Ch:4 Market Equillibrium Flashcards
State the meaning of equilibrium price.
Equilibrium Price: The price at which both demand and supply become equal is called equilibrium price and how much quantity is purchased and sold at this price is called equilibrium quantity.
Define market price.
Ans: Market Price: Market period lasts for a day or period a bit more or less than a day. Market price is the price which is settled by the equilibrium of demand and supply within a day.
Differentiate between perishable goods and durable goods.
The goods which rot or become stale within few hours (very soon) are called perishable goods, for example milk, fish, fruits and vegetable etc.
While the goods which do not rot or
spoil very soon are called durable goods e.g., pen, paper, pencil, cloth, table, rice,
wheat etc. Durable goods can be stored.
State the meaning of normal price.
Normal price of a commodity means the price which is determined by the equilibrium of its demand and supply in such circumstances when producers have enough time to adjust production to meet the demand in case of rise and fall in demand. It means supply is not fixed.
This can be
(a) short period normal price and
(b) long period normal price.
What is meant by market equilibrium?
Ans: Market Equilibrium: Market equilibrium occurs when quantity demanded becomes equal to quantity supplied in the market. With the changes in price demand and supply move in the opposite directions. Finally a certain price comes, at which the demand and supply become equal to each other. This price is known as equilibrium price and
The quantity which is sold and purchased at this price is known as equilibrium quantity.
What is meant by perishable goods?
Ans: Perishable Goods: The goods which rot or become stale very soon or the goods which can not be stored are called perishable goods, for example, milk, fish, fruits and vegetables etc.
What is meant by durable goods?
Durable Good: The goods which do not rot or spoil very soon are called durable
goods e.g. pen, paper, pencil, cloth etc.
Write conditions of perfect competition.
Ans: Following are conditions of perfect competition:
1-There should be large number of buyers and sellers.
2-Commodity should be homogeneous.
3-Buyers and sellers should be aware of the conditions of the market.
4-There should be free entry and exit in the market.
5-There should be perfect mobility in factors of production.
What is meant by reserve price?
: Reserve price is the minimum price. below which a seller does not want to sell any quantity of his commodity. This price depends upon the nature of the commodity and circumstances of the seller.
What are different kinds of equilibrium price according to period of time.
Ans: According to period of time, there are three kinds of equilibrium price:-
1-Market price.
2-Short period price.
3-Long period price.
Define perfect competition.
Ans: The presence of the following conditions in some market is called perfect competition.
1-Large Number of buyers and sellers
2-Homogeneity of commodity.
3-Perfect knowledge of the market
4-Free entry of the firms
5-Perfect mobility of factors of production
What is short period price?
Ans: Short Period Price: The price which is determined by the equilibrium of demand and supply during short period is called short period price.
Q.13: What is long period price?
Ans: Long Period Price: The price which is determined by the equilibrium of demand and supply during the long period is called long period price.
