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प्रश्न
Explain market equilibrium.
उत्तर
Market equilibrium is defined as the state of rest that is determined by the rational objectives of the consumers and the producers (i.e. maximisation of satisfaction and profit respectively). It is a state where the aggregate quantity that all the firms want to sell are purchased by consumers, i.e. market supply equals market demand. At this situation, there is no incentive or tendency for any change in quantity demanded, quantity supplied and price. That is: yd = ys.
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संबंधित प्रश्न
Market for a good is in equilibrium. There is simultaneous "decrease" both in demand and supply of the good. Explain its effect on market price
A market for a good is in equilibrium. The demand for the good 'increases'. Explain the chain of effects of this change.
A market for a good is in equilibrium. The supply of good "decreases". Explain the chain of effects of this change
A market for a product is in equilibrium. Demand for the product "decreases." Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram
What is meant by 'excess supply' of a good in a market?
Explain its chain of effects on the market of that good. Use diagram
What will happen if the price prevailing in the market is
(i) above the equilibrium price?
(ii) below the equilibrium price?
How are equilibrium price and quantity affected when income of the consumers increase.
How do the equilibrium price and the quantity of a commodity change when price of input used in its production changes?
Compare the effect of shift in the demand curve on the equilibrium when the number of firms in the market is fixed with the situation when entry-exit is permitted.
Considering the same demand curve as in exercise 22, now let us allow for free entry and exit of the firms producing commodity X. Also assume the market consists of identical firms producing commodity X. Let the supply curve of a single firm be explained as
qSf = 8 + 3p for p ≥ 20
= 0 for 0 ≤ p < 20
(a) What is the significance of p = 20?
(b) At what price will the market for X be in equilibrium? State the reason for your answer.
(c) Calculate the equilibrium quantity and number of firms.
Answer the following question.
Show with the help of diagrams, the effect on equilibrium price and quantity when:
There is a fall in the price of substitute goods.
Answer the following question.
Show with the help of diagrams, the effect on equilibrium price and quantity when:
There is a rise in the prices of inputs.
Rate of interest on savings account is more than that on recurring account.
