The Supply Curve(11th Grade > Economics - 1 ) Questions and answers for exam Preparation

11th Grade > Economics - 1

THE SUPPLY CURVE MCQs

Total Questions : 26 | Page 2 of 3 pages

Question 11. Study the supply curve given below and answer the following question.

If the quantity supplied increases from 10 to 20, the total revenue ________.

increases by $20
increases by $40
increases by $60
increases by $80

Discuss Question

Answer: Option C. -> increases by $60
:
C

C a s e i : q = 10, p = 2, T R = $ 20 C a s e i i : q = 20; p = 4, T R = $ 80

Total revenue increases by $60

Question 12. The supply curve of a firm is given by the equation

q = 250 p - 250

. If the price decreases by 2 units, ______

quantity increases by 250
quantity decreases by 250
quantity increases by 500
quantity decreases by 500

Discuss Question

Answer: Option D. -> quantity decreases by 500
:
D
Initially, let the price be

p_{1}

Q u a n t i t y, q_{1} = 250 p_{1} - 250

At a price of

p_{1} - 2

Q u a n t i t y, q_{2} = 250 (p_{1} - 2) - 250 q_{2} = (250 p_{1} - 250) - 500 q_{2} = q_{1} - 500

Quantity reduces by 500 units

Question 13. There are 20 identical firms in a market. At a price of Rs 20, firm 1 supplies 25 units of a good, What is the total supply at that price?

Discuss Question

Answer: Option D. -> 500
:
D
Since the firms are identical, we can assume that their supply curves are identical. Hence, each firm would supply 25 units.

∴ Q_{s} = 20 \times 25 = 500

Question 14. Study the supply curve given below and answer the following question.

If the market price is $4, the producer surplus is ________.

Discuss Question

Answer: Option C. -> $16
:
C
Producer surplus,

Π

is the area above the supply curve and below the price.

Π = \frac{1}{2} \times 8 \times 4 = $ 16

Question 15. A rise in the cost of inputs of production will shift the supply curve to the right. State true or false.

True
False
unitary elastic
none of these

Discuss Question

Answer: Option B. -> False
:
B
A rise in the cost of inputs of production will shift the supply curve to the left as the higher input costs correspond to a lower profit maximising quantity.

Question 16. The price of a good changes from Rs 20 to Rs 25. As a result, the quantity supplied changes from 500 units to 1000 units. Calculate the price elasticity of supply.

Discuss Question

Answer: Option C. -> 4
:
C
Price changes from Rs 20 to Rs 25 and qunatitysupplied changes from 500 to 1000.

ϵ_{s} = \frac{q_{1} - q_{0}}{p_{1} - p_{0}} \times \frac{p_{0}}{q_{0}} ϵ_{s} = \frac{1000 - 500}{25 - 20} \times \frac{20}{500} ϵ_{s} = \frac{500 \times 20}{500 \times 5} = 4

Question 17. Study the supply curve given below and answer the following question.

For the supplier, when the marginal cost of producing a unit is $2, his profit is maximized. What quantity would he supply?

Discuss Question

Answer: Option B. -> 4
:
B
Profit maximization occurs when MC = P. Since his profit maximization occurs at a marginal cost of

$

2, the market price is also $2. At this price, he would supply 4 units.

Question 18. For a good, price increases by 25% and quantity supplied increases by 50%. What is the supply elasticity?

Discuss Question

Answer: Option C. -> 2
:
C

ϵ_{s} = \frac{% change in quantity}{% change in price} = \frac{50}{25} = 2

Question 19. Which of the following can be the equation of the supply curve?

q=2p
pq+p+2q=0
3q+0.5p=8
q−0.4p+2=0

Discuss Question

Answer: Option D. -> q−0.4p+2=0
:
D
The supply curve is upward sloping. Among the given options, only q - 0.4p+ 2=0 has a positive slope.

Question 20. If the cost of a computer component falls, _________

the demand curve for computers shift to the right
the demand curve for computers shift to the left
the supply curve for computers shift to the right
the supply curve for computers shift to the left

Discuss Question

Answer: Option C. -> the supply curve for computers shift to the right
:
C
If the cost of a computer component falls, the supply curve will shift to the right due to the reduced costs of production.