Q.With the help of a diagram, explain short run profit maximising conditions of a firm under perfect competition market.

Showing the 12 most recent of 16 on this concept.

1. CBSE 2026Set MARCH1 markMCQ
   Q.Which among the following is a situation in which a firm earn normal profit?

   (a) Total revenue = Total cost

   (b) Total revenue > Total cost

   (c) Total revenue < Total cost

   (d) None of these

   ›Reveal solutionSolution

   A firm earns normal profit when total revenue equals total cost (zero economic profit), so the answer is (a).

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2. CBSE 2026Set ANNUAL1 mark
   Q.What is meant by profit of firm?

   ›Reveal solutionSolution

   A firm's profit is total revenue minus total cost: Profit = TR − TC.

   Profit is the financial gain a firm earns, measured as the difference between the total revenue it receives from selling its output and the total cost it incurs in producing that output: Profit = TR − TC. If TR exceeds TC the firm earns a profit; if TC exceeds TR it suffers a loss. Maximising this surplus is the firm's main objective, and a firm produces where it earns the greatest possible profit. T …

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3. CBSE 2026Set ANNUAL1 mark
   Q.Fill in the blank: The profit of a firm is the difference between revenue and ________.

   ›Reveal solutionSolution

   Profit = Revenue − Cost; the blank is 'cost'.

   A firm's profit is the surplus of its total revenue over its total cost: Profit = Total Revenue − Total Cost. Hence the profit of a firm is the difference between revenue and **co …

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4. CBSE 2025Set ANNUAL1 markMCQ
   Q.For every market, which condition has to be fulfilled for firm's equilibrium? (A) AR = MC (B) MR = MC (C) MC curve intersects the MR curve from below (D) Both (B) and (C)

   ›Reveal solutionSolution

   Firm equilibrium requires MR = MC with MC cutting MR from below, so the answer is (D) Both (B) and (C).

   For profit maximisation two conditions must hold in every market form. First, the necessary condition: marginal revenue equals marginal cost (MR = MC) — beyond this point extra output would add more to cost than to revenue. Second, the sufficient (second-order) condition: the MC curve must be rising and cut the MR curve from below, ensuring the point is a profi …

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5. CBSE 2025Set ANNUAL1 markMCQ
   Q.Firm gets profit when (A) AR > AC (B) AC > AR (C) AR = AC (D) None of these

   ›Reveal solutionSolution

   A firm earns profit when AR > AC, so the answer is (A).

   Average Revenue (AR) is revenue per unit (which equals price), and Average Cost (AC) is cost per unit. Total profit = (AR - AC) x quantity. When AR is greater than AC, each unit sold yields a positive margin and the firm earns supernormal (abnormal) profit. When AR = AC the firm earns only normal …

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6. CBSE 2025Set ANNUAL1 markMCQ
   Q.The necessary condition for a firm's equilibrium is (A) MR = MC (B) MR > MC (C) MR < MC (D) MR = MC = 0

   ›Reveal solutionSolution

   The necessary (first) condition for a firm's equilibrium is MR = MC, so the answer is (A) MR = MC.

   A firm is in equilibrium when it maximises profit. The necessary (first-order) condition is that Marginal Revenue (MR) = Marginal Cost (MC). If MR is greater than MC, producing one more unit adds more to revenue than to cost, so the firm expands; if MR is less than MC, it contracts. Profit is highest where the two are equal.

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7. CBSE 2025Set ANNUAL1 markMCQ
   Q.Net profit = ? (A) TR - TC (B) MR + MC (C) Both (A) and (B) (D) None of these

   ›Reveal solutionSolution

   Net profit = Total Revenue - Total Cost, so the answer is (A) TR - TC.

   The net profit of a firm is the surplus of its total earnings over its total expenses. In symbols, Profit = Total Revenue (TR) - Total Cost (TC). When TR is greater than TC the firm earns profit; when TR equals TC it only breaks even; when TR is less than TC it makes a loss.

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8. CBSE 2025Set ANNUAL1 mark
   Q.Fill in the blank: The excess of revenue over cost is called ________.

   ›Reveal solutionSolution

   The blank is 'profit' — profit = total revenue − total cost.

   In the RBSE/CBSE Class-12 chapter on the firm, a firm earns revenue by selling output and incurs cost in producing it. The surplus of total revenue (TR) over total cost (TC) is the firm's profit:

   Profit (π) = Total Revenue − Total Cost

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9. CBSE 2025Set ANNUAL1 markMCQ
   Q.Write True or False: Firm gets maximum profit under equilibrium condition.

   (a) True

   (b) False

   ›Reveal solutionSolution

   True — a firm's equilibrium is its maximum-profit position.

   A firm is said to be in equilibrium at the level of output where it earns the maximum profit (or incurs the minimum loss). This occurs where MR = MC and the MC curve cuts the MR curve from below. At this output the firm has no incentive to change its production, so it …

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10. CBSE 2024Set MARCH1 mark
    Q.Match the following (Column A item: Normal Profit):

    A	B
    11) SMC	a) Zero profit
    12) Normal Profit	b) Non-monetary exchange
    13) Domestic service	c) ΔTC/ΔQ
    14) Money	d) Trade in goods and services
    15) Balance of payment	e) QD = QS
    	f) Medium of Exchange

    ›Reveal solutionSolution

    Normal Profit matches (a) Zero profit.

    Normal profit is the minimum reward necessary to keep the entrepreneur in the industry; it is treated as part of the cost of production (the opportunity cost of enterprise). When a firm earns only normal profit, its total revenue exactly equals its total economic cost, so its economic profit — profit over and above normal profit — …

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11. CBSE 2024Set ANNUAL1 markMCQ
    Q.Which is a method of producer's equilibrium? (A) TR and TC method (B) MR and MC method (C) Both (A) and (B) (D) None of these

    ›Reveal solutionSolution

    Producer's equilibrium is found by both the TR–TC and MR–MC methods, so the answer is (C).

    In the BSEB Inter Class-12 Economics syllabus, a producer is in equilibrium (maximising profit) at the output that gives the largest gap of TR over TC. This can be identified in two equivalent ways:

    • TR and TC method — profit is maximum where the vertical gap (TR − TC) is greatest. …

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12. CBSE 2024Set ANNUAL1 markMCQ
    Q.For every market situation, which condition has to be fulfilled for firm's equilibrium? (A) AR = MC (B) MR = MC (C) MC curve should cut MR from below (D) Both (B) and (C)

    ›Reveal solutionSolution

    Firm's equilibrium needs MR = MC and MC cutting MR from below, so the answer is (D).

    In the BSEB Inter Class-12 Economics syllabus, for a firm to be in equilibrium (profit maximised) in any market situation, two conditions must hold together:

    1. MR = MC (first-order / necessary condition), and
    2. The MC curve cuts the MR curve from below (second-order condition), ensuring that beyond the equilibrium output MC exceeds MR so profit does not rise further. …

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