THEORY OF SUPPLY

The supply of a good refers to:

• (a) Actual production of goods

• (b) Total stock of goods

• (c) Stock available for sale

• (d) Amount of goods offered for sale at a particular price per unit of time

Increase or Decrease in Supply means

• (a) Shift in supply curve

• (b) Movement along same supply curve

• (c) Both (a) and (b)

• (d) Neither (a) or (b)

If supply curve is Perfectly Inelastic, the supply curve is:

• (a) Vertical

• (b) Horizontal

• (c) Upward sloping

• (d) Downward sloping

When supply price increase in the short run, the profit of the producer -----------:

• (a) Increases

• (b) Decreases

• (c) Remains constant

• (d) Decreases marginally

A change in the supply of a commodity along with same supply curve may occur due to:

• (a) Change in the price of the commodity

• (b) Change in the prices of related goods

• (c) Change in the future, expectations about the price of the good

• (d) Change in the cost of inputs

What is the elasticity of supply, when price changes from 15 to 12 and supply change from 6 units to 5 units?

• (a) 0.77

• (b) 0.87

• (c) 0.833

• (d) 0.58

A perfectly inelastic supply curve will be:

• (a) Parallel to X axis

• (b) Parallel to Y axis

• (c) Downward sloping

• (d) None of these

If the supply of a commodity is perfectly elastic, an increase in demand will result in:

• (a) Decrease in both price and quantity at equilibrium

• (b) Increase in both price and quantity at equilibrium

• (c) Increase in equilibrium quantity, equilibrium price remaining constant

• (d) Increase in equilibrium price, equilibrium quantity remaining constant

When change in the quantity supplied is proportionate to the change in the price, the producer is said to have ----.

• (a) Perfectly elastic supply

• (b) Relatively elastic supply

• (c) Unitary elastic supply

• (d) Perfectly inelastic supply

Expansion in supply refers to a situation when the producers are willing to supply a:

• (a) Larger quantity of the commodity at an increased price

• (b) Larger quantity of the commodity due to increased taxation on the commodity.

• (c) Larger quantity of the commodity at the same price.

• (d) Larger quantity of the commodity at the decreased price