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CBSE · Class 12 · Social Science

Market Equilibrium

Standard difficulty · 20 questions · 40 marks · Time: 37 minutes

Name: Date: Score: ____ / 40

Write full answers in Sections B and C. Answers are on the last page — try every question first!

Section A — Choose the correct answer8 × 1 = 8 marks
1.
Market equilibrium is where:
  1. demand is greater than supply
  2. supply is greater than demand
  3. price equals zero
  4. market demand equals market supply
2.
With a fixed number of firms, what happens if supply falls, demand unchanged?
  1. quantity falls; price may go either way
  2. price falls; quantity may go either way
  3. price rises, quantity falls
  4. price rises; quantity may go either way
3.
What is meant by “excess demand”?
  1. a legal minimum price above equilibrium
  2. where market demand equals market supply
  3. demand more than supply at a price
  4. firms can join or leave the market freely
4.
For cooking oil, qD = 325 − 3p and qS = 125 + 5p. What is the equilibrium price?
  1. ₹25
  2. ₹30
  3. ₹26
  4. ₹50
5.
For bicycles, qD = 559 − 7p and qS = 316 + 2p. What is the equilibrium quantity?
  1. 740 units
  2. 380 units
  3. 559 units
  4. 370 units
6.
For cooking oil, qD = 379 − 3p and qS = 249 + 7p. If a price ceiling is set at ₹12, how large is the excess demand?
  1. 10 units
  2. 20 units
  3. 343 units
  4. 333 units
7.
In a market with free entry and exit, each identical firm’s minimum average cost is ₹18, at an output of 3 units. Market demand is qD = 180 − 5p. How many firms will there be in equilibrium?
  1. 60 firms
  2. 31 firms
  3. 30 firms
  4. 29 firms
8.
A competitive firm sells its good at ₹10. The marginal product of workers 1 to 7 is 29, 27, 25, 22, 20, 18, 15 units. If the wage is ₹200, how many workers will it hire?
  1. 4 workers
  2. 7 workers
  3. 6 workers
  4. 5 workers
Section B — Short answer8 × 2 = 16 marks
9.
What is meant by market equilibrium?
10.
With a fixed number of firms, what happens to equilibrium price and quantity if (a) supply rises, demand unchanged (b) demand falls and supply rises?
11.
Explain each term: (a) equilibrium (b) value of marginal product of labour
12.
For onions, qD = 250 − 7p and qS = 6p − 10. Find the equilibrium price and quantity.
13.
For tomatoes, qD = 235 − 5p and qS = 83 + 3p. A price floor is set at ₹23. Is there excess demand or excess supply, and how much?
14.
For cooking oil, qD = 525 − 7p and qS = 200 + 6p. At p = 28, find qD and qS. Which way will the price move?
15.
A competitive firm sells at ₹6 per unit, and the marginal product of one more worker is 20 units. What is the value of the marginal product of labour? Should the firm hire the worker at a wage of ₹125?
16.
With free entry and exit, each firm’s minimum AC is ₹30 at 8 units of output, and qD = 316 − 2p. Find the equilibrium price, quantity and number of firms.
Section C — Longer answers4 × 4 = 16 marks
17.
Explain how equilibrium price and quantity are reached in a market with a fixed number of firms.
18.
Match each with its meaning: (a) price floor (b) marginal revenue product of labour (c) excess supply. Choose from: supply more than demand at a price; a legal minimum price above equilibrium; MR × marginal product of labour.
19.
For school bags, qD = 420 − 5p and qS = 288 + 6p. (a) Find the equilibrium price and quantity. (b) The government sets a price ceiling of ₹10: find the excess demand. (c) Why may rationing be needed?
20.
With free entry and exit, each firm’s minimum AC is ₹22 at 2 units, and qD = 94 − 3p. (a) Find the equilibrium price, quantity and number of firms. (b) Demand rises to qD = 112 − 3p: find the new values. (c) Why does the price not change?
AmbifulWorksheets
Practice that never repeats
CBSE · Class 12 · Social Science

Answer key

Market Equilibrium · AW-12SS-MEQ-2026-V1 · For parents — fold back or tear off before handing the sheet to your child.

QAnswerWorking
1(d) market demand equals market supply—
2(c) price rises, quantity falls—
3(c) demand more than supply at a price—
4(a) ₹25325 − 3p = 125 + 5p → 8p = 200
5(d) 370 unitsp* = 27; q* = 559 − 7 × 27
6(a) 10 unitsqD − qS = 343 − 333
7(c) 30 firmsp = 18; qD = 180 − 90 = 90; ÷ 3
8(d) 5 workershire while p × MPL ≥ w: 10 × 20 = 200
9A situation where quantity demanded equals quantity supplied, so there is no tendency for price to change.—
10(a) price falls, quantity rises (b) price falls; quantity may go either way—
11(a) where market demand equals market supply (b) price × marginal product of labour—
12p* = ₹20, q* = 110 units13p = 260 → p = 20; q = 250 − 140
13excess supply of 32 unitsqS − qD = 152 − 120
14qD = 329, qS = 368: excess supply of 39, so the price falls525 − 196; 200 + 168
15VMPL = ₹120; no, the wage is more than the worker adds6 × 20; compare with 125
16p = ₹30, q = 256, 32 firmsq = 316 − 2 × 30; 256 ÷ 8
17Price moves until demand equals supply: excess demand pushes it up, excess supply pushes it down; equilibrium is where the curves cross.—
18(a) a legal minimum price above equilibrium (b) MR × marginal product of labour (c) supply more than demand at a price—
19(a) ₹12, 360 units (b) 370 − 348 = 22 units (c) At the low price demand exceeds supply, so the limited amount must be shared out.11p = 132
20(a) ₹22, 28, 14 firms (b) ₹22, 46, 23 firms (c) New firms enter until price is back at minimum AC.q = 94 − 66; (112 − 66) ÷ 2