MCQ Questions for Class 11 Economics Chapter 5 Market Equilibrium with Answers (2023)

FAQs

What is the market equilibrium based on Mcq? ›

The correct answer is option 2 i.e The balancing of the forces of demand and supply for the commodity. Market equilibrium is a market state where the supply in the market is equal to the demand in the market.

MCQs on Consumer Equilibrium. Consumer Equilibrium is a situation where a consumer spends their salary on purchasing one or more commodities and gets maximum satisfaction.

Market equilibrium is the condition where the production by the sellers and the demand of that product by the buyer becomes equal. We can find the equilibrium price by putting the demand equal to the demand. The equilibrium price is the price at which the quantity demanded equals the quantity supplied.

Market equilibrium refers to a situation where quantity demanded and quality supplied of a good are equal. In other words, market equilibrium is a situation of zero excess demand and zero excess supply.

In a competitive market, demand for and supply of a good or service determine the equilibrium price.

At equilibrium price quantity demanded and quantity supplied of a commodity are equal. This quantity is called the equilibrium quantity of the commodity. In practical life, the price at which the seller/firm wants to sell a commodity, its quantity supplied may be greater or lesser than its quantity demanded.

In a chemical reaction chemical equilibrium is defined as the state at which there is no further change in concentration of reactants and products. At equilibrium the rate of forward reaction is equal to the rate of backward reaction.

The consumer equilibrium formula is MUx/Px=MUY/PY=MU of the last cost spent on each commodity. The MU or marginal utility of commodity X cost of product in terms of cost s is equal to the cost of the commodity X in cost s (MUx = Px).

Indifference curves are used in microeconomic studies in order to study consumer preferences. Each point in the indifference curve shows that a consumer is indifferent towards the two products as each of them give them the same utility.

Example #1

During summer, there is a great demand and equal supply. Hence the markets are at equilibrium. The supply will start falling post-summer season, and demand might remain the same. Company A will increase the prices to take advantage and control the demand.

What is the formula of market equilibrium in economics? ›

It can be calculated by solving the demand and supply function (Qa – bP = x + yP). Solving the equation when the supply equals the demand gives an equilibrium price. Input the equilibrium price in the demand or supply function to determine the quantity.

Overview of Changes in Equilibrium Prices

As you can see, an increase in demand causes the equilibrium price to rise. On the other hand, a decrease in demand causes the equilibrium price to fall. An increase in supply causes the equilibrium price to fall, while a decrease in supply causes the equilibrium price to rise.

Equilibrium is the state in which market supply and demand balance each other, and as a result prices become stable. Generally, an over-supply of goods or services causes prices to go down, which results in higher demand—while an under-supply or shortage causes prices to go up resulting in less demand.

Market equilibrium is a situation in which the demand for a commodity is exactly equal to its supply, corresponding to a particular price. At this point, the market is stable and no one wishes to move from this position.

A market is in equilibrium at the point where the demand and supply curves cross. The equilibrium price is the market price at which consumers can buy as much as they want and sellers can sell as much as they want. The equilibrium quantity is the quantity demanded / quantity sold at the equilibrium price.

Market prices are dependent upon the interaction of demand and supply. An equilibrium price is a balance of demand and supply factors.

A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.

At the equilibrium price, there is no shortage or surplus: The quantity of the good that buyers are willing to buy equals the quantity that sellers are willing to sell. Buyers can buy the quantity they want to buy at the market price, and sellers can sell the quantity they want to sell at the market price.

An equilibrium price, also known as a market-clearing price, is the consumer cost assigned to some product or service such that supply and demand are equal, or close to equal.

On a graph, the intersection of the demand and supply curves shows the equilibrium price. Any price above or below this price creates a surplus or shortage respectively. It's formula is Sq=Dq or quantity supplied=quantity demanded. At this price, whatever is produced by the manufacturer is purchased by the consumer.

What is an equilibrium state Mcq? ›

The state of a system in which properties are definite as long as external conditions are unchanged is called an equilibrium state.

There are three types of equilibrium: stable, unstable, and neutral. Figures throughout this module illustrate various examples. Figure 1 presents a balanced system, such as the toy doll on the man's hand, which has its center of gravity (cg) directly over the pivot, so that the torque of the total weight is zero.

A body is said to be in equilibrium if it does not experience a change in its rest or uniform motion, even under the influence of external forces. Types of equilibrium: Stable equilibrium. Unstable equilibrium.

An equilibrium reaction refers to the chemical reaction between the reactants before and after the reaction is complete (i.e., a thermodynamic equilibrium state). An example of an equilibrium reaction is water evaporating to form vapour.

Kp = Kc (RT)^Δn

atm/degree/mole and Δn is the total number of molecules of the product – total number of molecules of the reactants.

The first condition of equilibrium states that for an object to remain in equilibrium, the net force acting upon it in all directions must be zero.

