NCERT Solutions class 12 Economics Theory of the Firm Under Perfect Competition

NCERT Solutions class 12 Economics Theory of the Firm Under Perfect Competition Class 12 Economics book solutions are available in PDF format for free download. These ncert book chapter wise questions and answers are very helpful for CBSE board exam. CBSE recommends NCERT books and most of the questions in CBSE exam are asked from NCERT text books. Class 12 Economics chapter wise NCERT solution for Economics part 1 and Economics part 2 for all the chapters can be downloaded from our website and myCBSEguide mobile app for free.

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Microeconomics

• Introduction
• Theory o Consumer Behavior
• Production and Costs
• Theory of Firm Under Perfect Competition
• Market Competition
• Non Competitive Markets

Macroeconomics

• Introduction
• National Income Accounting
• Money and Banking
• Income Determination
• Government Budget and Economy
• Open Economy Macroeconomics

CHAPTER Four Theory of Firm Under Perfect Competition

1. Perfect competition: Defining Features
2. Revenue
3. Profit Maximisation
   1. Condition 1
   2. Condition 2
   3. Condition 3
   4. The Profit Maximisation Problem: Graphical Representation
4. Supply Curve of a Firm
   1. Short Run Supply Curve of a Firm
   2. Long Run Supply Curve of a Firm
      1. The Shut Down Point
   3. The Normal Profit and Break-even Point
5. Determinants of a Firm’s Supply Curve
   1. Technological Progress
   2. Input Prices
   3. Unit Tax
6. Market Supply Curve
7. Price Elasticity of Supply
   1. The Geometric Method

NCERT Solutions class 12 Economics Theory of the Firm Under Perfect Competition

1. What are the characteristics of a perfectly competitive market?

2. How are the total revenue of a firm, market price, and the quantity sold by that firm related to each other?

3. What is the price line?

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?

5. What is the relation between market price and average revenue of a price taking firm?

6. What is the relation between market price and marginal revenue of a price-taking firm?

7. What conditions must hold if a profit-maximizing firm produces positive output in a competitive market?

8. Can there be a positive level of output that a profit-maximizing firm produces in a competitive market at which market price is not equal to marginal cost? Give an explanation.

9. Will a profit-maximising firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.

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?

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.

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

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

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

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

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

17. How does an increase in the number of firms in a market affect the market supply curve?

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

19. Calculate the total revenue, marginal revenue and average revenue schedules in the following table. Market price of each unit of the good is Rs 10.

Quantity Sold	TR	MR	AR
0
1
2
3
4
5
6

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	10	10
3	15	12
4	20	15
5	25	23
6	30	33
7	35	40

21. The following table shows the total cost schedule of a competitive firm. It is given that the price of the good is Rs 10. Calculate the profit at each output level. Find the profit maximising the level of output.

Quantity Sold	TC
0	5
1	15
2	22
3	27
4	31
5	38
6	49
7	63
8	81
9	101
10	123

22. Consider a market with two firms. The following table shows supply schedules of two firms: SS₁ denotes the supply schedule of firm 1 and SS₂ denotes the supply schedule of firm 2. Calculate the market supply schedule.

Price	(units)	(units)
0	0	0
1	0	0
2	0	0
3	1	1
4	2	2
5	3	3
6	4	4

23. Consider a market with two firms. In the following table, columns labelled as and give the supply schedules of firm 1 and firm 2 respectively. Compute the market supply schedule.

Price	(kg)	(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

24. There are three identical firms in a market. The following table shows the supply schedule of firm 1. Calculate the market supply schedule.

Price	(units)
0	0
1	0
2	2
3	4
4	6
5	8
6	10
7	12
8	14

25. 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?

26. The market price of a good changes from Rs 5 to Rs 20. As a result, the quantity supplied by a firm increase 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.

27. 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?

NCERT Solutions for Class 12 Economics

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