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 3 of 3 pages

Question 21. The total cost of production at different output levels for a firm are tabulated below. What is the profit-maximizing level of output at a market price of Rs 10?

\begin{matrix} Q & T C (R s) 1 & 15 2 & 22 3 & 27 4 & 31 5 & 38 6 & 49 7 & 63 \end{matrix}

Discuss Question

Answer: Option C. -> 5
:
C
Let us add the MC column to the table

\begin{matrix} Q & T C (R s) & M C (R s) 1 & 15 & 15 2 & 22 & 7 3 & 27 & 5 4 & 31 & 4 5 & 38 & 7 6 & 49 & 11 7 & 63 & 14 \end{matrix}

At an output level of 5, MC =7 < P=10
At an output level of 6, MC =11 > P=10
Hence, the profit is maximum at an output level of 5 because the 6th unit will incur a loss.

Question 22. There are three sellers A, B and C in a market. Their supply curves are given by the following equations.

q_{A} = 5 p - 30, p \geq 8 q_{B} = 2 p + 20, p \geq 10 q_{C} = 3 p + 10, p \geq 15

What is the total quantity supplied at a market price of Rs 10?

Discuss Question

Answer: Option B. -> 60
:
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 = q_{A} + q_{B} \Rightarrow q = 7 p - 10

At p=10, the quantity supplied is 60 units.

Question 23. The individual supply curves of two firms are

q_{1} = p - 2, p \geq 3 q_{2} = \frac{1}{2} (p - 3), p \geq 4

The market supply curve is given by

q=0, p
q=p−2, 3≤p
q=32p−4, p≥5
All of these

Discuss Question

Answer: Option D. -> All of these
:
D
The individual supply curves of the two firms are

q_{1} = p - 2, p \geq 3 q_{2} = \frac{1}{2} (p - 4), p \geq 5

p < 3 \Rightarrow q = 0 3 \leq p < 5 \Rightarrow q = q_{1} p \geq 5 \Rightarrow q = q_{1} + q_{2}

All options are correct.

Question 24. Study the supply curve given in the figure.

Study The Supply Curve Given In The Figure.If The Market Pri...

If the market price is $8, what is the quantity supplied?

Discuss Question

Answer: Option D. -> 40
:
D
From the supply curve, it can be seen that corresponding to a price of $8, the quantity supplied is 40 units.

Question 25. The supply curve is upward sloping because __________.

costs increase when the price increases
quantity demanded decreases when price increases
As the price increases, suppliers can justify producing at higher marginal costs
All of the above

Discuss Question

Answer: Option C. -> As the price increases, suppliers can justify producing at higher marginal costs
:
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 26. A 10% increase in the price of a good causes a 10% decrease in quantity supplied. The supply curve is a _______.