Tag: law of supply and 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

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.

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 of durable goods is usually _____________.

  1. more elastic

  2. less elastic

  3. perfectly elastic

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

Durable goods can be stored over time, allowing producers to adjust their supply more easily in response to price changes compared to perishable goods. Thus, their supply is generally more 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
If ${E} _{s}=0.6$, and the percentage change in price $=5$, then percentage change in quantity supplied is ______.
  1. $8.33$
  2. $4.4$
  3. $5.6$
  4. $3$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Elasticity of supply = (Percentage change in quantity) / (Percentage change in price). Given Es = 0.6 and % change in price = 5, then % change in quantity = 0.6 * 5 = 3.