Download App

The theory of the firm under perfect competition — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsThe theory of the firm under perfect competition4 Marks
Question
Explain any two causes of a leftward shift of supply curve.
OR
What is decrease in supply? Explain any two factors that can cause it.
✓

Answer

The following are the causes for a leftward shift of supply curve (or decrease in supply) of a commodity:
  1. Use of less productive technology: If the firm is using less productive technology, the unit cost of production will rise. With the higher cost of production, the firm produces less and less would be supplied than before at the given price, i.e., the supply would decrease implying that the supply curve would shift to the left.
  2. A rise in the price of inputs: When the price of inputs (i.e., wages of labour, price of raw materials and fuel) goes up, the unit cost of production will rise. With the higher cost of production, less would be supplied than before at the given price, i.e., the supply would decrease implying that the supply curve would shift to the left.
  3. A rise in excise duty: When excise duty is increased by the government, the unit cost of production will rise. With the higher cost of production, less would tibe supplied than before at the given price, i.e., supply would decrease implying that the supply curve would shift to the left.
  4. A rise in the price of related goods: Suppose wheat and sunflower are the two goods which a farmer produce. If the price of sunflower rises, then it would be profitable for the firm to produce more sunflower. The firm would withdraw some land and other resources from the production of wheat and devote them to the production of sunflower whose price has increased. This would decrease supply of wheat implying that the supply curve of wheat would shift to the left.

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 The theory of the firm under perfect competition→The theory of the firm under perfect competition — all question types→Economics STD 11 Commerce question papers→CBSE Board STD 11 Commerce question papers→CBSE Board question paper generator→

Similar questions

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

(Rs.)		 Total Cost

(Rs.)
1 24 26
2 24 50
3 24 72
4 24 92
5 24 115
6 24 139
7 24 165
→
Explain how market price of a good is determined using diagram.
OR
How is price determined under perfect competition? Explain briefly.

OR
How is equilibrium price of a commodity determined? Explain with the help of demand and supply schedule.
→
  1. What is a budget line? What does the point on it indicate in terms of prices?
  2. A consumer consumes only two 2 pieces of goods X and Y. Her money income is 24 and the prices of pieces of goods X and Y are 24 and 2 respectively.
Answer the following questions:
  1. Can the consumer afford a bundle 4X and 5Y? Explain.
  2. What will be the MRS. when the consumer is in equilibrium? Explain.
→
Differentiate between Short Period and Long Period.
→
Convert the following inclusive class interval into exclusive class interval.
Inclusive Class IntervalFrequency (f)
0-992
100-1994
200-2995
300-3996
400-4993
500-5995
Total25
→
Explain the relation between marginal revenue and average revenue when a firm is able to sell more quantity of output:
  1. At the same price.
  2. Only by lowering the price.
→
Calculate MC and TC from the following cost schedule of a firm whose total fixed cost is ₹ 15.
Output (Units)
1
2
3
4
Marginal Cost (₹)
10
19
29
40
→
Explain two points of distinction between monopoly and monopolistic competition.
→
Complete the following table:
Output (Q) (units) Price (₹) Marginal Revenue (₹) Total Revenue (₹)
1
-
10
10
2
-
4
-
3
-
-
15
4
-
-3
-
→
The following table shows the average variable cost at different levels of output by a firm. Its total fixed cost is ₹ 60. Find its average total cost and marginal cost at each level of output.
Output (Units)
1
2
3
Average Variable Cost(₹)
20
25
24
→