Download App

Market Equilibrium — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMarket Equilibrium2 Marks
Question
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 exit is permitted. Explain.
✓

Answer

Under the long run, when free entry and exit is permitted, there is total changes in quantity but no change in equilibrium price. It happens when the demand curve intersects tile supply curve at equilibrium point. Then Price = minimum Average cost. As a result demand curve shift upward,
It effect, there is no change in price but quantity rises When the number of firms is fixed, the supply curve is upward and demand curve is downward sloping. It results the demand effect more in price than quantity.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "2 Marks Question" from Market Equilibrium→Market Equilibrium — all question types→Economics STD 12 Humanities & Commerce question papers→Rajasthan Board STD 12 Humanities & Commerce question papers→Rajasthan Board question paper generator→

Similar questions

"All Producer Goods are not Capital Goods”. Explain.
→
Explain with diagram, the relationship between TU and MU.
→
What are the main forms of market?
→
An increase of ₹ 1000 crore in invest ment leads to a rise of ₹ 5000 crore in the national income. Calculate the value of multiplierier.
→
Define macroeconomics.
→
Explain the role of Government budget in allocation of resources.
→
Why is perfectly elastic demand curve parallel to X-axis?
→
The feature ‘large number of sellers’ under perfect competition.
→
Calculate ‘private income’ from the following data:
S.No.   (Rs. crores)
1 National debt interest. 30
2 Gross national product at market price. 400
3 Current transfers from government. 20
4 Net indirect taxes. 40
5 Net current transfers from the rest of the world. (-)10
6 Net domestic product at factor cost accruing to government. 50
7 Consumption of fixed capital. 70
→
Why is a production possibilities curve concave? Explain.
→