NCERT Microeconomics Solution Chapter 4 -The Theory of the firm under Perfect Competition Class 11
NCERT Microeconomics Solution Chapter 3 -The Theory of the Firm under Perfect Competition Class 11
Q. 1 What are the characteristics of a perfectly competitive market?
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Q. 2 How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?
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Q. 3 What is the ‘price line’?
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Q. 4. Why is the total revenue curve of a price-taking firm an upward-sloping straight line? Why does the curve pass through the origin?
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Q. 5. What is the relation between market price and average revenue of a price taking firm?
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Q. 6. What is the relation between market price and marginal revenue of a price-taking firm?
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Q. 7. What conditions must hold if a profit-maximising firm produces positive output in a competitive market?
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Q. 8. Can there be a positive level of output that a profit-maximising firm produces in a competitive fmarket at which market price is not qual to marginal cost? Give an explanation.
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Q. 9. Will aprofit-maximsing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.
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Q. 10. Will a profit-maximising firm in a competitive market produce a positive level of output in the short run if the market price is less than the minimum of AVC? Give an explanation.
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Q. 11. Will a profit-maximising firm in a competitive market produce a positive level of output in the long run if the market price is less than the minimum of AC? Give an explanation.
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Q. 12. What is the supply curve of a firm in the short run?
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Q. 13. What is the supply curve of a firm in the long run?
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Q. 14. How does technological progress affect the supply curve of a firm?
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Q. 15. How does the imposition of a unit tax affect the supply curve of a firm?
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Q. 16. How does an increase in the price of an input affect the supply curve of a firm?
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Q. 17. How does an increase in the number of firms in a market affect the market supply curve?
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Q. 18. What does the price elasticity of supply mean? How do we measure it?
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Q. 19. Compute the total revenue, marginal revenue and average revenue schedules in the following table. Market price of each unit of the good is ₹ 10.
| Quantity Sold | TR | MR | AR |
| 0 | |||
| 1 | |||
| 2 | |||
| 3 | |||
| 4 | |||
| 5 | |||
| 6 |
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Q. 20. The following table shows the total revenue and total cost schedules of a competitive firm. Calculate the profit at each output level. Determine also the market price of the good.
| Quantity Sold | TR (₹) | TC (₹) | Profit |
| 0 | 0 | 5 | |
| 1 | 5 | 7 | |
| 2 | 15 | 10 | |
| 3 | 20 | 12 | |
| 4 | 25 | 15 | |
| 5 | 30 | 23 | |
| 6 | 35 | 33 | |
| 7 | 40 | 40 |
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Q. 21. The following table shows the total cost schedule of a competitive firm. It is given that the price of the good is ₹ 10. Calculate the profit at each output level. Find the profit-maximising level of output.
| Output | TC (₹) |
| 0 | 5 |
| 1 | 15 |
| 2 | 22 |
| 3 | 27 |
| 4 | 31 |
| 5 | 38 |
| 6 | 49 |
| 7 | 63 |
| 8 | 81 |
| 9 | 101 |
| 10 | 123 |
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Q. 22. Consider a market with two firms. The following table shows the supply schedules of the two firms: the SS1 column gives the supply schedule of firm 1 and the SS2 column gives the supply schedule of firm 2. Compute the market supply schedule.
| Price (₹) | SS1 (units) | SS2 (Units) |
| 0 | 0 | 0 |
| 1 | 0 | 0 |
| 2 | 0 | 0 |
| 3 | 1 | 1 |
| 4 | 2 | 2 |
| 5 | 3 | 3 |
| 6 | 4 | 4 |
Q. 23. Consider a market with two firms. In the following table, columns labelled as SS1 and SS2 give the supply schedules of firm 1 and firm 2, respectively. Compute the market supply schedule.
| Price (₹) | SS1 (Kg) | SS2 (Kg) |
| 0 | 0 | 0 |
| 1 | 0 | 0 |
| 2 | 0 | 0 |
| 3 | 1 | 0 |
| 4 | 2 | 0.5 |
| 5 | 3 | 1 |
| 6 | 4 | 1.5 |
| 7 | 5 | 2 |
| 8 | 6 | 2.5 |
Q. 24. There are three identical firms in a market. The following table shows the supply schedule of firm 1. Compute the market supply schedule.
| Price (₹) | SS1 (units) |
| 0 | 0 |
| 1 | 0 |
| 2 | 2 |
| 3 | 4 |
| 4 | 6 |
| 5 | 8 |
| 6 | 10 |
| 7 | 12 |
| 8 | 14 |
Q. 25. A firm earns a revenue of ₹ 50 when the market price of a good is ₹ 10. The market price increases to ₹ 15 and the firm now earns a revenue of ₹ 150. What is the price elasticity of the firm’s supply curve?
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Q. 26. The market price of a good changes from ₹ 5 to ₹ 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.
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Q. 27. At the market price of ₹ 10, a firm supplies 4 units of output. The market price increases to ₹ 30. The price elasticity of the firm’s supply is 1.25. What quantity will the firm supply at the new price?
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