NCERT Solution Economics Class 12 Chapter 6 Non Competitive Markets
NCERT Solution Economics Class 12 Chapter 6 Non Competitive Markets all questions and answers. Economics Class 12 6th Chapter Non Competitive Markets exercise solution and experts answer. As one of online learning platforms, we (netex.) are excited to offer the NCERT Solution Economics Class 12 Chapter 6. This solution is designed to help students who are looking to brush up on their physics concepts on Chapter 6 Non Competitive Markets.
1.) What would be the shape of the demand curve so that the total revenue curve is (a) a positively sloped straight line passing through the origin? (b) a horizontal line?
Ans -1.If the total revenue curve is positive sloped straight line pass thought the origin that time the shape of demand curve will behorizontal line parallel to the X-axis.
2.) From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
Marginal Revenue | 10 | 6 | 2 | 2 | 2 | 0 | 0 | 0 | -05 |
Ans.
Quantity | MR | TR | AR | Ed=∆Q/∆P*P/Q |
1 | 10 | 10 | 10 | – |
2 | 6 | 16 | 8 | 5 |
3 | 2 | 18 | 6 | 2 |
4 | 2 | 20 | 5 | 2 |
5 | 2 | 22 | 4.5 | 2.5 |
6 | 0 | 22 | 3.6 | 1 |
7 | 0 | 22 | 3.1 | 1.2 |
8 | 0 | 22 | 2.7 | 1.1 |
9 | -5 | 17 | 1.9 | 0.38 |
3.) What is the value of the MR when the demand curve is elastic?
Ans – The quantity of the commodity increases, MR value becomes smaller and the value of the price elasticity of demand also becomessmaller. Thedemand curve is called elastic at a point where priceelasticity is greater than unity, inelastic at a point where the price elasticity is less than unity and unitary elastic when price elasticity is equal to 1.when quantity is lessthan 10 units, MR is positive and the demand curve is elastic .
4.) A monopoly firm has a total fixed cost of Rs 100 and has the following demand schedule:
Quantity | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
Price | 100 | 90 | 80 | 70 | 60 | 50 | 40 | 30 | 20 | 10 |
Find the short run equilibrium quantity, price and total profit. What would be the equilibrium in the long run? In case the total cost was Rs 1000, describe the equilibrium in the short run and in the long run.
Ans.
Quantity | Price | TR=P*Q | TFC | TVC | TC | TOTAL PROFIT=TR-TC |
1 | 100 | 100 | 100 | 0 | 100 | 0 |
2 | 90 | 180 | 100 | 0 | 100 | 80 |
3 | 80 | 240 | 100 | 0 | 100 | 140 |
4 | 70 | 280 | 100 | 0 | 100 | 180 |
5 | 60 | 300 | 100 | 0 | 100 | 200 |
6 | 50 | 300 | 100 | 0 | 100 | 200 |
7 | 40 | 280 | 100 | 0 | 100 | 180 |
8 | 30 | 240 | 100 | 0 | 100 | 140 |
9 | 20 | 180 | 100 | 0 | 100 | 80 |
10 | 10 | 100 | 100 | 0 | 100 | 0 |
Profit = TR-TC
=300-100
=200
TR is the maximum at the 6th level of output.
SO PROFT=300-1000
= – 700.
6.) Comment on the shape of the MR curve in case the TR curve is a (i) positively
sloped straight line, (ii) horizontal straight line.
Ans -The values of the MR curve are given by the slope of the TR curve.
1.) If the TR curve is positively sloped straight line that time MR curve will horizontal straight line parallel to X-axis .
2.) If the TR curve is horizontal straight line that time the MR curve will be touching to X- axis That is MR is zero.
7.) The market demand curve for a commodity and the total cost for a monopoly firm producing the commodity is given by the schedules below. Use the information to calculate the following:
QUANTITY | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
PRICE | 52 | 44 | 37 | 31 | 26 | 22 | 19 | 16 | 13 |
QUANTITY | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
TOTAL COST | 10 | 60 | 90 | 100 | 102 | 105 | 109 | 115 | 125 |
(a) The MR and MC schedules (b) The quantites for which the MR and MC are equal (c) The equilibrium quantity of output and the equilibrium price of the commodity.
