Topics
Demand
- Introduction to Microeconomics and Macroeconomics
- Microeconomics
- Macroeconomics
- Macroeconomics Vs Microeconomics
- Introduction to Demand
- Meaning of Demand
- Features of Demand
- Types of Demand
- Determinants of Demand
- Demand Function
- Quantity Demanded and Demand
- Law of Demand
- Demand Schedule
- Demand Curve
- Individual Demand Curve to Market Demand Curve
- Slope of the Demand Curve
- Linear Demand Curve
- Reasons for the Downward Slope of the Demand Curve
- Importance of the Law of Demand
- Exceptions to the Law of Demand
- Movement Along the Demand Curve
- Change in Demand – Shift in Demand Curve
- Difference Between Extension and Increase in Demand
- Difference Between Contraction and Decrease in Demand
- Cross Price Effects
- Relationship Between Income and Demand
- Impact of Tastes and Preferences on Demand for a Commodity
- Industry Demand Vs Firm Demand
Microeconomic Theory
Theory of Income and Employment
Elasticity of Demand
- Concept of Elasticity of Demand
- Types of Elasticity of Demand > Price Elasticity
- Methods of Measuring Price Elasticity of Demand
- Percentage or Proportionate Method
- Total Expenditure Method
- Point Method (Geometric Method)
- Arc Elasticity of Demand
- Revenue Method
- Numerical Problems of Price Elasticity of Demand
- Factors Affecting Price Elasticity of Demand
- Importance of Elasticity of Demand
- Types of Elasticity of Demand > Income Elasticity
- Types of Elasticity of Demand > Cross Elasticity
Money and Banking
Supply
- Concept of Supply
- Distinction Between Supply and Stock
- Determinants of Supply
- Supply Schedule and Supply Curve
- Individual Supply Schedule and Supply Curve
- Market Supply Schedule and Supply Curve
- Law of Supply
- Time Period and Supply
- Exceptions to the Law of Supply
- Shifts in the Supply Curve
- Change in Supply> Extension and Contraction in Supply
- Change in Supply> Increase and Decrease in Supply
- Expansion of Supply and Increase in Supply
- Contraction of Supply and Decrease in Supply
- Elasticity of Supply
- Price Elasticity of Supply
- Categories (Degrees) of Elasticity of Supply
- Measurement of Elasticity of Supply > Percentage Method
- Measurement of Elasticity of Supply > Geometric or Point Method
- Determinants of Elasticity of Supply
Balance of Payments and Exchange Rate
Market Mechanism
- Basic Concepts of Equilibrium and Equilibrium Price
- Equilibrium Price and Quantity in a Competitive Market
- Effects of Changes (Shifts) in Demand on Equilibrium Price and Equilibrium Quantity
- Effects of Changes (Shifts) in Supply on Equilibrium Price and Equilibrium Quantity
- Effects of Simultaneous Changes (Shifts) in Demand and Supply
- Some Special Cases of Equilibrium
- Applications of Tools of Demand and Supply Price Control
- Mаximum Price Legislation or Price Ceiling and Rationing
- Minimum Price Legislation or Floor Price
Public Finance
Concepts of Production
- Basics of Production Theory
- Concept of Product
- Factors of Production
- Production Function
- Types of Production Functions
- Variation of Output in the Short-Run Returns to a Factor
- Relationship between Average Product (AP) and Marginal Product (MP)
- Relationship between Total Product (TP) and Marginal Product (MP)
- Returns to a Factor - Laws of Returns to a Variable Factor
- Law of Variable Proportions
- Explanation of the Law of Variable Proportions
- Three Stages of Production
- Stages of Operation and the Decision to Produce
- Changes in Production
- Returns to a Factor or Law of Returns
- Variation of Output in the Long Run - Returns to Scale
- Comparison Between Laws of Returns and Returns to Scale
- Scale of Production
- Concept of Indivisibility
- Economies of Scale
- Diseconomies of Scale
- Comparison Between Laws of Returns and Returns to Scale
National Income
Cost and Revenue
- Cost of Production
- Theories of Costs: Traditional Theory of Costs/Short Run Cost Curves
- Cost Concepts > Total Costs
- Cost Concepts > Average Cost
- Cost Concepts > Marginal Cost
- Costs in Long Run Period
- Difference Between Short - Run & Long Run Costs
- Behaviour of Cost in the Short - Run
- Relationship between Average and Marginal Cost
- Long-Run Cost Curves
- Revenue Concepts
- Relation Between Total, Average and Marginal Revenue
- Revenue Curve under Perfect Competition
- Revenue Curve under Monopoly
- Revenue Curve under Imperfect Competition
- Relationship Between (Mutual Determination) AR, MR, and Elasticity of Demand
- Revenue Curve under Oligopoly
- Significance of Revenue Curve
Main Market Forms and Equilibrium of a Firm
- Concept of Market
- Market Structure
- Classification of Market Structure
- Perfect Competition
- Monopoly
- Monopolistic Competition
- Oligopoly
- Duopoly
- Bilateral Monopoly
- Concept of Monopsony
- Other Forms of Market
- Factors Determining Market / Extent of Market
- Demand Curves of Firms under Different Market Forms
- Comparison between different forms of market
CISCE: Class 12
Introduction
In a competitive market, price is set by the interaction between demand and supply, not by any single buyer or seller.
CISCE: Class 12
Price Determination: Stepwise Illustration
1. Law of Demand and Supply
- If price decreases, demand goes up; supply goes down.
- If price increases, demand falls; supply rises.
2. Demand-Supply Table for Shirts
| Price (₹/shirt) | Quantity Demanded (000/month) | Quantity Supplied (000/month) | Market Position | Effect on Price |
|---|---|---|---|---|
| 1000 | 30 | 56 | Excess Supply | ↓ |
| 900 | 40 | 50 | Excess Supply | ↓ |
| 800 | 45 | 45 | Equilibrium | ↔ |
| 700 | 55 | 35 | Excess Demand | ↑ |
| 600 | 70 | 20 | Excess Demand | ↑ |
-
At ₹800: Quantity demanded = quantity supplied (45,000 shirts/month), so this is the equilibrium price and equilibrium quantity.
CISCE: Class 12
Effects of Prices Above and Below Equilibrium
- Price below ₹800 (e.g., ₹600):
Demand > Supply (shortage). Some buyers won't get shirts; prices go up. - Price above ₹800 (e.g., ₹1000):
Supply > Demand (surplus). Sellers can't sell all shirts; prices go down.
CISCE: Class 12
Important Terms and Visuals
- Excess Demand: When buyers want to buy more than what is available (KL in the diagram).
- Excess Supply: When sellers offer more than buyers want to buy (AB in diagram).
- Equilibrium Point (E): Where demand and supply curves meet; price stays stable.
CISCE: Class 12
Real-Life Application
Think of demand and supply like two blades of a scissor; both are needed to set the price, just like both blades are needed to cut a cloth.
CISCE: Class 12
Key Points: Equilibrium Price and Quantity in a Competitive Market
- Neither buyers nor sellers set the price alone; market interaction does.
- Equilibrium price is where demand equals supply—no shortage or surplus.
- Actual price moves towards equilibrium due to market competition.
