Micro

Forms of Market

Medium

Identify the incorrect statement regarding price flooring:

It causes excess demand, which often leads to the problem of black marketing.

Price floor is the minimum price of a commodity in the market as fixed by the government.

Often, the government fixes this price higher than the equilibrium market price of a commodity.

It ensures stability of income to the producers.

✅ Correct Option: 1

Option 1 -> Price floors cause excess SUPPLY, not excess demand, as the high minimum price discourages buyers.

Option 2 -> Correct definition of price floor.

Option 3 -> Price floor must be above equilibrium to be effective.

Option 4 -> Price floors protect producers by guaranteeing minimum income.

Hence, Option 1 -> Statement 1 is incorrect because a price floor (set above equilibrium) causes EXCESS SUPPLY, not excess demand. When the minimum price is artificially high, producers supply more but consumers demand less, creating a surplus. Black marketing is typically associated with price ceilings (maximum prices) where excess demand occurs, not with price floors. -> correct

2026: 12 May Shift 1

Arrange the following in ascending order as impact of the unit tax on supply :

(A) After imposition of unit tax ,firm will supply less unit of output

(B) Firm's long run average cost and marginal cost increases by Rs.t

(D) suppose the government place a unit tax of Rs,t

Choose the correct answer from the options given below:

2025: 22 May Shift 1

Let us consider the example of a market consisting of identical farms producing the same quality of wheat. Suppose the market demand curve and the market supply curve for wheat are given by: qᵈ = 200 - p and qˢ = 120 + p. What is the equilibrium price?

2025: 28 May Shift 2

The existence of a large number of buyers and sellers in the perfectly competitive market means?

2026: 19 May Shift 2

A positive level of output at which a firm's profit is maximised must hold some conditions, Identify those conditions from the following:

A. The price must equal to marginal cost.

B. Marginal cost must be non-decreasing.

C. Price must be greater than or equal to the average variable cost.

D. The price should less than marginal cost.

Select the correct option from the following:

2026: 15 May Shift 1

When the price of a ball is Rs 10 then 200 cricket balls are produced by the firm in the market. When the price of a ball rises to Rs 30 then 1000 cricket balls are produced in aggregate by the firm in the market. What will be the value of Price elasticity of supply?

2025: 2 June Shift 1

What is the shape of Average Revenue (AR) curve under perfect competition?

Identify the incorrect statement regarding price flooring:

Solution

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CUET Economics Past Year Questions (Topic-Wise)