NCERT Solutions for Class 12 Economics (Microeconomics) Non-Competitive Market [Old Book]
NCERT Solutions for Class 12 Economics (Microeconomics) Non-Competitive Market [Old Book]
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Page 1
NCERT
SOLUTIONS
CLASS - 12th
aglase .co
SOLUTIONS
CLASS - 12th
aglase .co
Page 2
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
Class : 12th
Subject : Economics
Chapter : 6
Chapter Name : Non-Competitive Market
Q1 What would be the shape of the demand curve so that the total revenue curve is a) a
positively sloped straight line passing through the origin? B) a horizontal line?
Answer. a) Demand curve will be a horizontal straight line parallel to the x-axis when total
revenue curve is a positively sloped straight line.
Page 1 of 13
Class : 12th
Subject : Economics
Chapter : 6
Chapter Name : Non-Competitive Market
Q1 What would be the shape of the demand curve so that the total revenue curve is a) a
positively sloped straight line passing through the origin? B) a horizontal line?
Answer. a) Demand curve will be a horizontal straight line parallel to the x-axis when total
revenue curve is a positively sloped straight line.
Page 1 of 13
Page 3
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
b) When Total revenue curve is a horizontal line, it indicated TR remains same at all level of
output. Which mean with fall in price there will be a rise in output. Thus, the demand curve will
slope downward from left to right.
Image source - NCERT
Page : 100 , Block Name : Exercises
Q2 From the schedule provided below calculate the total revenue, demand curve and the price
elasticity of demand.
Q 1 2 3 4 5 6 7 8 9
MR 10 6 2 2 2 0 0 0 -5
Answer.
Q MR TR Demand Curve Price Elasticity
1 10 10 10 -
2 6 16 8 (1÷2)×(10÷1) = 5
3 2 18 6 (1÷2)×(8÷2) = 2
Page 2 of 13
b) When Total revenue curve is a horizontal line, it indicated TR remains same at all level of
output. Which mean with fall in price there will be a rise in output. Thus, the demand curve will
slope downward from left to right.
Image source - NCERT
Page : 100 , Block Name : Exercises
Q2 From the schedule provided below calculate the total revenue, demand curve and the price
elasticity of demand.
Q 1 2 3 4 5 6 7 8 9
MR 10 6 2 2 2 0 0 0 -5
Answer.
Q MR TR Demand Curve Price Elasticity
1 10 10 10 -
2 6 16 8 (1÷2)×(10÷1) = 5
3 2 18 6 (1÷2)×(8÷2) = 2
Page 2 of 13
Page 4
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
4 2 20 5 (1÷1)×(6÷3) = 2
5 2 22 4.4 (1÷0.6)×(5÷4) =
2.09
6 0 22 3.7 (1÷0.7)×(4.4÷5)
= 1. 26
7 0 22 3.1 (1÷0.6)×(3.7÷6)
= 1.03
8 0 22 2.8 (1÷0.3)×(3.1÷7)
= 1.48
9 -5 17 1.9 (1÷0.9)×(2.8÷8)
=0.39
AR=Price
Price Elasticity=
Page : 100 , Block Name : Exercises
Q3 What is the value of MR when the demand curve is elastic?
Answer. When demand curve is elastic ,it means elasticity of demand is greater than 1 so MR
will be positive.
Page 3 of 13
4 2 20 5 (1÷1)×(6÷3) = 2
5 2 22 4.4 (1÷0.6)×(5÷4) =
2.09
6 0 22 3.7 (1÷0.7)×(4.4÷5)
= 1. 26
7 0 22 3.1 (1÷0.6)×(3.7÷6)
= 1.03
8 0 22 2.8 (1÷0.3)×(3.1÷7)
= 1.48
9 -5 17 1.9 (1÷0.9)×(2.8÷8)
=0.39
AR=Price
Price Elasticity=
Page : 100 , Block Name : Exercises
Q3 What is the value of MR when the demand curve is elastic?
Answer. When demand curve is elastic ,it means elasticity of demand is greater than 1 so MR
will be positive.
Page 3 of 13
Page 5
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
Image source - NCERT
Page : 100 , Block Name : Exercises
Q4 A monopoly firm has a total fixed cost of Rs. 100 and has the following demand schedule.
