Given: qD = 200 − p qS = 120 + p p = 45 Quantity Demanded: qD = 200 − 45 = 155 Quantity Supplied: qS = 120 + 45 = 165 Since 165 > 155, there is an excess supply of 10 units. Therefore: Option C is correct. Option A incorrectly states excess demand. Option B incorrectly treats unequal quantities as equilibrium. Option D incorrectly calculates both demand and supply.

The Assertion says that a shift in market demand has no impact on the equilibrium price. This statement is not universally true. In the short run, a demand shift does affect equilibrium price. Only in the long run, under free entry and exit with identical firms, does entry and exit restore the price to minimum average cost (min AC). The Reason correctly states the NCERT long-run equilibrium result: Under free entry and exit, Long-run equilibrium price equals minimum average cost. Therefore: Assertion is false. Reason is true. Hence Option D is the correct answer.

An increase in input prices raises marginal cost, making production more expensive. Consequently: Individual and market supply curves shift leftward. The demand curve does not change, since only production costs have changed. Therefore: Option D is correct. The other options incorrectly change the direction of the supply curve or incorrectly shift demand.

In a perfectly competitive market with free entry and exit, the long-run equilibrium satisfies: p₀ → Minimum Average Cost (Min AC) because firms earn only normal profit. q₀ → Equilibrium market quantity, determined by market demand and supply. q₀ᶠ → Output supplied by each firm when producing at minimum average cost. n₀ = q₀ / q₀ᶠ → Number of identical firms required to supply the equilibrium quantity. Thus, the correct matching is: 1 → b 2 → a 3 → d 4 → c Hence, Option C is correct.

Under free entry and exit in perfect competition: Statement I is correct because, in the long run, Price = Minimum Average Cost (Min AC). Statement II is incorrect because supernormal profits cannot persist. If firms earn supernormal profits, new firms enter the market, increasing supply and reducing price until only normal profit remains. Statement III is correct because at long-run equilibrium, firms earn normal profit and therefore do not incur losses. Hence, only Statements I and III are correct. Therefore, Option C is the correct answer.

When the supply curve shifts rightward, producers supply more at the prevailing price. The sequence is: 1. Supply increases. 2. Excess supply develops at the old price. 3. Sellers reduce prices to clear inventories. 4. Consumers move along the demand curve and purchase more until a new equilibrium is reached. Thus, the correct order is 1 → 2 → 3 → 4. Option C correctly represents the adjustment process. The remaining options disturb the logical sequence.

The Value of Marginal Product of Labour (VMPL) is the monetary value of the additional output produced by one extra unit of labour. For a perfectly competitive firm, VMPL = Marginal Revenue × Marginal Product of Labour Since, Marginal Revenue = Price Therefore, VMPL = Price × MPL Hence, Option A is correct. Option B uses an incorrect formula. Option C has no economic basis. Option D incorrectly combines unrelated concepts.

Given, Price = 20 Market Demand: qD = 200 − 20 = 180 Each firm's supply: qSf = 10 + 20 = 30 Therefore, n₀ = 180 ÷ 30 = 6 Mathematically, the number of firms is 6. However, notice the options carefully: Option B = 6, which matches the calculation. So after careful verification: The provided answer (B) is actually correct.

Statement I is correct because both shifts increase equilibrium quantity. Statement II is correct because demand increases while supply decreases, causing price to rise. Statement III is incorrect because when both curves shift left, the effect on price depends on the relative magnitude of the shifts. Therefore, Option D is correct.

The correct matching is: Demand Right + Supply Right → Quantity increases (1 → c) Demand Left + Supply Left → Quantity decreases (2 → b) Demand Right + Supply Left → Quantity depends on relative shifts (3 → a) Demand Left + Supply Right → Quantity depends on relative shifts (4 → a) Thus, Option A is correct.

