Tag: supply - law of supply and price elasticity of supply

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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

When a large change in price results in a very small change in the quantity supplied, the supply is considered relatively inelastic (price elasticity of supply < 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 percentage change in quantity supplied due to percentage change in price is called __________.

  1. elasticity of supply

  2. law of supply

  3. supply curve

  4. elasticity of demand
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Elasticity of supply measures the responsiveness of the quantity supplied to a change in price. It is defined as the percentage change in quantity supplied divided 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
Supply is more elastic in case of ______________.

  1. very short period

  2. short period

  3. long period

  4. both (b) and (c)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In the long run, producers have more time to adjust their production processes, acquire new resources, or enter/exit the market, making supply more elastic. In the short run, production capacity is often fixed.

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 15% increase in price of the commodity causes 10% increase in the quantity supplied, then elasticity of supply is _____________.

  1. elastic

  2. inelastic

  3. perfectly elastic

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

Elasticity of supply = (% change in quantity supplied) / (% change in price). Here, 10% / 15% = 0.67. Since the value is less than 1, the supply is considered inelastic.

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

Write True or False with a reason.
Price elasticity of supply measures the change in quantity supplied in response to a change in own price of the commodity.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. Price elasticity of supply$=\cfrac { Percentage\quad change\quad in\quad quantity\quad supplied }{ Percentage\quad change\quad in\quad 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

CRR refers to the share of_____________ that rural banks have to maintain with RBI of their net demand and time liabilities?

  1. Liquid cash

  2. Gold

  3. Forex reserves

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

Cash Reserve Ratio (CRR) is the portion of deposits that banks must hold as liquid cash with the Reserve Bank of India. It is a tool used to control liquidity in the banking system.

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 Cross Price Elasticity of demand between two goods is zero then those goods are called?

  1. Independent goods

  2. Luxury goods

  3. Substitute goods

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

When the cross price elasticity of demand is zero, a change in the price of one good has no effect on the quantity demanded of the other. This indicates that the goods are unrelated or independent.

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

Rent will be produced at that time when ________.

  1. entire land is fertile

  2. elasticity of supply of land is perfectly elastic

  3. land is mobile

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

Rent on land will be produced only when different types of lands are differently fertile. At the same time, the supply of land should be elastic and not perfectly 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

Land is the only factor of production whose supply is _____.

  1. more elastic

  2. perfectly elastic

  3. perfectly inelastic

  4. unitary elastic
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A perfectly inelastic supply curve is a vertical line at a given quantity, which shows a constant supply regardless of price. Land becomes one such factor of production.