Quantity 1 2 3 4 5 6 7 8 9 10
Price 100 90 80 70 60 50 40 30 20 10
Find the short run equilibrium quantity, price and total profit. What would be the equilibrium in
the long run? In case the total cost was 1000, describe the equilibrium in the short run and in
Find the short run equilibrium quantity, price and total profit. What would be the
equilibrium in the long run? In case the totaL cost was Rs 1000, describe the equilibrium
in the short run and in the long run.
Answer.
Quantity Price
1 100 100
2 90 180
3 80 240
Page 4 of 13
Image source - NCERT
Page : 100 , Block Name : Exercises
Q4 A monopoly firm has a total fixed cost of Rs. 100 and has the following demand schedule.
Quantity 1 2 3 4 5 6 7 8 9 10
Price 100 90 80 70 60 50 40 30 20 10
Find the short run equilibrium quantity, price and total profit. What would be the equilibrium in
the long run? In case the total cost was 1000, describe the equilibrium in the short run and in
Find the short run equilibrium quantity, price and total profit. What would be the
equilibrium in the long run? In case the totaL cost was Rs 1000, describe the equilibrium
in the short run and in the long run.
Answer.
Quantity Price
1 100 100
2 90 180
3 80 240
Page 4 of 13
Page 6
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
4 70 280
5 60 300
6 50 300
7 40 280
8 30 240
9 20 180
10 10 100
TR is maximum at 6th unit of output, profit will be maximum here. Equilibrium Quantity= 6 unit of
output
Equilibrium Price= 50
Profit=TR-TC=300-100=200
Now, if the total cost is 1000, firm incurs loss as total cost is greater than the total revenue.
Loss=TC-TR=1000-300=700
The firm will incur loss in short run production and will stop production in the long run.
Q5 If the monopolist firm of Exercise 3, was a public sector firm. The government set a rule for
its Manager to accept the government fixed price as given i.e. to be a price taker and therefore
behave as a firm in a perfectly competitive market and the government decided to set the price
so that demand and supply in the market are equal. What would be the equilibrium price,
quantity and profit in this case.
Page 5 of 13
4 70 280
5 60 300
6 50 300
7 40 280
8 30 240
9 20 180
10 10 100
TR is maximum at 6th unit of output, profit will be maximum here. Equilibrium Quantity= 6 unit of
output
Equilibrium Price= 50
Profit=TR-TC=300-100=200
Now, if the total cost is 1000, firm incurs loss as total cost is greater than the total revenue.
Loss=TC-TR=1000-300=700
The firm will incur loss in short run production and will stop production in the long run.
Q5 If the monopolist firm of Exercise 3, was a public sector firm. The government set a rule for
its Manager to accept the government fixed price as given i.e. to be a price taker and therefore
behave as a firm in a perfectly competitive market and the government decided to set the price
so that demand and supply in the market are equal. What would be the equilibrium price,
quantity and profit in this case.
Page 5 of 13
Page 7
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
Answer. When the firm becomes price taker as in a perfectly competitive market, equilibrium
price and quantity is determined by the interaction of demand and supply curve in the market.
Here p* and q* will be the equilibrium price and quantity respectively and the firm will earn zero
profit because in perfectly competitive market firm earns only normal profits.
Image source - NCERT
Q6 Comment on the slope of MR curve in case the TR curve is a
i) Positively sloped straight line.
ii) Horizontal straight line.
Answer.
i) When TR curve is positively sloped straight line, MR curve will be horizontal line parallel to the
x-axis.
Page 6 of 13
Answer. When the firm becomes price taker as in a perfectly competitive market, equilibrium
price and quantity is determined by the interaction of demand and supply curve in the market.
Here p* and q* will be the equilibrium price and quantity respectively and the firm will earn zero
profit because in perfectly competitive market firm earns only normal profits.
Image source - NCERT
Q6 Comment on the slope of MR curve in case the TR curve is a
i) Positively sloped straight line.
ii) Horizontal straight line.
Answer.
i) When TR curve is positively sloped straight line, MR curve will be horizontal line parallel to the
x-axis.
Page 6 of 13
Page 8
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
Image source - NCERT
ii)When TR curve is a horizontal straight line it implies TR is constant at all levels of output MR
will be zero.
