Commerce (English Medium) Class 12 - CBSE Question Bank Solutions

How are the equilibrium price and quantity affected when both demand and supply curves shift in the same direction?

Suppose the demand and supply curves of salt are given by:

q^D = 1,000 − p q^S = 700 + 2p

(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

q^S = 400 +2p

How does the equilibrium price and quantity change? Does the change conform to your expectation?

(c) Suppose the government has imposed a tax of Rs 3 per unit of sale on salt. How does it affect the equilibrium rice quantity?

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

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

How does technological progress affect the supply curve of a firm?

How does the imposition of a unit tax affect the supply curve of a firm?

How does an increase in the price of an input affect the supply curve of a firm?

How are the equilibrium price and quantity affected when demand and supply curves shift in opposite directions?

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

A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increase to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?

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.

At the market price of Rs 10, a firm supplies 4 units of output. The market price increases to Rs 30. The price elasticity of the firm’s supply is 1.25. What quantity will the firm supply at the new price?

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

At which point does the SMC curve intersect SAC curve? Give reason in support of your answer.

What is the relation between marginal cost and average variable cost when marginal cost is rising and average variable cost is falling?

Draw Average Variable Cost, Average Total Cost ad Marginal Cost curves in a single diagram.

What is the relation between Average Variable Cost and Average Total Cost, if Total Fixed Cost is zero?

What happens to the difference between Average Total Cost and Average Variable Cost as production is increased?

State the relation between MC curve and AVC and ATC curves.

Answer the following question.
Explain the relation between the Average Variable Cost (AVC) curve and the Marginal Cost (MC) curve. Use diagram