1. With the help of demand and supplu schedule. explain the meaning of exess demand and its effect on price.
2. Define equilibrium prie of a commodity, how is it determined ? explain with the help of a schedule.
3. Give reasons and state whether true or false : A. Average cost falls only when marginal cost falls.
B. The difference between average total cost and average variable cost is constant
C. When total revenue is maximum, marginal revenue is also maximum.
4. Explain the effect on the following on the market demand of a commodity.
a.change in the price of related goods.
b.change in the no. of buyers.
5. The price of elasticity of supply of a commodity Y is half the price of the commodity X. 16 percent rise in the price X results in 40 percent rise in supply. If the price of Y falls by 8% calculate ther percentage fall in its supply.
6.explain 3 causes of a shift demand curve of a commodity.
The topic mentioned in your first and second query are already covered in our study material and revision notes for economics. Follow the below mentioned path to view the concerned lesson.
Chapter-5 (Market Equilibrium)-Lesson-1( Introduction of Concept of Market Equilibrium, Excess Demand and Excess Supply​)-Under the topic Introduction.
For Revision notes,
Under the tab Revise, choose revision notes-Economics-Chapter-5 (Market Equilibrium)
In response to your third query,
1. We know that AC is a U-shaped curve and the reason behind AC being U-shaped is the Law of Variable Proportions. According to this law, in the initial stages of production, MP of labour ( MPL ) rises as the fixed factors are not fully utilised. The rising MPL implies more output can be produced by per additional unit of labour; consequently cost of labour per unit of output falls. Therefore, in the initial stage of production AC falls. Now, the falling AC implies that the total cost is increasing but at a decreasing rate. And this decreasing rate suggests that the MC, showing the additional cost to the total cost, is falling. Thus, we can say that when AC falls, MC also falls. Also, as the marginal component always falls faster than the average component, we see that MC falls at a faster rate than AC.
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