Q7 The market demand curve for a commodity and the total cost for a monopoly firm producing
the commodity is given by the schedule below. Use the following information to calculate-
i) MR and MC schedule
ii) The quantities for which MR and MC are equal
iii) the equilibrium quantity of output and the equilibrium price of commodity
Page 7 of 13
Image source - NCERT
ii)When TR curve is a horizontal straight line it implies TR is constant at all levels of output MR
will be zero.
Q7 The market demand curve for a commodity and the total cost for a monopoly firm producing
the commodity is given by the schedule below. Use the following information to calculate-
i) MR and MC schedule
ii) The quantities for which MR and MC are equal
iii) the equilibrium quantity of output and the equilibrium price of commodity
Page 7 of 13
Page 9
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
iv) the Total revenue, total cost and total profit in equilibrium.
Quantity 0 1 2 3 4 5 6 7 8
Price 52 44 37 31 26 22 19 16 13
TC 10 60 90 100 102 105 109 115 125
Answer.
Quantity Price = AR TC TR MR MC
0 52 10 0 - -
1 44 60 44 44 50
2 37 90 74 30 30
3 31 100 93 19 10
4 26 102 104 11 2
5 22 105 110 6 3
6 19 109 114 4 4
7 16 115 112 -2 6
8 13 125 104 -8 10
Where,
Page 8 of 13
iv) the Total revenue, total cost and total profit in equilibrium.
Quantity 0 1 2 3 4 5 6 7 8
Price 52 44 37 31 26 22 19 16 13
TC 10 60 90 100 102 105 109 115 125
Answer.
Quantity Price = AR TC TR MR MC
0 52 10 0 - -
1 44 60 44 44 50
2 37 90 74 30 30
3 31 100 93 19 10
4 26 102 104 11 2
5 22 105 110 6 3
6 19 109 114 4 4
7 16 115 112 -2 6
8 13 125 104 -8 10
Where,
Page 8 of 13
Page 10
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
ii) MR and MC are equal at 2nd and 6th unit of output.
iii) Equilibrium quantity of output= 6 unit and equilibrium price of commodity is 19, because at 6th
unit of output both the conditions of equilibrium are fulfilled i.e. a) MR is equal to MC and b) MC
intersects MR curve from below.
It is so because the producer can earn profits after the 2nd unit of output and will maximise
profits at the 6th unit after which he will incur losses only. So, his equilibrium is obtained at 6th
unit of output.
iv) At equilibrium,
Total Revenue=114
Total Cost=109
Total Profit= TR-TC=114-109=5
Q8 Will the monopolist firm continue to produce in the short run if a loss is incurred at the best
short run level of output?
Answer. In the short run, following two cases determine whether the monopolist firm should
continue to produce:
i) If at the level of output MC curve cuts MR curve from above, the firm will continue to produce
in the short run because beyond that level of output, firm may earn profit as MC is sloping
downwards.
ii) If at the level of output, MC curve cuts MR from below, the firm will stop production in the
short run if firm incurs loss, because MC will be upward sloping and will be greater than MR and
firm will continue to incur loss.
Page 9 of 13
ii) MR and MC are equal at 2nd and 6th unit of output.
iii) Equilibrium quantity of output= 6 unit and equilibrium price of commodity is 19, because at 6th
unit of output both the conditions of equilibrium are fulfilled i.e. a) MR is equal to MC and b) MC
intersects MR curve from below.
It is so because the producer can earn profits after the 2nd unit of output and will maximise
profits at the 6th unit after which he will incur losses only. So, his equilibrium is obtained at 6th
unit of output.
iv) At equilibrium,
Total Revenue=114
Total Cost=109
Total Profit= TR-TC=114-109=5
Q8 Will the monopolist firm continue to produce in the short run if a loss is incurred at the best
short run level of output?
Answer. In the short run, following two cases determine whether the monopolist firm should
continue to produce:
i) If at the level of output MC curve cuts MR curve from above, the firm will continue to produce
in the short run because beyond that level of output, firm may earn profit as MC is sloping
downwards.
ii) If at the level of output, MC curve cuts MR from below, the firm will stop production in the
short run if firm incurs loss, because MC will be upward sloping and will be greater than MR and
firm will continue to incur loss.
