro Economics
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List the three different ways in which oligopoly firms may have.
- Q:-
Suppose there are two consumers in the market for a good and their demand functions are as follows:
d1(p) = 20 – p for any price less than or equal to 20, and d1(p) = 0 at any price greater than 20.
d2(p) = 30 – 2p for any price less than or equal to 15 and d1(p) = 0 at any price greater than 15.
Find out the market demand function.
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At which point does the SMC curve intersect the SAC curve? Give a reason in support of your answer.
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If duo poly behavior is one that is described by Cornet, the market demand curve is given by the equation q = 200 - 4p and both the firms have zero costs, find the quantity supplied by each firm in equilibrium and the equilibrium market price.
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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
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(a) Positively sloped straight line
(b) Horizontal straight line
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