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# NCERT solutions for Class 12 Economics chapter 5 - Market Equilibrium

## Introductory Microeconomics - Textbook in Economics for Class - 11

#### NCERT Introductory Microeconomics - in Economics Class - 11 ## Chapter 5: Market Equilibrium

Exercise

#### Chapter 5: Market Equilibrium Exercise Exercise solutions [Pages 86 - 87]

Exercise | Q 1 | Page 86

Explain market equilibrium.

Exercise | Q 1 | Page 86

Explain market equilibrium.

Exercise | Q 2 | Page 86

When do we say that there is an excess demand for a commodity in the market?

Exercise | Q 2 | Page 86

When do we say that there is an excess demand for a commodity in the market?

Exercise | Q 3 | Page 86

When do we say that there is an excess supply for a commodity in the market?

Exercise | Q 3 | Page 86

When do we say that there is an excess supply for a commodity in the market?

Exercise | Q 4 | Page 86

What will happen if the price prevailing in the market is

(i) above the equilibrium price?

(ii) below the equilibrium price?

Exercise | Q 4 | Page 86

What will happen if the price prevailing in the market is

(i) above the equilibrium price?

(ii) below the equilibrium price?

Exercise | Q 5 | Page 86

Explain how price is determined in a perfectly competitive market with fixed number of firms.

Exercise | Q 5 | Page 86

Explain how price is determined in a perfectly competitive market with fixed number of firms.

Exercise | Q 6 | Page 86

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?

Exercise | Q 6 | Page 86

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?

Exercise | Q 7 | Page 86

At what level of price do the firms in a perfectly competitive market supply when free entry and exit is allowed in the market? How is the equilibrium quantity determined in such a market?

Exercise | Q 7 | Page 86

At what level of price do the firms in a perfectly competitive market supply when free entry and exit is allowed in the market? How is the equilibrium quantity determined in such a market?

Exercise | Q 8 | Page 86

How is the equilibrium number of firms determined in a market where entry and exist is permitted?

Exercise | Q 8 | Page 86

How is the equilibrium number of firms determined in a market where entry and exist is permitted?

Exercise | Q 9.1 | Page 86

How are equilibrium price and quantity affected when income of the consumers increase.

Exercise | Q 9.1 | Page 86

How are equilibrium price and quantity affected when income of the consumers increase.

Exercise | Q 9.2 | Page 86

How are equilibrium price and quantity affected when income of the consumers decrease.

Exercise | Q 9.2 | Page 86

How are equilibrium price and quantity affected when income of the consumers decrease.

Exercise | Q 10 | Page 86

Using supply and demand curves, show how an increase in the price of shoes affects the price of a pair of socks and the number of pairs of socks bought and sold.

Exercise | Q 10 | Page 86

Using supply and demand curves, show how an increase in the price of shoes affects the price of a pair of socks and the number of pairs of socks bought and sold.

Exercise | Q 11 | Page 87

How will a change in price of coffee affect the equilibrium price of tea? Explain the effect on equilibrium quantity also through a diagram.

Exercise | Q 11 | Page 87

How will a change in price of coffee affect the equilibrium price of tea? Explain the effect on equilibrium quantity also through a diagram.

Exercise | Q 12 | Page 87

How do the equilibrium price and the quantity of a commodity change when price of input used in its production changes?

Exercise | Q 12 | Page 87

How do the equilibrium price and the quantity of a commodity change when price of input used in its production changes?

Exercise | Q 13 | Page 87

If the price of a substitute Y of good X increases, what impact does it have on the equilibrium price and quantity of good X?

Exercise | Q 13 | Page 87

If the price of a substitute Y of good X increases, what impact does it have on the equilibrium price and quantity of good X?

Exercise | Q 14 | Page 87

Compare the effect of shift in the demand curve on the equilibrium when the number of firms in the market is fixed with the situation when entry-exit is permitted.

Exercise | Q 14 | Page 87

Compare the effect of shift in the demand curve on the equilibrium when the number of firms in the market is fixed with the situation when entry-exit is permitted.

Exercise | Q 15 | Page 87

Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.

Exercise | Q 15 | Page 87

Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.

Exercise | Q 16.1 | Page 87

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

Exercise | Q 16.1 | Page 87

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

Exercise | Q 16.2 | Page 87

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

Exercise | Q 16.2 | Page 87

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

Exercise | Q 17 | Page 87

In what respect do the supply and demand curves in the labour market differ from those in the goods market?

Exercise | Q 17 | Page 87

In what respect do the supply and demand curves in the labour market differ from those in the goods market?

Exercise | Q 18 | Page 87

How is the optimal amount of labour determined in a perfectly competitive market?

Exercise | Q 18 | Page 87

How is the optimal amount of labour determined in a perfectly competitive market?

Exercise | Q 19 | Page 87

How is the wage rate determined in a perfectly competitive labour market?

