Lakshya Education MCQs

Question: Study the supply curve given in the figure.



If the market price is $8, what is the quantity supplied?
Options:
A.10
B.20
C.30
D.40
Answer: Option D
: D

From the supply curve, it can be seen that corresponding to a price of $8, the quantity supplied is 40 units.

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More Questions on This Topic :

Question 1. The supply curve is upward sloping because __________.
  1.    costs increase when the price increases
  2.    quantity demanded decreases when price increases
  3.    As the price increases, suppliers can justify producing at higher marginal costs
  4.    All of the above
Answer: Option C
: C

The supply curve is upward sloping because as price increases, suppliers can justify producing at higher marginal costs as long as MC < P.
Question 2. A 10% increase in the price of a good causes a 10% decrease in quantity supplied. The supply curve is a _______.
  1.    straight line passing through the origin
  2.    straight line not passing through the origin
  3.    straight line parallel to the x-axis
  4.    rectangular hyperbola
Answer: Option A
: A

ϵs=% change in quantity% change in price=1010=1

Unit elastic supply curves are straightlines passing through the origin.
Question 3. The individual supply curves of two firms are

q1=p2, p3q2=12(p3), p4

The market supply curve is given by
  1.    q=0, p
  2.    q=p−2, 3≤p
  3.    q=32p−4, p≥5
  4.    All of these
Answer: Option D
: D

The individual supply curves of the two firms are
q1=p2,p3q2=12(p4),p5

p<3q=03p<5q=q1p5q=q1+q2 All options are correct.
Question 4. There are three sellers A, B and C in a market. Their supply curves are given by the following equations.

qA=5p30, p8qB=2p+20, p10qC=3p+10, p15

What is the total quantity supplied at a market price of Rs 10?
  1.    20
  2.    60
  3.    80
  4.    100
Answer: Option B
: B

Note that the supply curve of C starts only above a price level of 15. Hence, at a price of Rs 10, only the supply curves of B and C are relevant. q=qA+qBq=7p10 At p=10, the quantity supplied is 60 units.
Question 5. The costs (LRAC) and prices (P) for four firms are given in the options below. Which of these cannot lie on the long-run supply curve of a firm?
  1.    LRAC = Rs 20, P = Rs 20
  2.    LRAC = Rs 25, P = Rs 20
  3.    LRAC = Rs 20, P = Rs 25
  4.    LRAC = Rs 25, P = Rs 25
Answer: Option B
: B

A firm does not supply when the market price is less than the averagecost. For option B, P < LRAC.

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