The goal of general equilibrium is to find prices p ₁, p ₂, … , p _G for the goods in such a way that demand for each good exactly equals supply of the good. The supply of good g is just the sum of the endowments of that good. The prices yield a wealth for person n equal to W n = ∑ g = 1 G p g y ( n , g ) .

The marginal rate of substitution tells us the amount of a good the consumer has to give up in order to purchase more of the other good.

An isoquant curve is a concave line plotted on a graph, showing all of the various combinations of two inputs that result in the same amount of output. Most typically, an isoquant shows combinations of capital and labor and the technological trade-off between the two.

Explanation: Law Of Diminishing Returns states that as one variable input is increased, with all others remaining fixed, a point will be reached beyond which the marginal physical product of the variable factor will begin to decrease.

What is an example of a market not in equilibrium? ›

Another way is to see if there is an excess or shortage of a particular good in the market. For example, if there is a shortage of tomatoes in the market then the economy is not in equilibrium.

When there is more of a resource available than is being consumed, we say that there is a surplus. Contrarily, a shortage occurs when market demand exceeds supply.

Market Equilibrium. The supply and demand curves intersect at P* and Q*, which are the equilibrium price and quantity.

In this equation: M stands for money. V stands for the velocity of money (or the rate at which people spend money). P stands for the general price level. Q stands for the quantity of goods and services produced.

If both demand and supply increase, there will be an increase in the equilibrium output, but the effect on price cannot be determined.

If the number of firms is fixed, when there is decrease in consumer's income equilibrium price will decrease because the consumer would pay less due to less income. As a result the demand curve will shift leftward.

Price controls are normally mandated by the government in the free market. They are usually implemented as a means of direct economic intervention to manage the affordability of certain goods and services, including rent, gasoline, and food.

The answer is B: No, but if there is no outside interference, they tend to move toward equilibrium. A market is in equilibrium when the quantity supplied equals the quantity demanded. Equilibrium is the point where the upward sloping supply curve intersects the downward sloping demand curve.

Equilibrium is important to create both a balanced market and an efficient market. If a market is at its equilibrium price and quantity, then it has no reason to move away from that point, because it's balancing the quantity supplied and the quantity demanded.

What are two things that are true when an economy is in equilibrium? ›

In economics, economic equilibrium is a situation in which economic forces such as supply and demand are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change.

What is supply and demand in simple terms? Supply is the amount of a specific good or service that's available in the market. Demand is the amount of the good or service that customers want to buy. Supply and demand are both influenced by the price of goods and services.

The Law of Demand

Because buyers have finite resources, their spending on a given product or commodity is limited as well, so higher prices reduce the quantity demanded. Conversely, demand rises as the product becomes more affordable.

Market prices are dependent upon the interaction of demand and supply. An equilibrium price is a balance of demand and supply factors. There is a tendency for prices to return to this equilibrium unless some characteristics of demand or supply change.

When you combine the supply and demand curves, there is a point where they intersect; this point is called the market equilibrium. The price at this intersection is the equilibrium price, and the quantity is the equilibrium quantity.

In other words, market equilibrium is the point where the demand and supply are equal. Market equilibrium is the point where the demand and supply are equal.

The five factors that affect the market equilibrium are excess demand, excess supply, changes in demand and supply, competitive factors, and strategic factors.

On a graph, the intersection of the demand and supply curves shows the equilibrium price. Any price above or below this price creates a surplus or shortage respectively. It's formula is Sq=Dq or quantity supplied=quantity demanded. At this price, whatever is produced by the manufacturer is purchased by the consumer.

The changes in the market equilibrium is caused due to the changes in the demand and supply.

Equilibrium contains a root from the Latin libra, meaning "weight" or "balance". As a constellation, zodiac symbol, and astrological sign, Libra is usually pictured as a set of balance scales, often held by the blindfolded goddess of justice, which symbolizes fairness, equality, and justice.

Is balance a state of equilibrium? ›

Balance refers to an individuals ability to maintain their line of gravity within their Base of support (BOS). It can also be described as the ability to maintain equilibrium, where equilibrium can be defined as any condition in which all acting forces are cancelled by each other resulting in a stable balanced system.

There are three types of equilibrium: stable, unstable, and neutral. Figures throughout this module illustrate various examples. Figure 1 presents a balanced system, such as the toy doll on the man's hand, which has its center of gravity (cg) directly over the pivot, so that the torque of the total weight is zero.

The types of economic equilibrium include microeconomic and macroeconomic. In microeconomics, supply and demand between buyers and sellers are balanced. With macroeconomics, an economy achieves a balance of aggregate demand and supply.

People can trade items for food, and they can meet their own preferences. Food in high demand will end up being priced higher, and the farmers will know which food to grow more of. It is a simple example, but it demonstrates the effectiveness of the market-based economy.

Disequilibrium is a situation where internal and/or external forces prevent market equilibrium from being reached or cause the market to fall out of balance. This can be a short-term byproduct of a change in variable factors or a result of long-term structural imbalances.

Disequilibrium is the opposite of equilibrium and it is characterized by changes in conditions that affect market equilibrium.