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प्रश्न
Explain the chain effects, if the prevailing market price is below the equilibrium price.
उत्तर
When the price is lower than the equilibrium market price of a good (OPe), the price ceiling leads to excess of demand. Now, the excess demand will increase the competition among consumers in the market. Thereby they consume the good at a higher price which leads to an increase in the price level, i.e. OPe.
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संबंधित प्रश्न
Determination of equilibrium price under perfect competition.
Giving reason, state whether the following statement is true or false.
When equilibrium price of a good is less than its market price, there will be competition among the sellers.
If the prevailing market price is above the equilibrium price, explain its chain of effects.
Explain the chain of effects of excess supply of a good on its equilibrium price
Explain the chain of an effect of excess demand of a good on it equilibrium price.
Distinguish between Gross domestic product at a market price and Gross domestic product at factor cost.
Define or Explain the General equilibrium.
Define or explain the following concepts (Any THREE):
Effective demand
Suppose the price at which the equilibrium is attained in exercise 5 is above the minimum average cost of the firms constituting the market. Now if we allow for free entry and exit of firms, how will the market price adjust to it?
At what level of price do the firms in a perfectly competitive market supply when free entry and exit is allowed in the market? How is the equilibrium quantity determined in such a market?
Define or explain the following concept:
Price discrimination
Define or explain the following concept:
Equilibrium price
State whether the following statement is TRUE and FALSE.
Under perfect competition, price is determined by equilibrium of demand and supply.
Fill in the blank with appropriate alternative given below
The price at which demand and supply equate to each other is called _______ price.
Answer the following question:
The market for a good is in equilibrium. How would an increase in an input price affect the equilibrium price and equilibrium quantity, keeping other factors constant? Explain using a diagram.
The diagram given below shows the change in price of cotton shirts. Which one of the following causes the equilibrium price to move from P1 to P2?
