The Theory of the Firm under Perfect Competition
Class 12 Economics · Introductory Microeconomics · Chapter 4
CBSE Class 12 Board Examination community
View all
Economics
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Economics
Physics, Chemistry, Maths + English
8~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Mathematics
- Physics
- + 3 more
Physics, Chemistry, Biology + English
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Physics
- Chemistry
- + 3 more
Accountancy, Business Studies, Economics + English
9~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Accountancy
- Business Studies
- + 3 more
Economics
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Economics
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
TrendingStart now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Physics
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Physics
History
3~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- History
Hindi Elective
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- हिंदी
Mathematics
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Mathematics
Sociology
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Sociology
Home Science
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Home Science
Urdu Elective
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- اردو
- Urdu Elective
Geography
3~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Geography
Accountancy
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Accountancy
English Core
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Flamingo
- Vistas
Political Science
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Political Science
Chemistry
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Chemistry
Business Studies
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Business Studies
Hindi Core
2~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- हिंदी
Mathematics
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
हिंदी (आधार)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Accountancy
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
اردو (اختیاری)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Mathematics
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
हिंदी (आधार)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
संस्कृतम् (केन्द्रिकम्)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Physics
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
हिंदी (ऐच्छिक)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
संस्कृत (ऐच्छिक)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Physics
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
TrendingStart now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
हिंदी (ऐच्छिक)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
اردو (کور)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Chemistry
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Urdu Elective
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Computer Science
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Chemistry
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Fine Art · Painting
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
TrendingStart now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
हिंदुस्तानी संगीत (गायन / वादन)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Biology
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Informatics Practices
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Accountancy
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Biotechnology
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Accountancy
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
सृजनात्मक लेखन और अनुवाद
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Business Studies
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
हिंदुस्तानी संगीत (तबला / पखावज)
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Business Studies
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
History
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
History
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
History
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Geography
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Geography
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Geography
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
English Elective · Kaleidoscope
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Political Science
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Political Science
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Sociology
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Sociology
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Psychology
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
English Core · Flamingo
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
English Core · Vistas
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Home Science
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Home Science
~50days leftPre-boards · school dates varyDec 2026 · school-specific · tentative
Start now for December pre-boards. Reuse it for boards.- Space weighted by unit marks
- Charts from the book's own data
- Traps corrected
Summary
A perfectly competitive market has many buyers and sellers, a homogeneous product, free entry and exit, and perfect information. Its key feature is price-taking behaviour: each firm is too small to influence the price and simply accepts the market price. For such a firm total revenue is \(TR=p\times q\), and because price is fixed, average revenue and marginal revenue both equal price, \(AR=MR=p\); the demand curve facing the firm is a horizontal (perfectly elastic) price line. The firm is a profit maximiser, where profit \(\pi=TR-TC\). Profit is maximised at the output where three conditions hold: price equals marginal cost \(p=MC\), marginal cost is non-decreasing, and price is at least the average variable cost in the short run (or average cost in the long run). From these conditions the firm’s supply curve is derived — it is the rising part of the marginal cost curve above the minimum AVC (short run) or minimum LRAC (long run), with zero output below that. The shut-down point is the minimum of AVC, and the break-even point is where the firm earns only normal profit at the minimum of average cost. Factors such as technological progress, input prices, a unit tax and the number of firms shift the supply curve. The market supply curve is the horizontal sum of individual firms’ supply curves, and the price elasticity of supply, \(e_s=\dfrac{\%\,\Delta Q}{\%\,\Delta P}\), measures how responsive supply is to price.
Key terms
Perfect competition
A market with many firms, a homogeneous product, free entry/exit and perfect information.
Price taker
A firm that accepts the market price because it cannot influence it.
Marginal revenue
The addition to total revenue from selling one more unit; under perfect competition \(MR=AR=p\).
Profit maximisation
Producing where \(p=MC\) with MC non-decreasing and price at least covering AVC (or AC).
Shut-down point
The minimum point of AVC, below which the firm produces zero output in the short run.
Price elasticity of supply
Responsiveness of quantity supplied to price, \(e_s=\dfrac{\%\,\Delta Q}{\%\,\Delta P}\).
Extra questions & answers
Try one from this chapter
A defining feature of perfect competition is: