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Market Equilibrium

CBSE · Class 12 · Economics

Complete topic list for Market Equilibrium in CBSE Class 12 Economics. Key concepts, sub-topics, and what to focus on for board exams.

30 questions92 flashcards5 concepts

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A graph showing the intersection of market demand and supply curves, illustrating the equilibrium price and quantity, and areas of excess demand and excess supply.
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4 Topics · CBSE Class 12 Economics

Topics in Market Equilibrium

1

1. Core idea of market equilibrium

  • Equilibrium is a zero excess demand-zero excess supply situation.
  • An equilibrium is a situation where the plans of all consumers and firms in the market match and the market clears.
  • Market demand curve shows the quantity all consumers together wish to buy at different prices, taking price as given.
2

2. Example 5.1: Wheat market with fixed number of firms

  • In Example 5.1, market demand is q^D = 200 - p for 0 <= p <= 200 and q^D = 0 for p > 200.
  • In Example 5.1, market supply is q^S = 120 + p for p >= 10 and q^S = 0 for 0 <= p < 10.
  • The equilibrium price of wheat is Rs 40 per kg.
3

3. Labour market and wage determination

  • In the labour market, households supply labour and firms demand labour, opposite to the goods market.
  • Labour here means hours of work provided by labourers, not the number of labourers.
  • The wage rate is determined where market labour demand and market labour supply intersect.
4

4. Shifts in demand and supply

  • A rightward demand shift with unchanged supply raises both equilibrium price and quantity when the number of firms is fixed.
  • A leftward demand shift with unchanged supply lowers both equilibrium price and quantity when the number of firms is fixed.
  • An increase in consumer income increases demand for a normal good such as clothes, causing a rightward shift in demand and no change in supply.

Key Concepts

Central concept: Market equilibrium in perfectly competitive markets

Market demand curveMarket supply curveEquilibrium price and quantityExcess demand and excess supplyInvisible HandLabour market equilibriumMarginal Revenue Product of LabourValue of Marginal Product of Labour

Frequently Asked Questions

What are the important topics in Market Equilibrium for CBSE Class 12 Economics?
Market Equilibrium covers several key topics that are frequently asked in CBSE Class 12 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
How to score full marks in Market Equilibrium — CBSE Class 12 Economics?
Understand the core concepts first, then work through the 30 practice questions available for this chapter. Revise formulas and definitions regularly, and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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All 12 chapters — CBSE Class 12 Economics Syllabus

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