Notes Class XII Economics (Introductory Microeconomics) Chapter 4 The Theory of the Firm Under Perfect Competition

Class 12 Economics (Introductory Microeconomics) Chapter 4: The Theory of the Firm Under Perfect Competition explains how firms operate and make decisions in a perfectly competitive market. The chapter introduces the features of perfect competition, including a large number of buyers and sellers, homogeneous products, and free entry and exit. Students learn about the revenue concepts (total, average, and marginal revenue), and how a firm achieves profit maximization under both short run and long run. It also covers how firms decide the level of output, the relationship between cost and revenue, and how equilibrium is attained. The graphical and theoretical explanations help students understand how real-world competitive markets function. These notes are structured to provide clear and concise understanding, align with the latest CBSE 2025–26 syllabus, and are perfect for quick revision and board exam preparation.