Exercise | Q 19 | Page 87

How is the wage rate determined in a perfectly competitive labour market?

Exercise | Q 20 | Page 87

Can you think of any commodity on which price ceiling is imposed in India? What may be the consequence of price-ceiling?

Exercise | Q 20 | Page 87

Can you think of any commodity on which price ceiling is imposed in India? What may be the consequence of price-ceiling?

Exercise | Q 21 | Page 87

A shift in demand curve has a larger effect on price and smaller effect on quantity when the number of firms is fixed compared to the situation when free entry and exist is permitted. Explain.

Exercise | Q 21 | Page 87

A shift in demand curve has a larger effect on price and smaller effect on quantity when the number of firms is fixed compared to the situation when free entry and exist is permitted. Explain.

Exercise | Q 22 | Page 87

Suppose the demand and supply curve of commodity X in a perfectly competitive market are given by:

qD = 700 − p

qS = 500 + 3p for p ≥ 15

= 0 or 0 ≤ p 15

Assume that the market consists of identical firms. Identify the reason behind the market supply of commodity X being zero at any price less than Rs 15. What will be the equilibrium price for this commodity? At equilibrium, what quantity of X will be produced?

Exercise | Q 22 | Page 87

Suppose the demand and supply curve of commodity X in a perfectly competitive market are given by:

qD = 700 − p

qS = 500 + 3p for p ≥ 15

= 0 or 0 ≤ p 15

Assume that the market consists of identical firms. Identify the reason behind the market supply of commodity X being zero at any price less than Rs 15. What will be the equilibrium price for this commodity? At equilibrium, what quantity of X will be produced?

Exercise | Q 23 | Page 87

Considering the same demand curve as in exercise 22, now let us allow for free entry and exit of the firms producing commodity X. Also assume the market consists of identical firms producing commodity X. Let the supply curve of a single firm be explained as

qSf = 8 + 3p for p ≥ 20

= 0 for 0 ≤ p < 20

(a) What is the significance of p = 20?

(b) At what price will the market for X be in equilibrium? State the reason for your answer.

(c) Calculate the equilibrium quantity and number of firms.

Exercise | Q 23 | Page 87

Considering the same demand curve as in exercise 22, now let us allow for free entry and exit of the firms producing commodity X. Also assume the market consists of identical firms producing commodity X. Let the supply curve of a single firm be explained as

qSf = 8 + 3p for p ≥ 20

= 0 for 0 ≤ p < 20

(a) What is the significance of p = 20?

(b) At what price will the market for X be in equilibrium? State the reason for your answer.

(c) Calculate the equilibrium quantity and number of firms.

Exercise | Q 24 | Page 87

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

qD = 1,000 − p qS = 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

qS = 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?

Exercise | Q 24 | Page 87

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

qD = 1,000 − p qS = 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

qS = 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?

Exercise | Q 25 | Page 87

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?

Exercise | Q 25 | Page 87

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?

## Chapter 5: Market Equilibrium

Exercise

#### NCERT Introductory Microeconomics - in Economics Class - 11 ## NCERT solutions for Class 12 Economics chapter 5 - Market Equilibrium

NCERT solutions for Class 12 Economics chapter 5 (Market Equilibrium) include all questions with solution and detail explanation. This will clear students doubts about any question and improve application skills while preparing for board exams. The detailed, step-by-step solutions will help you understand the concepts better and clear your confusions, if any. Shaalaa.com has the CBSE Introductory Microeconomics - Textbook in Economics for Class - 11 solutions in a manner that help students grasp basic concepts better and faster.

Further, we at Shaalaa.com provide such solutions so that students can prepare for written exams. NCERT textbook solutions can be a core help for self-study and acts as a perfect self-help guidance for students.

Concepts covered in Class 12 Economics chapter 5 Market Equilibrium are Price Elasticity of Supply, Market Supply Curve, Determinants of a Firm’s Supply Curve, Profit Maximisation, Revenue, Price Floor, Price Ceiling, Simple Applications of Demand and Supply, Equilibrium Price, Market Forms - Imperfect Oligopoly, Market Forms - Perfect Oligopoly, Features of Oligopoly, Main Market Forms, Market Forms - Imperfect Competition, Features of Perfect Competition, Effects of Shifts in Demand and Supply, Determination of Market Equilibrium, Market Equilibrium, Meaning and Features of Market, Revenue, Profit Maximisation, Determinants of a Firm’s Supply Curve, Market Supply Curve, Price Elasticity of Supply, Meaning and Features of Market, Market Equilibrium, Determination of Market Equilibrium, Effects of Shifts in Demand and Supply, Features of Perfect Competition, Market Forms - Imperfect Competition, Main Market Forms, Features of Oligopoly, Market Forms - Perfect Oligopoly, Market Forms - Imperfect Oligopoly, Equilibrium Price, Simple Applications of Demand and Supply, Price Ceiling, Price Floor.

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