Microeconomics Episode 2 | Chapter : Theory of Price and Output Determination | Class 12

Welcome to the Zero to Hero Series for NEB Class 12 Economics! 🌱
In this video, we’ll deeply explore the Theory of Price and Output Determination, one of the most essential and conceptual topics in Microeconomics. This topic helps you understand how firms, businesses, and industries determine both the price of their goods or services and the quantity of output to produce under various market conditions.

💡 What You’ll Learn in This Lesson

🔹 Introduction to the Theory of Price and Output Determination — Understand the core concept and why it’s considered the foundation of microeconomic theory.
🔹 Meaning and Importance of Cost in Decision-Making — Learn how the cost of production influences firm behavior, pricing strategy, and market equilibrium.
🔹 Types of Cost Explained in Detail:
  • Fixed Cost (TFC): Cost that doesn’t change with output.
  • Variable Cost (TVC): Cost that varies with the level of production.
  • Total Cost (TC): The sum of total fixed and total variable cost.
  • Average Cost (AC): Cost per unit of output.
  • Marginal Cost (MC): Additional cost incurred when producing one more unit.
🔹 Understanding Cost Curves and Their Shapes — You’ll see how TFC, TVC, TC, AC, and MC behave as output changes.
🔹 Relationship between AC and MC Curves — How these two cost curves interact and why MC cuts AC at its minimum point.
🔹 Price and Output Determination under Different Market Structures — Perfect competition, monopoly, monopolistic competition, and oligopoly simplified for Class 12.

🕒 Timestamps for Easy Navigation
⏱️ Chapters:
0:00 Cost and Its types
3:53 TFC, TVC, TC, MC, and AC Curve Explanation
15:30 Relationship between AC and MC

📘 Why This Topic Is Important
The Theory of Price and Output Determination helps you understand how firms make production and pricing decisions to maximize profit. It also builds your conceptual base for advanced studies in economics — like market equilibrium, marginal analysis, and revenue-cost relationships.

📚 Who Should Watch This Video?
✔️ NEB Class 12 Economics Students
✔️ Students preparing for Board Exams or internal assessments
✔️ Beginners learning Microeconomics concepts
✔️ Anyone interested in understanding real-world market mechanisms
✔️ Learners following the Zero to Hero Economics Series by Learn With Sadhana

💬 How This Video Helps You Learn Better

Each concept is explained clearly with the help of diagrams, simple examples, and comparisons between real-life markets and theoretical models.
The goal is to help you understand, not memorize. You’ll see how costs and prices are interrelated, and how businesses use these concepts for decision-making.

By the end of this lesson, you’ll confidently answer exam questions like:
✅ Explain the relationship between Average Cost and Marginal Cost.
✅ Differentiate between Fixed and Variable Cost.
✅ How is Price and Output determined under Perfect Competition?

✨ Support My Educational Journey!

If you find this helpful, please LIKE 👍 the video, COMMENT 💬 your feedback, and SHARE 📤 it with your friends.
Your engagement truly motivates me to keep making more content that helps students learn Economics from Zero to Hero. 💖

Don’t forget to SUBSCRIBE 🔔 and turn on the notification bell to stay updated with upcoming videos in this series — including topics like Revenue Curves, Market Equilibrium, and Determination of Equilibrium Price.

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