An agricultural price support programme is a form of price floor where the government fixes a minimum price above the market equilibrium price. At this higher price, producers supply more than consumers are willing to purchase, creating excess supply (surplus). To ensure that the market price does not fall below the support price, the government purchases the surplus production. Option B is correct because government buying removes the surplus from the market. Option A is incorrect because taxation does not eliminate the surplus. Option C is incorrect because destruction of surplus is not the standard NCERT mechanism. Option D is incorrect because exporting may reduce surplus but is not the required government action explained in NCERT.

An increase in the number of consumers causes the market demand curve to shift rightward, not the supply curve. Since the number of firms is fixed, the market supply curve remains unchanged. As equilibrium price rises due to higher demand, firms supply more by moving upward along the existing supply curve, rather than shifting the supply curve itself. Therefore: Assertion is false. Reason is true. Hence, Option D is correct.

When the demand curve shifts leftward under free entry and exit: 1. At the original equilibrium price, excess supply develops. 2. Price falls, causing firms to incur losses. 3. Some firms exit the market. 4. Market supply decreases until price returns to minimum average cost, where remaining firms earn normal profit. Thus, the correct order is 1 → 2 → 3 → 4. Therefore, Option A is correct.

The correct matching is: 1 → d: A higher wage increases the opportunity cost of leisure, encouraging more work initially (substitution effect). 2 → a: At high wages, the income effect dominates, leading individuals to choose more leisure. 3 → b: The wage rate is the additional cost of employing one more unit of labour. 4 → c: The Marginal Product of Labour (MPL) is the additional output produced by one more unit of labour. Thus, Option C is correct.

A price ceiling is the maximum price legally allowed for a good or service. To be effective, it is set below the market equilibrium price, making the good more affordable for consumers. However, this often creates excess demand (shortage) because consumers demand more while producers supply less. Therefore: Option B is correct. Option A refers to a price floor. Option C is incorrect because a price floor is set above equilibrium. Option D is incorrect because a ceiling above equilibrium has no binding effect.

A profit-maximizing firm employs labour until: VMPL = Wage Rate (w) If: VMPL < Wage Rate the additional worker contributes less revenue than the wage paid. This reduces profit. Therefore, the firm should reduce employment until the equality VMPL = w is restored. Option C is correct because reducing labour increases profit. Option A is incorrect because increasing employment would reduce profits further. Option B is incorrect because the firm is not earning supernormal profits in this situation. Option D is incorrect because wage rates are determined by the labour market and do not adjust instantly through the "Invisible Hand."

Under free entry and exit: Statement I is correct because entry and exit of firms allow market quantity to adjust more than in a market with a fixed number of firms. Statement II is incorrect because demand shifts have only a temporary effect on price. In the long run, price returns to minimum average cost. Statement III is correct because long-run equilibrium price equals minimum average cost (Min AC). Therefore, Statements I and III are correct. Hence, Option D is correct.

Given: p = 20 Market demand: qD = 200 − 20 = 180 There are 9 identical firms. Therefore, q₀ᶠ = 180 ÷ 9 = 20 units Thus, each firm supplies 20 units. Option B is correct. The remaining options do not satisfy the calculation.

The passage clearly states that new firms enter the market whenever price exceeds the minimum average cost because existing firms earn supernormal profits. Entry of new firms increases market supply until price falls back to the minimum average cost where firms earn only normal profit. Option C exactly matches the passage. Option A is incorrect because no further entry occurs when firms earn only normal profit. Option B is incorrect because normal profit does not attract new firms. Option D is incorrect because firms exit when price falls below minimum average cost.

The passage clearly states that when price equals the minimum average cost, each firm earns normal profit. At this point: No new firms enter the market. Existing firms have no incentive to exit. Long-run equilibrium is achieved. Therefore: Option A is correct. Option B is incorrect because supernormal profit occurs only when Price > Minimum AC. Option C is incorrect because losses occur when Price < Minimum AC. Option D is incorrect because firms still earn revenue equal to total cost.