Page 9 of 13
Page 11
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
Q9 Explain why the demand curve facing a firm under monopolistic competition is negatively
sloped.
Answer. Under monopolistic competition, in order to increase the demand, the firm has to
reduce the price. Hence, monopoly firm faces a downward sloping demand curve.
Image source - NCERT
When price is p0, demand is q0 unit of goods. To increase the demand to q1 units, price falls to
p1. Thus demand curve is negatively sloped as more units of commodities can be sold only at a
lower price.
Q10 What is the reason for the long run equilibrium of a firm in monopolistic competition to be
associated with zero profit?
Answer. In monopolistic firms, the number of firms is large and free entry and exit is permitted.
So in the short run if any firm earns supernormal profit, it attracts new firms to enter the market.
Thus supply will increase whereas demand remains constant. As a result, the price will fall up to
the point when firm start earning normal profit.
Similarly, in the short run, some firms incur loss. They will exit the market. Hence, supply will
decrease and the demand will remain constant. As a result of which price will rise and continue
to rise until all the firms start earning normal profits.
Page 10 of 13
Q9 Explain why the demand curve facing a firm under monopolistic competition is negatively
sloped.
Answer. Under monopolistic competition, in order to increase the demand, the firm has to
reduce the price. Hence, monopoly firm faces a downward sloping demand curve.
Image source - NCERT
When price is p0, demand is q0 unit of goods. To increase the demand to q1 units, price falls to
p1. Thus demand curve is negatively sloped as more units of commodities can be sold only at a
lower price.
Q10 What is the reason for the long run equilibrium of a firm in monopolistic competition to be
associated with zero profit?
Answer. In monopolistic firms, the number of firms is large and free entry and exit is permitted.
So in the short run if any firm earns supernormal profit, it attracts new firms to enter the market.
Thus supply will increase whereas demand remains constant. As a result, the price will fall up to
the point when firm start earning normal profit.
Similarly, in the short run, some firms incur loss. They will exit the market. Hence, supply will
decrease and the demand will remain constant. As a result of which price will rise and continue
to rise until all the firms start earning normal profits.
Page 10 of 13
Page 12
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
Hence, we see due to free entry and exit, firms in the monopolistic competition earns zero profit
in the long run.
Q11 List the three different ways in which oligopoly firms may behave?
Answer. Three different ways in which oligopoly firms may behave are-
i) Firms could decide to collaborate to maximize the collective profit.
ii) Each of the two firms decides how much quantity to produce and should not change the
quantity supplied. Firms realize that competition under price-cutting is harmful for their own
profits.
iii) The market price does not move freely in response to change in demand in case of oligopoly
market.
Q12 If duopoly behavior is one that is described by cornet, the market demand curve is given by
the equation (q=200-4p) and both the firms have zero cost, find the quantity supplied by each
firm in equilibrium and the equilibrium market place.
Answer. The market demand of the two firms is 200 - 4p.
At price = 0, the market demand will be 200 - 4× 0 = 200.
So, the firm A will supply half of the demanded quantity
=½ × 200 = 100 units.
Again, the demand faced by firm B = 200 - 100 = 100 units.
So, it will supply ½ × 100 = 50 units.
Firm A will supply ½ × (200 - 50) = 75 units.
Page 11 of 13
Hence, we see due to free entry and exit, firms in the monopolistic competition earns zero profit
in the long run.
Q11 List the three different ways in which oligopoly firms may behave?
Answer. Three different ways in which oligopoly firms may behave are-
i) Firms could decide to collaborate to maximize the collective profit.
ii) Each of the two firms decides how much quantity to produce and should not change the
quantity supplied. Firms realize that competition under price-cutting is harmful for their own
profits.
iii) The market price does not move freely in response to change in demand in case of oligopoly
market.
Q12 If duopoly behavior is one that is described by cornet, the market demand curve is given by
the equation (q=200-4p) and both the firms have zero cost, find the quantity supplied by each
firm in equilibrium and the equilibrium market place.
Answer. The market demand of the two firms is 200 - 4p.
At price = 0, the market demand will be 200 - 4× 0 = 200.
