Class 12 Introductory Microeconomics

Introductory Microeconomics Class 12

NCERT Books for Class 12 Introductory microeconomics in English Medium


Think of any society. People in society require many things and services in their daily lives, including food, clothing, housing, road and railways, postal services, and similar transport facilities. Many other services such as teachers and doctors.

In fact, the list of goods and services that a person needs is so large that no person in a society has all the things they need. Everyone has a very small amount of goods and services that he wants to use. A family farm may also have a plot of land, some grain, farming equipment, perhaps a pair of oxen, and labor services of family members.

Introductory Microeconomics Chapter 1 Click Here to Download

Theory of Consumer Behavior

In this chapter, we will study consumer Behaviour in the market for final goods. The consumer must decide how much she would like to consume each of the various items. Our aim here is to study this electoral problem in some detail.

As we see, a consumer’s choice depends on the choices available to him and his tastes and preferences in relation to those choices. First, we will try to find an accurate and convenient way of describing the available options and the tastes and preferences of the consumer. Then we will use these details to find out the consumer’s choice in the market.

Introductory Microeconomics Chapter 2 Click Here to Download

Production and Costs

In the previous chapter, we have discussed the Behaviour of consumers. In this chapter as well as in the next chapter, we will examine the Behaviour of a creator. A manufacturer or a firm receives various inputs such as labor, machines, land, raw materials, etc.

By combining these inputs, outputs are produced. This is called the process of production. To get input, they have to pay for them. That is the cost of production. Once produced, the firm sells it to the market and earns revenue. Net cost-earning revenue is the firm’s profit.

We believe here that the purpose of a firm is to maximize its profit. A firm decides to produce a quantity of production in view of its cost structure and market value of production so that its profit reaches its maximum.

In this chapter, we study various aspects of the production function of a firm. We discuss here – the relationship between input and output, the contribution of a variable input to the production process, and various properties of the production function. Then we look at the cost structure of the firm. We discuss the cost function and its various aspects. We learn about the properties of short-term and long-term cost curves.

Introductory Microeconomics Chapter 3 Click Here to Download

The Theory of the Firm under Perfect Competition

In the previous chapter, we studied the concepts related to the production function and cost curves of a firm. The focus of this chapter is different. Here we ask: how does a firm decide how much to produce? Our answer to this question is by no means simple or non-controversial.

We base our answer on a critical, if the certain, assumption about inappropriate, outspoken Behaviour – a firm, which we maintain, is a cruel profit maximizer. So, a firm that produces and sells in the market is the one that maximizes its profit.

The structure of this chapter is as follows. We first establish and examine in detail the profit maximization problem of a firm. By doing this we get the supply curve of a firm. The supply curve represents the level of production that a firm chooses to produce for different values ​​of market value. Finally, we study how to aggregate the supply curves of individual firms and derive market supply curves.

Introductory Microeconomics Chapter 4 Click Here to Download

Market equilibrium

This chapter will be built on the foundations laid out in Chapters 2 and 4 where we studied consumer and firm Behaviour when they are price takers. In Chapter 2, we have seen that a person’s demand curve for a commodity tells us how much a consumer wants to buy at different prices when he takes a given price.

The market demand curve, in turn, tells us how much of a commodity all consumers have prepared to buy at different prices when everyone charges a fixed price.

In Chapter 4, we have seen that an individual firm’s supply curve tells us the number of items that a profit-maximizing firm wants to sell at different prices when it takes a given price and the market supply curve tells us Is that when each firm charges a fixed price, then all firms would like to supply the goods taken together at different prices.

In this chapter, we combine both consumers and firms. Practices for studying market equilibrium through demand-supply analysis and determining at what price equilibrium will be achieved. We also examine the effects of demand and supply shifts on equilibrium. At the end of the chapter, we will look at some applications of demand-supply analysis.

Introductory Microeconomics Chapter 5 Click Here to Download

Non-competitive Markets

We recall that perfect competition was theorized as a market structure where both consumers and firms were price takers. The Behaviour of the firm in such situations is described in Chapter 4. We discussed that the absolute competition market structure is approximated by the market fulfilling the following conditions:

Introductory Microeconomics Chapter 6 Click Here to Download

Glossary microeconomics

Introductory Microeconomics Chapter 6 Glossary Click Here to Download

Average cost Total cost per unit production.

Average Fixed Cost Total static cost of production per unit.

The break-even point is the point on the supply curve at which a firm earns a normal profit.

Average product output per unit of the variable input.

Average Revenue Total Revenue Per Unit Production.

The budget line consists of all bundles whose value is equal to the consumer’s income.

Average Variable Cost Total variable cost per unit of production.





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