Market and Price Determination [CBSE (Central Board of Secondary Education) Class-12 Economics]: Questions 30 - 38 of 40
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Question 30
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
Describe in Detail Subjective▾
Define equilibrium price of commodity. How is it determined? Explain with the help of schedule.
EditExplanation
Equilibrium price means market demand and market supply are equal and intersect market demand and market supply.
I…
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Question 32
Describe in Detail Subjective▾
Explain two points of distinction between monopoly and monopolistic competition.
EditExplanation
Characteristics | Monopoly competition | monopolistic competition |
Number of Buyers and sellers | In 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
Describe in Detail Subjective▾
Define equilibrium price. How is it determined? Explain with the help of a schedule.
EditExplanation
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 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?
EditExplanation
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
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.
EditExplanation
(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
Describe in Detail Subjective▾
At a given price there is excess demand for a good. Explain how the equilibrium price will be reached. Use diagram.
EditExplanation
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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