So, the firm A will supply half of the demanded quantity
=½ × 200 = 100 units.
Again, the demand faced by firm B = 200 - 100 = 100 units.
So, it will supply ½ × 100 = 50 units.
Firm A will supply ½ × (200 - 50) = 75 units.
Page 11 of 13
Page 13
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
This process goes on and can be represented as -
Firm Quantity supplied
A ½ × 200 = 200/2 = 100 units
B ½ × (200 - ½ × 200) = 200/2 - 200/4 = 50 units
A ½ × (200 - ½ (200 - ½ × 200) = 200/2 - 200/4 + 200/8 = 75 units.
B ½ × {200 - [½ ×(200 - ½ (200 - ½ × 200)]} = 200/2 - 200/4 +200/8 - 200/16
=62.5.
In this way, the production of firm A is
100 + 75 +...... (calculated using the above explained algorithm)
The equilibrium quantity can be calculated as -
100÷( 1 + 1÷2) = 100 ÷ 3/2 = 200/ 3
The production of firm B is
50 + 62.5 +....... (calculated using the above explained algorithm)
The equilibrium quantity can be calculated as -
100 ÷(1 + 1÷2) = 100÷ 3/2 = 200/3.
Hence the equilibrium quantity supplied in the market = 200/3 + 200/3 = 400/3.
Now, we know that q = 200 - 4p
4p = 200 - q
4p = 200 - 400/3
4p = 200/3
p = 50/3.
Page 12 of 13
This process goes on and can be represented as -
Firm Quantity supplied
A ½ × 200 = 200/2 = 100 units
B ½ × (200 - ½ × 200) = 200/2 - 200/4 = 50 units
A ½ × (200 - ½ (200 - ½ × 200) = 200/2 - 200/4 + 200/8 = 75 units.
B ½ × {200 - [½ ×(200 - ½ (200 - ½ × 200)]} = 200/2 - 200/4 +200/8 - 200/16
=62.5.
In this way, the production of firm A is
100 + 75 +...... (calculated using the above explained algorithm)
The equilibrium quantity can be calculated as -
100÷( 1 + 1÷2) = 100 ÷ 3/2 = 200/ 3
The production of firm B is
50 + 62.5 +....... (calculated using the above explained algorithm)
The equilibrium quantity can be calculated as -
100 ÷(1 + 1÷2) = 100÷ 3/2 = 200/3.
Hence the equilibrium quantity supplied in the market = 200/3 + 200/3 = 400/3.
Now, we know that q = 200 - 4p
4p = 200 - q
4p = 200 - 400/3
4p = 200/3
p = 50/3.
Page 12 of 13
Page 14
Book : Introductory Microeconomics Ncert Solutions | Chapter - 6 Economics
Q13 What is meant by prices being rigid? How can an oligopoly behavior lead to such an
outcome?
Answer. Price being rigid meant that despite change in demand and cost, prices tend to be fixed
or constant.
If the firms in an oligopoly market decide to compete with each other on the basis of price, then
if one firm lowers the price below other firms to attract customers, the other firms would retaliate
by doing the same. So the market price keeps falling as long as firms keep undercutting each
other’s prices. So the firms generally don't opt for this way.
Rather, the firms mutually decide a price at which they will sell their produce and this price isn't
altered by any of the firms. Hence, it leads to price rigidity. This price is changed only due to
change in certain market conditions.
Page 13 of 13
Q13 What is meant by prices being rigid? How can an oligopoly behavior lead to such an
outcome?
Answer. Price being rigid meant that despite change in demand and cost, prices tend to be fixed
or constant.
If the firms in an oligopoly market decide to compete with each other on the basis of price, then
if one firm lowers the price below other firms to attract customers, the other firms would retaliate
by doing the same. So the market price keeps falling as long as firms keep undercutting each
other’s prices. So the firms generally don't opt for this way.
Rather, the firms mutually decide a price at which they will sell their produce and this price isn't
altered by any of the firms. Hence, it leads to price rigidity. This price is changed only due to
change in certain market conditions.
Page 13 of 13
Document Details
| Board / Org | NCERT |
| Exam | Class 12 |
| Type | Solution |
| Pages | 14 |
| Updated | 22 Jul 2026 |