As per the NCERT glossary, the price line is a horizontal straight line that shows the relationship between:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → the market price and a firm’s output level
The price line is drawn with the firm’s output on the x-axis and the market price on the y-axis. It is flat, because the price is the same whatever the firm sells.
Option (1) the market price and a firm’s output level — Correct. This is the Glossary meaning of the price line.
Option (2) a firm’s total revenue and its output level — Incorrect. This is the total revenue curve, an upward rising line.
Option (3) a firm’s total cost and its output level — Incorrect. This is the firm’s total cost curve, not a horizontal line.
Option (4) the market price and the quantity that all buyers wish to buy — Incorrect. This is the market demand curve, which links price with what all buyers want.
NCERT (2026-27): Glossary: “Price line – is a horizontal straight line that shows the relationship between market price and a firm’s output level.” Glossary: “Total revenue curve – shows the relationship between firm’s total revenue and firm’s output level.” |