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The Theory Of The Firm Under Perfect Competition
Question
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What is the relationship between support price and equilibrium price?

Answer

Since support price is fixed above equilibrium price to protect the interests of producers, quantity supplied exceeds quantity demanded. The result is surplus supply which government itself buys at support price to help producers.

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Some More Questions From The Theory Of The Firm Under Perfect Competition Chapter

What is meant by differentiated product?

 Define perfect competition.

 Is the seller under perfect competition a price maker or a price taker? 

Define monopoly.  

Define market equilibrium. 

Can a seller under monopolistic competition influence the price?

Why under imperfect competition, MR is less than price?

Why is demand for a good under monopoly less elastic than in monopolistic competition? 

What is meant by the term equilibrium?  

What is an equilibrium price?