Ans. revenue schedules
Quantity | Price | TR | MR |
0 | 52 | 0 | – |
1 | 44 | 44 | 44 |
2 | 37 | 74 | 30 |
3 | 31 | 93 | 19 |
4 | 26 | 104 | 11 |
5 | 22 | 114 | 6 |
6 | 19 | 110 | 4 |
7 | 16 | 112 | -2 |
8 | 13 | 104 | -8 |
Cost schedules
Quantity | Tc | Mc |
0 | 10 | 0 |
1 | 60 | 50 |
2 | 90 | 40 |
3 | 100 | 10 |
4 | 102 | 2 |
5 | 105 | 3 |
6 | 109 | 4 |
7 | 115 | 6 |
8 | 125 | 10 |
Equilibrium price = 19
Profit in equilibrium = TR-TC
= 114-109
= 5
8.) Will the monopolist firm continue to produce in the short run if a loss is incurred at the best short run level of output?
Ans -No, if the monopolist firms incurs loss in short run they stop production in long run. Themarket structure of monopolisticcompetition allows for new firms to enter themarket. If the firms inthe industry are receiving supernormal profit in the shortrun, this will attract new firms. As new firms enter, some customers shift fromexisting firms to these new firms. So existing firms find that their demand curve has shifted leftward, and the price that they receive falls. This causes profits tofall. This happen continuesly till thesuper-normal profits of firms areConvert into normal profits.Conversely, if firms in the industry are facing lossesin the short run, some firms would stop producing (exit from the market).
9.) Explain why the demand curve facing a firm under monopolistic competition is negatively sloped.
Ans- The structure of monopolistic firm is like there is a large number of firm they produce homogenous product. For example There is a very largenumber of biscuit producing firms .But many of the biscuits beingproduced are associated with some brand name and are distinguishable fromone another by these brand names and packaging and are slightly different intaste. The consumer develops a taste for a particular brand of biscuit over time,or becomes loyal to a particular brand for some reason, and is, therefore, notimmediately willing to substitute it for another biscuit. However, if the pricedifference becomes large, the consumer would be willing to choose a biscuit ofanother brand. A consumers’ preference for a brand will often vary in depth, sothe change in price required for the consumer to change her brand may vary. Because there is available substitute product .Therefore if the price of any firm is low the consumers shift toward that firm.Hence, the demand curve faced by the firm is not horizontalas is the case with perfect competition. The demand curve faced by the firm isalso not the market demand curve, as in the case with monopoly. In the case ofmonopolistic competition, the firm expects increases in demand if itlowers theprice. The demand curve of the firm is also AR curve. This firm,therefore has downward sloping AR curve that means demand curvealso downward sloping i.e negative sloping.
10.) What is the reason for the long run equilibrium of a firm in monopolistic competition to be associated with zero profit?
Ans- Themarket structure of monopolistic competition allows fornew firms to enter themarket. If the firms in the industry arereceiving supernormal profit in the shortrun, this will attract newfirms. As new firms enter, some customers shift fromexisting firms to these new firms. So existing firms find that their demand curve has shifted leftward, and the price that they receive falls. This causesprofits tofall. The happen continuesly till super-normal profits of firms areConvert into normal profits. Conversely, if firms in the industry are facing lossesin the short run, some firms would stop producing (exit from the market). Thdemand curve for existing firms would shift rightward. This would lead to ahigher price, and profit.Entry or exit would halt once supernormal profits becomezero and this would serve as the long run equilibrium.
For more ⇓
- NCERT Solution Class 12 Economics The Theory of the firm under perfect competition
- NCERT Solution Class 12 Economics Market Equilibrium
- NCERT Solution Class 12 Production and Costs
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