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Class 12th | Microeconomics | Chapter 5: Market Equilibrium
50 One-Liner Questions & Answers
This material is highly useful for CBSE, State Boards, and competitive exams. It covers essential concepts of market dynamics and price determination.
Q1. What is Market Equilibrium?
Ans. A situation where Quantity Demanded = Quantity Supplied.
Q2. What is Equilibrium Price?
Ans. The price at which demand and supply are equal.
Q3. What is Equilibrium Quantity?
Ans. The quantity bought and sold at the equilibrium price.
Q4. What happens when demand is high and supply is low?
Ans. The price will increase.
Q5. What happens when supply is high and demand is low?
Ans. The price will decrease.
Q6. In which situation does a Surplus occur?
Ans. When Supply > Demand.
Q7. In which situation does a Shortage occur?
Ans. When Demand > Supply.
Q8. What is the effect of a surplus on price?
Ans. The price tends to fall.
Q9. What is the effect of a shortage on price?
Ans. The price tends to rise.
Q10. Which economist gave the concept of Equilibrium?
Ans. Alfred Marshall.
Q11. On which principle is Market Equilibrium based?
Ans. The principle of Demand and Supply.
Q12. What is an example of price control?
Ans. Maximum Price Ceiling.
Q13. What is Minimum Price Fixation?
Ans. The minimum price set by the government (Floor Price).
Q14. What is the objective of Minimum Price Fixation?
Ans. Protection of producers/farmers.
Q15. What is the objective of Maximum Price Fixation?
Ans. Protection of consumers.
Q16. What happens if the Maximum Price is lower than the Equilibrium Price?
Ans. It creates a shortage (Excess Demand).
Q17. What happens if the Minimum Price is higher than the Equilibrium Price?
Ans. It creates a surplus (Excess Supply).
Q18. How is the Equilibrium Price determined?
Ans. Through the interaction of market demand and market supply.
Q19. What is the main cause of price change in the market?
Ans. Changes in demand and supply.
Q20. What happens to the Equilibrium Price when demand increases?
Ans. The equilibrium price increases.
Q21. What happens to the Equilibrium Price when supply increases?
Ans. The equilibrium price decreases.
Q22. What happens to the Equilibrium Quantity when demand decreases?
Ans. The equilibrium quantity decreases.
Q23. What happens to the Equilibrium Quantity when supply decreases?
Ans. The equilibrium quantity decreases.
Q24. How does a Market Equilibrium graph look?
Ans. It is the intersection point of the Demand and Supply curves.
Q25. What is the Price Mechanism?
Ans. The allocation of resources through prices.
Q26. In which economy is the price mechanism prominent?
Ans. Capitalist Economy.
Q27. Who decides prices in a free market?
Ans. Market forces of Demand and Supply.
Q28. What is the effect of government intervention on market equilibrium?
Ans. It may distort or disturb the equilibrium.
Q29. What occurs at a price higher than the Equilibrium Price?
Ans. Surplus.
Q30. What occurs at a price lower than the Equilibrium Price?
Ans. Shortage.
Q31. Why is the market equilibrium position stable?
Ans. Because there is no inherent tendency for the price to change.
Q32. What could be a major reason for an increase in demand?
Ans. An increase in consumer income.
Q33. What could be a reason for a decrease in supply?
Ans. An increase in the cost of production.
Q34. At what level is equilibrium analysis performed?
Ans. Market level.
Q35. What affects equilibrium in the short run?
Ans. Price fluctuations.
Q36. What affects equilibrium in the long run?
Ans. Both demand and supply shifts.
Q37. What is a negative effect of price control?
Ans. Black Marketing.
Q38. In which situation does Black Marketing arise?
Ans. During Maximum Price Ceiling.
Q39. What is Support Price?
Ans. The minimum purchase price guaranteed by the government.
Q40. What is the objective of Support Price?
Ans. To ensure income security for farmers.
Q41. What is another name for Market Equilibrium?
Ans. Price Equilibrium.
Q42. What is the slope of a Demand Curve?
Ans. Downward sloping.
Q43. What is the slope of a Supply Curve?
Ans. Upward sloping.
Q44. What happens to demand when price increases?
Ans. Demand decreases.
Q45. What happens to supply when price increases?
Ans. Supply increases.
Q46. How is equilibrium adjusted?
Ans. Through price movements.
Q47. What is the equilibrium price often called?
Ans. Market Price.
Q48. What results from the imbalance of demand and supply?
Ans. Price volatility/change.
Q49. In which chapter is market equilibrium studied?
Ans. Market Equilibrium chapter.
Q50. What is the practical importance of market equilibrium?
Ans. Assistance in price determination.
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