Basics of General Economics - Supply Analysis and Equilibrium Price
Exam Duration: 45 Mins Total Questions : 30
The Supply of a product refers to
- (a)
Actual production of the product
- (b)
Total existing stock of the product
- (c)
Stock available for sale
- (d)
Amount of the product offered for sale at a particular price per unit of time
Supply of a Commodity is a
- (a)
Stock Concept
- (b)
Flow Concept
- (c)
Both Stock and Flow Concept
- (d)
None of these
______is the total volume of the commodity which can be brought into the market for sale at a short notice.
- (a)
Demand
- (b)
Supply
- (c)
Stock
- (d)
Sales
Stock is potential supply
- (a)
True
- (b)
False
- (c)
Partially True
- (d)
None of the above
Prices of Related Commodities are not a determinant of supply of a particular commodity. This statement is
- (a)
True
- (b)
False
- (c)
Partially True
- (d)
None of the above
Supply of a Product decreases when the prices of other related goods increase. This is because
- (a)
Customers start demanding more of other goods
- (b)
Those goods become relatively more profitable to the Firm to produce and sell
- (c)
Customers preferences and tastes will change
- (d)
Producing Firms' profit motive changes
Other things being equal, the supply quantity of a product is_____related to price of related goods
- (a)
Directly
- (b)
Inversely
- (c)
Proportionally
- (d)
Not at all
Which of the following is the determinant in the Law of Supply?
- (a)
Technology
- (b)
Price of related goods
- (c)
Price of the product
- (d)
None of these
As per Law of Supply, other things being equal,if the Price of a Commodity decreases, its Supply Quantity will
- (a)
Increase
- (b)
Decrease
- (c)
Remain Constant
- (d)
Become Zero
_______shows the quantity of products a producer or seller wishes to sell at a given price level
- (a)
Average Product Curve
- (b)
Supply Curve
- (c)
Marginal Product Curve
- (d)
Total Product Curve
Generally, the Supply Curve
- (a)
Slopes downwards from left to right
- (b)
Slopes upwards from right to left
- (c)
Slopes upwards from left to right
- (d)
Nothing can be said
Typically, the Supply Curve
- (a)
Slopes upward
- (b)
Slopes downward
- (c)
Is horizontally straight
- (d)
Is vertically straight
Change in Quantity Supplied causes
- (a)
a movement on the same Supply Curve
- (b)
shift of the Supply Curve
- (c)
Both (a) and (b)
- (d)
Neither (a) nor (b)
An Increase in the Supply of a product is caused by
- (a)
Inventions and Innovations on this commodity
- (b)
Reduction in Cost of Production of this Commodity
- (c)
Reduction in the price of Related Commodities
- (d)
AIl of these
Use the following diagram to answer the question
Movement from S0 to S2 is called
- (a)
Contraction of Supply
- (b)
Expansion of Supply
- (c)
Decrease in Supply
- (d)
Increase in Supply
Use the following diagram to answer the question
Technology or fashion change, making the commodity outdated, will lead to
- (a)
Movement from S0 to S1
- (b)
Movement from S0 to S2
- (c)
Movement on S0 itself
- (d)
No change at all
Given the Market Demand, the burden of specific tax that will be borne by the Consumer (Buyer) depends on the
- (a)
Price Elasticity of Supply
- (b)
Price Elasticity of Demand
- (c)
Consumer's Ability
- (d)
Type of the Product
If Price is Rs.15, quantity supplied is 150 units. If Price is Rs.25, quantity supplied is 300 units. Compute Price Elasticity of Supply using Arc Method.
- (a)
-1.09
- (b)
+1.09
- (c)
-0.98
- (d)
+0.98
If \(\triangle\)q = Change in Quantity Supplied, \(\triangle\)p = Change in Price, when Supply is relatively elastic, it means
- (a)
\(\triangle\)q=Zero
- (b)
\(\triangle\)q>\(\triangle\)p
- (c)
\(\triangle\)q<\(\triangle\)p
- (d)
\(\triangle\)p=Zero
Generally, the Demand Curve
- (a)
Is positively sloped
- (b)
Is negatively sloped
- (c)
Has both positive and negative slopes
- (d)
Does not have a slope at all
Generally, the Supply Curve
- (a)
Is negatively sloped
- (b)
Is positively sloped
- (c)
Has both positive and negative slopes
- (d)
Does not have a slope at all
In the table below what will be Equilibrium Price?
Price (in Rs) | Demand Qty | Supply Qty |
1 | 1000 | 400 |
2 | 900 | 500 |
3 | 800 | 600 |
4 | 700 | 700 |
5 | 600 | 800 |
6 | 500 | 900 |
7 | 400 | 1000 |
8 | 300 | 1100 |
- (a)
Rs.2
- (b)
Rs.3
- (c)
Rs.4
- (d)
Rs.5
Other things being equal, as Demand increases, Equilibrium Price
- (a)
decreases
- (b)
increases
- (c)
does not change at all
- (d)
cannot be commented upon
Other things being equal, as Demand increases, Quantity at the Equilibrium Price level
- (a)
increases
- (b)
decreases
- (c)
does not change at all
- (d)
cannot be commented upon
Other things being equal, as Supply decreases, Equilibrium Price
- (a)
Decreases
- (b)
Increases
- (c)
Does not change at all
- (d)
Cannot be commented upon
Other things being equal, as Supply decreases Equilibrium Price and Quantity both increase
- (a)
Equilibrium Price and Quantity both decrease
- (b)
Equilibrium Price increases and Quantity decreases
- (c)
Equilibrium Price decreases and Quantity increases
- (d)
None of the above
If increase in demand is greater than the increase in supply, then the Equilibrium Price
- (a)
Decreases
- (b)
Increases
- (c)
Does not change at all
- (d)
Cannot be commented upon
If decrease in demand is equal to the decrease in supply, then the Equilibrium Price
- (a)
Decreases
- (b)
Increases
- (c)
Does not change at all
- (d)
Cannot be commented upon
If a fisherman must sell all of his daily catch before it spoils for whatever price he is offered once the fish are caught. The Fisherman's Price Elasticity of Supply for fresh fish is
- (a)
Zero
- (b)
Infinity
- (c)
One
- (d)
cannot be determined
The question are based on the demand and supply diagrams below. S1 and D1 are the original demand and supply curves. D 2 , D 3 , S 2 and S3 are possible new demand and supply curves. Starting from initial equilibrium point (1) what point on the graph is most likely to result from each change?
The market of computers is not in equilibrium, then which of the following statements is definitely true?
- (a)
The prices of computer will rise
- (b)
The prices of computer will fall
- (c)
The prices of computers will change, but not enough information is given to determine the direction of the change
- (d)
None of the above