Download App

Market Equilibrium — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMarket Equilibrium4 Marks
Question
Demand for electrical appliances like induction chulazas, heaters etc have increased due to increase in the price of LPG. However, in short run supply of these appliances remains constant. What will be the effect on the equilibrium price of these electrical appliances in the given scenario? In this case, which values are being highlighted by the demanders of electrical appliances?
✓

Answer

As given in the examination problem that market for a good is in equilibrium. So, we assume that initial price is OP as shown below:

In the above figure price is on vertical axis and quantity demanded and supplied are on horizontal axis. But due to increase in the price of LPG, the demand of electrical appliances like induction chulazas, heaters etc increases and demand curve shifts rightward from DD to D1D1. With new demand curve D1D1, there is excess demand at initial price OP because at price OP, demand is PB and supply is PA, so there is excess demand of AB at price OP. Due to this excess demand, competition among the consumer will rise the price. With the rise in price, there is upward movement along the demand curve (contraction in demand) from B to C and similarly, there is upward movement along the supply curve (expansion in supply) from A to C. So, finally equilibrium price rises from OP to OP, and equilibrium quantity also rises from OQ to OQ1. Conclusion: Due to increase in demand,
  1. Equilibrium price rises from OP to OP1.
  2. Equilibrium quantity also rises from OQ to OQ1.

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 "4 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

On the basis of the following schedule, calculate Price Elasticity of Demand by percentage method.
Price per unit (₹)
Total expenditure (₹)
10
180
9
162
→
Calculate national income and Gross national disposable income from the following:
 
 
(₹ Arab)
i.
Net current transfers to abroad
(-) 15
ii.
Private final consumption expenditure
600
iii.
Subsidies
20
iv.
Government final consumption expenditure
100
v.
Indirect tax
120
vi.
Net imports
20
vii.
Consumption of fixed capital
35
viii.
Net change in stocks
(-) 10
ix.
Net factor income to abroad
5
x.
Net domestic capital formation
110
→
Market for a good is in equilibrium. There is increase in supply for this goods. Explain the chain of effects of this change. Use diagram.###How will equilibrium price and quantity be affected when there is increase in supply?### Explain the chain effect of increase in supply of a good on its price, supply and demand. Use diagram.### How does an increase in supply of a commodity affect its equilibrium price and equilibrium quantity? Explain with the help of a diagram.### Market for a good is in equilibrium. Supply of the good 'increases'. Explain the chain of effects of this change.
→
    (Rs. crores)
1 Net current transfers from abroad. -5
2 Private final consumption expenditure. 250
3 Net factor income from abroad. 15
4 Government final consumption expenditure. 50
5 Consumption of fixed capital. 25
6 Net exports. -10
7 Subsidies. 10
8 Net domestic capital formation. 30
9 Indirect tax. 20
→
From the following schedule, find out the level of output at which the producer is in equilibrium. Give reasons for your answer.
Output (units) Price (₹) Total Cost (₹)
1 24 26
2 24 50
3 24 72
4 24 92
5 24 115
6 24 139
7 24 165
→
Will the following factor incomes be included in domestic factor income of India? Give reasons for your answer.
  1. Compensation of employees to the residents of Japan working in Indian embassy in Japan.
  2. Profits earned by a branch of foreign bank in India.
  3. Rent received by an Indian resident from Russian embassy in India.
  4. Profits earned by a branch of State Bank of India in England.
→
Distinguish:
  1. Between current account and capital account.
  2. Between autonomous transactions and accommodating transactions of balance of payments account.
→
Find Gross Domestic Product at Factor Cost and Personal Disposable Income:
    (₹ crore)
(i) Personal tax 100
(ii) Net National Disposable Income 800
(iii) Corporation tax 50
(iv) Net factor income to abroad (–) 10
(v) Retained income 20
(vi) Indirect tax 170
(vii) Private income 600
(viii) Subsidy 30
(ix) Consumption of fixed capital 60
(x) Net current transfer from abroad 10
→
Explain the concepts of the short run and the long run.
→
Explain determination of equilibrium level of income using ‘consumption plus investment’ approach. Use diagram.
→