Q.Explain the 'shutdown point' in perfect competetion market with the help of diagram. OR Explain changes in market equilibrium in following conditions with the help of diagram -

Supply is the quantity of a good a firm is willing and able to sell at a given price in a given period.

Supply is not the same as the total stock a seller holds; it is only that part which the seller is willing and able to offer for sale at a particular price during a particular period. It is therefore a flow concept and always relates to a specific price and time. Other things remaining constant, supply usually rises as price rise …

The blank is filled by 'market supply' curve.

The market supply curve shows the total quantity of a good that all firms together are willing to supply at each price. It is obtained by horizontally adding (aggregating) the individual supply curves of all the firms in the market at every …

Supply is always stated with respect to a price and a time period, so the answer is (C).

Supply means the quantity of a good that producers are willing and able to offer for sale at a particular price during a specified period of time. It is a flow concept, so it must be measured over a period (per day, week, etc.), and it is defined at a given price, since the quantity supplied c …

The Law of Supply is written S = f(P), so the answer is (A).

The Law of Supply states that, other things being equal, the quantity supplied of a good rises as its price rises and falls as its price falls — a direct (positive) relationship. In functional form this is S = f(P), where S is quantity supplied and P is price. Option (B) S = f(1/P) would wrongly imply an …

Short-run supply curve = rising part of SMC above the minimum of AVC.

In the short run, a profit-maximising firm produces where price = marginal cost (on the rising part of MC). But it will produce only if the price at least covers its average variable cost; below the minimum of AVC it minimises losses by shutting down (producing zero). Therefore the firm's short-run supply curve is the portion of its short-run marginal cost (SMC) curve lying at or above the minimum point of the AVC curve. …

The point on the supply curve where the firm earns only normal (zero economic) profit is the break-even point, where P = minimum AC (Kerala Plus Two/DHSE economics).

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Own price, prices of related goods and factor prices all determine supply, so the answer is (D).

In the BSEB Inter Class-12 Economics syllabus, the supply of a good depends on several factors:

• (A) Price of the good itself — a higher price generally raises quantity supplied (law of supply).
• (B) Prices of related goods — if producing an alternative good becomes more profitable, supply of this good may fall. …

Quantity supplied and price have a direct (positive) relationship, so the answer is (B).

In the BSEB Inter Class-12 Economics syllabus, the law of supply states that, other things being equal, a rise in price raises the quantity supplied and a fall in price lowers it. Thus price and quantity supplied move in the same direction — a direct (positive) relationship — giving …

The firm's short-run supply curve is determined by its marginal cost curve and the minimum point of its average variable cost curve.

In perfect competition a firm produces where price equals marginal cost, so its supply decisions trace out the marginal cost curve. However, the firm supplies a positive output only if price is at least equal to the minimum of average variable cost (below that it shuts down). Hence the two determining elements of the firm's short-run supply curve are:

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The short-run shut-down point of a perfectly competitive firm is where Price = minimum Average Variable Cost (AVC).

Why:

• In the short run, fixed costs must be paid whether or not the firm produces, so they are irrelevant to the operate-or-shut decision.
• The firm continues producing as long as price covers AVC (so it recovers variable cost and contributes something toward fixed cost). …

Supply = the quantity of a good that producers are willing and able to sell at a particular price over a particular period of time.

Supply is the quantity of a commodity that a seller (or all sellers together) offers for sale at a given price during a given period of time. Three elements are essential to the idea of supply:

1. Price — supply is always stated with reference to a price; the same seller offers different quantities at different prices.
2. Time — supply refers to a specified period (per day, week, etc.), because how much can be offered depends on the time available.
3. Willingness and ability to sell — mere possession of a stock is not supply; the goods must actually be offered for sale. …

Supply is associated with both a time period and a price — option (c).

Supply is the quantity of a commodity that sellers are willing to offer for sale at a given price during a given period of time. It is always stated with reference to both a price (quantity supplied varies directly with price) and a time period (supply is per day, per wee …