If equilibrium price of a good is greater than its market pirce, explain all the changes that will take place in the market. Use diagram.
Giving reasons state the following statements whether true or false:-
(i) When there are diminishing returns to a factor total product always decreases
(ii) Total product will increase only when marginal product increases
(iii) Increase in total product always indicate that there are increasing reaturns to a factor
(iv) When there are diminishing returns to a factor, both always falls.
Explain the implication of the feature 'freedom of entry and exit to firms' under perfect competition.
If equilibrium price of a good is greater than its market pirce, explain all the changes that will take place in the market. Use diagram.
1. Price of the given commodity.
2. Expected utility from each successive unit.
To determine the equilibrium point, consumer compare the price of the given commodity with its utility. Being a rational consumer, he will be at equilibrium when marginal utility is equal to price paid for the commodity.
Consumer Equilibrium in case of Single Commodity.
a) To the right b) to the left
c) Does not change d) None of the above
Giving reasons state the following statements whether true or false:-
(i) When there are diminishing returns to a factor total product always decreases
(ii) Total product will increase only when marginal product increases
(iii) Increase in total product always indicate that there are increasing reaturns to a factor
(iv) When there are diminishing returns to a factor, both always falls.
Explain the implication of the feature 'freedom of entry and exit to firms' under perfect competition.