Economics · Commerce Accountancy

Microeconomics and Pricing

1,413 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 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.

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 refers to the degree of responsiveness of supply of a good to changes in its.

  1. Demand

  2. Price

  3. Cost of production

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

 Elasticity of supply measures the degree of responsiveness of quantity supplied to a change in own price of the commodity. It is also defined as the percentage change in quantity supplied divided by 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 elasticity of supply is defined as the.

  1. Responsiveness of the quantity supplied of a good to a change in its price

  2. Responsiveness of the quantity supplied of a good without in its price

  3. Responsiveness of the quantity demanded of a good to a change in its price

  4. Responsiveness of the quantity demanded of a good without change in its price
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

1:The elasticity of supply is the responsiveness of the quantity supplied and the change in price.
2:The elasticity of supply is measured as the ratio of proportionate change in the quantity supplied to the proportionate 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

Elasticity of supply is measured by dividing the percentage change in quantity supplied of a good by __________.

  1. Percentage change in income

  2. Percentage change in quantity demanded of goods

  3. Percentage change in price

  4. Percentage change in taste and preference
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Es$=\dfrac{\%\Delta Q}{\%\Delta P}$.
The elasticity of supply is measured by dividing the percentage change in quantity supplied of a good by 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

If the quantity supplied exactly equal to the relative change in price than the elasticity of supply is?

  1. Less than one

  2. Greater than one

  3. One

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If $\Delta Q=\Delta P$ the $Es=1$(one).
So if the quantity supplied exactly equal to the relative change in price than the elasticity of supply is 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

If the percentage change in supply is less then the percentage change in price it is called.

  1. Unit elasticity of supply

  2. Perfectly elastic supply

  3. More elastic supply

  4. Inelastic supply
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If $\%$ $\Delta$Q $<$ $\%$ $\Delta$P then there is less then one elastic supply i.e., $e < 1$.
Supply is price elastic when the percentage change in quantity supplied is greater than the percentage change in price, and supply is price inelastic when the percentage change in quantity supplied is less 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

If the price of apples rises from $Rs. 30$ per kg to $Rs. 40$ per kg and the supply increases from $240\ kg$ to $300\ kg$, Elasticity of supply is _________.

  1. $.75$
  2. $.67$
  3. $(-).67$
  4. $(-).75$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

$Es = \dfrac {\triangle q}{\triangle p} \times \dfrac {p}{q}$
$\triangle q = (300 - 240) = 60$
$\triangle p = (40 - 30) = 10$
$= \dfrac {60}{10}\times \dfrac {30}{240}$
$= .75$.

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 supply of a commodity remain same with change in price, this situation is called as _____________.

  1. elastic supply

  2. inelastic supply

  3. perfectly elastic supply

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

When the quantity supplied does not change at all regardless of price changes, the elasticity of supply is zero. This is known as perfectly inelastic supply.

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

If supply of a commodity falls by $20$% due to decrease in price of the commodity by $10$%, then elasticity of supply will be _______.

  1. elastic

  2. unit elastic

  3. perfectly elastic

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

When change in supply is higher than the change in price of the commodity, the supply is elastic.

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 for a positively sloping supply curve that starts from price axis is ______.

  1. zero

  2. greater than one

  3. less than one

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

A positively sloping supply curve that intersects the price axis (above the origin) has an elasticity of supply greater than one. This indicates that 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

If elasticity of supply becomes negative, supply curve is _________.

  1. negatively sloping

  2. positively sloping

  3. horizontal

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

A negative elasticity of supply implies that as price increases, quantity supplied decreases. This corresponds to a negatively sloping (downward-sloping) 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

When supply curve is upward sloping and originates from the starting point, elasticity is __________.

  1. infinity

  2. less than one

  3. zero

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

A supply curve that is a straight line passing through the origin has a unitary elasticity (Es = 1) at every point. This is because the percentage change in price and quantity are always equal.