Economics · Commerce Accountancy

Microeconomics and Pricing

1,364 Questions

Microeconomics and pricing analyze market structures, consumer utility, marginal cost, and strategic pricing models like predatory pricing. These foundational economic concepts are regularly featured in civil services and state administrative examinations. Solve these practice questions to understand market equilibrium, demand elasticity, and competitive firm behavior.

Market equilibrium pricingIncome elasticity of demandMarginal cost conceptsUtility functions analysisPredatory pricing strategiesOligopoly market structures

Microeconomics and Pricing Questions

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Relatively elastic supply means ________.

  1. ${ E } _{ s }>1$
  2. ${ E } _{ s }<1$
  3. ${ E } _{ s }=\infty$
  4. ${ E } _{ s }=0$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Relatively elastic supply occurs when the percentage change in quantity supplied is greater than the percentage change in price, meaning elasticity is greater than 1.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Elasticity of supply is greater than one when _________.

  1. proportionate change in quantity supplied is more than the proportionate change in price.

  2. proportionate change in price is greater than the proportionate change in quantity supplied.

  3. change in price and quantity supplied are equal

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Elasticity of supply is greater than 1 when the quantity supplied is highly responsive to price changes, meaning the percentage change in quantity is greater than the percentage change in price.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Perfectly elastic supply means _________.

  1. ${ E } _{ s }>1$
  2. ${ E } _{ s }<1$
  3. ${ E } _{ s }=\infty $
  4. ${ E } _{ s }=0$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Perfectly elastic supply is represented by a horizontal line where any change in price would lead to an infinite change in quantity, represented by infinity.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

When price of a commodity increase from Rs.10 to Rs.12 per unit, its supply goes up from 100 units to 140 units, the elasticity of supply would be ____.

  1. $1$
  2. $2$
  3. $3$
  4. $4$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Elasticity = (% change in Q) / (% change in P). % change in Q = (40/100) = 0.4. % change in P = (2/10) = 0.2. Elasticity = 0.4 / 0.2 = 2.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

When price of a commodity increase from Rs. 10 Rs. 12 per units, its supply goes up from 100 units to 140 units, the elasticity of supply would be _______.

  1. 1

  2. 2

  3. 3

  4. 4
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is a duplicate of 485808. Elasticity = (% change in Q) / (% change in P). % change in Q = (40/100) = 0.4. % change in P = (2/10) = 0.2. Elasticity = 0.4 / 0.2 = 2.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply curve which is beginning at the origin has.

  1. A price elasticity of supply less than one

  2. A price elasticity of supply equal to one

  3. A price elasticity of supply more than one

  4. A positive price elasticity of supply
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A linear supply curve that passes through the origin has a price elasticity of supply equal to 1 at every point along the curve.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Supply is likely to be more price elastic ________,

  1. in the short run rather than the long run

  2. if factors of production are relatively immobile between industries

  3. if there are very few producers

  4. if it is easy to expand output
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Supply is more elastic when producers can easily adjust their output in response to price changes. If it is easy to expand output, the producer has more flexibility.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

 When the greater the elasticity of supply, the change in the new equilibrium price will _____________.

  1. be higher

  2. be higher than previous price

  3. be lower

  4. be lower than previous price
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When supply is highly elastic, a change in demand results in a smaller change in price because the quantity supplied adjusts significantly to absorb the shock.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The _________ refers to the amount of a certain good producers are willing to supply when receiving a certain price.

  1. quantity demanded

  2. quantity purchased

  3. quantity supplied

  4. quantity sold
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Quantity supplied is defined as the specific amount of a good that producers are willing and able to sell at a specific price during a given period.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply is said to be __________, when any change in price produces no change in the quantity supplied of a commodity.

  1. relatively more elastic

  2. perfectly elastic

  3. perfectly inelastic

  4. relatively Inelastic
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Perfectly inelastic supply means the quantity supplied does not change at all regardless of price changes, resulting in a vertical supply curve.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply is ___________, when a small change in price causes a greater change in quantity supplied.

  1. relatively more elastic

  2. perfectly elastic

  3. perfectly inelastic

  4. relatively Inelastic
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a small change in price leads to a larger percentage change in quantity supplied, the supply is relatively more elastic (elasticity > 1).

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The formula for calculating price elasticity of supply is ________________.

  1. $\displaystyle E _s = \frac{percentage \,\, change \,\, in \,\, price}{percentage \,\, change\,\, in \,\, quantity\,\, demanded}$
  2. $\displaystyle E _s = \frac{percentage \,\, change \,\, in \,\, quantity\,\, demanded }{percentage \,\, change\,\, in \,\, quantity\,\, supplied}$
  3. $\displaystyle E _s = \frac{percentage \,\, change\,\, in \,\, quantity\,\, supplied }{percentage \,\, change\,\, in \,\, price}$
  4. $\displaystyle E _s = \frac{ percentage \,\, change \,\, in \,\, quantity \,\, demanded }{percentage \,\, change\,\, in \,\, price}$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Price elasticity of supply is defined as the ratio of the percentage change in quantity supplied to the percentage change in price.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply is said to be ____________, when a very insignificant change in price leads to an infinite change in quantity supplied.

  1. relatively more elastic

  2. perfectly elastic

  3. perfectly inelastic

  4. relatively Inelastic
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Perfectly elastic supply occurs when an infinitesimal change in price results in an infinite change in quantity supplied, represented by a horizontal supply curve.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply is ________, when a greater change in price leads to smaller change in quantity supplied.

  1. relatively more elastic

  2. perfectly elastic

  3. perfectly inelastic

  4. relatively inelastic
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Relatively inelastic supply occurs when the percentage change in quantity supplied is less than the percentage change in price. This means the supply is not very responsive to price fluctuations.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Relatively in inelastic supply means: _____________.

  1. $E _s > 1$
  2. $E _s <1$
  3. $E _s =1$
  4. $E _s=0$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Elasticity of supply (Es) is defined as the ratio of the percentage change in quantity supplied to the percentage change in price. For relatively inelastic supply, this ratio is less than 1.