Market and Price Determination [CBSE (Central Board of Secondary Education) Class-12 Economics]: Questions 30 - 38 of 40

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Question 30

Describe in Detail Subjective▾

Why is a firm under Perfect competition a price-taker? Explain

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Explanation

A firm under perfect competition is a price – taker because of the existence of large number of sellers in perfect competitive market selling homogenous products. In large number of seller arise a situation of free and perfect competition in market.

The market price is determined by hands of market by demand and supply of commodities. If firm raises…

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Question 31

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Define equilibrium price of commodity. How is it determined? Explain with the help of schedule.

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Explanation

Equilibrium price means market demand and market supply are equal and intersect market demand and market supply.

I…

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Question 32

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Explain two points of distinction between monopoly and monopolistic competition.

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Explanation

CharacteristicsMonopoly competitionmonopolistic competition
Number of Buyers and sellersIn this only single sellers and large number of buyers in demand.In this large number of sellers and buyers both.

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Question 33

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Define equilibrium price. How is it determined? Explain with the help of a schedule.

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Explanation

The price equal to the market demand of a commodity with its market supply is the equilibrium price. Equilibrium price is determined at a point where market demand is equal to market supply.

Demand and supply schedules are given:-

Determination of Equilibrium Price

Price

(₹)

Quantity Demanded

(Units)

Quantity Supplied

(Units)

5

4

3

2

1

10

20

30

40

50

50

40

30

20

10

The ab…

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Question 34

Write in Short Short Answer▾

Define monopoly

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Question 35

Describe in Detail Subjective▾

Given market equilibrium of a good, what are the effects of simultaneous increase in both demand and supply of that good on its equilibrium price and quantity?

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Explanation

If increase in demand affects prices and quantities we assume that there is increase in income of working class.

Their demand for cloth This will raise the equilibrium price and quantity of cloth and the supply curve of cloth is unchanged in figure. It is to understand the increase in price and quantity and increase in demand.

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Question 36

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Explain the central problem of ‘choice of technique’ .

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Explanation

The problem of choice of technique is also known as the problem of how to produce. As resources are scarce and it has alternative uses the problem of choice of technique of production arises. There are two techniques of production:

1 Labor intensive technique: Labor intensive technique is used in a country like India where there is problem of unempl…

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Question 37

Describe in Detail Subjective▾

Explain the implications of the following:

(i) The feature ‘differentiated product’ under monopolistic competition.

(ii) The feature ‘large number of sellers’ under perfect competition.

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Explanation

(i) The feature ‘differentiated product’ under monopolistic competition.

some generation in position to perform some degree of monopoly with product differentiation.

Product differentiation is based on differentiating the products on brand, color, size. The product of firm is close and it is not perfect substitute of other firm.

This implication is bu…

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Question 38

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At a given price there is excess demand for a good. Explain how the equilibrium price will be reached. Use diagram.

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Explanation

Market equilibrium is a one type of situation of the market in which demand for a commodity is equal to its supply so, in a state of equilibrium the market is at equilibrium there is neither excess demand nor excess supply. In this type of situation the price in the market is called equilibrium price and quantity supplied is called equilibrium quan…

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