Tag: theory of supply

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Questions Related to theory of 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

Which of these does not affect elasticity of supply?

  1. Size of population

  2. Disposal income of consumer

  3. Consumers taste and preference

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Factors like population size, disposable income, and consumer preferences affect the demand side, not the supply side elasticity.

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

A supply curve passing through the origin will have elasticity _______.

  1. less than 1

  2. more than 1

  3. just one

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

A linear supply curve passing through the origin has a constant elasticity of 1 (unitary elastic) because the percentage change in quantity is always equal 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

Which of these will have highly inelastic supply curve ___________.

  1. perishable goods

  2. consumer durable goods

  3. items of elite class consumption

  4. all of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Perishable goods have highly inelastic supply because they cannot be stored for long periods, so producers must sell them regardless of price changes.

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

Very short period is the market condition where the supply remains perfectly ___________.

  1. elastic

  2. inelastic

  3. unity elastic

  4. elasticity less than 1
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the very short period, producers cannot adjust their production levels to price changes because time is insufficient to change inputs. Therefore, the quantity supplied remains fixed regardless of price, making supply perfectly 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

Very short period is the market condition where the supply remain perfectly____.

  1. elastic

  2. inelastic

  3. unity elastic
  4. elasticity is less than $1$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This appears to be a duplicate or near-duplicate of question 485797. In the very short period or market period, supply remains perfectly inelastic because producers have no time to adjust production. The goods available for sale are fixed, and new production cannot occur instantaneously regardless of price changes.

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

A dealer of air-conditioners is prepared to supply 1000 pieces of AC if the price is Rs. 20,000 per piece however he is prepared to supply 1200 pieces if the price is Rs. 24,000 per piece. What is the price elasticity of supply of AC?

  1. 0.5

  2. 1

  3. 0.75

  4. 1.25
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Elasticity = (% change in Q) / (% change in P). % change in Q = (200/1000) = 0.2. % change in P = (4000/20000) = 0.2. Elasticity = 0.2 / 0.2 = 1.