CBSE Class 12 Economics Producers Behaviour And Supply To Economics Assignment

Question. The supply of a commodity implies
a) actual product of a good
b) stock available for sale
c) total existing stock of the good
d) the amount of goods offered for sale at a different prices, per unit of time

Answer. D

Question. A firm will supply more quantity of a commodity at same price or even at a reduced price, if the firm wants to
a) maximise profit
b) maximise social welfare
c) maximise sales
d) maximise wealth

Answer. C

Question. Supply of a commodity is …… concept.
a) stock
b) flow
c) Both (a) and (b)
d) wholesale

Answer. B

Question. The claim that other things being equal, the quantity supplied of a good rises when the price of good rises and vice-versa is known as
a) Law of Economics
b) Law of Supply
c) Law of Demand
d) All of these

Answer. B

Question. The functional relationship between supply of a commodity and its various determinants is known as
a) supply function
b) change in supply
c) change in quantity supplied
d) None of the above

Answer. A

Question. Which of the following shows relationship between the price of a commodity and quantity supplied graphically?
a) Supply statement
b) Supply schedule
c) Supply curve
d) All of these

Answer. C

Question. The supply curve is usually
a) upward rising
b) downward sloping
c) nothing definite can be said
d) None of the above

Answer. A

Question. When supply curve shifts to the right, there is ...... in supply.
a) an increase
b) expansion
c) contraction
d) decrease

Answer. A

Question. Supply schedule shows ...... relationship between price and quantity supplied of a commodity.
a) positive
b) inverse
c) negative
d) opposite

Answer. A

Question. Increase or decrease in supply means
a) change in supply due to change in its own price.
b) change in supply due to change in factors other than its own price.
c) Both (a) and (b)
d) None of the above

Answer. B

Question. Contraction of supply curve means
a) upward movement along the supply curve
b) downward movement along the supply curve
c) rightward shift in supply curve
d) leftward shift in supply curve

Answer. B

Question. A supply curve will shift leftward due to
a) increase in supply
b) increase in quantity supplied
c) decrease in supply
d) decrease in quantity supplied

Answer. C

Question. Relation between price of a good and its amount of good is known as
a) Supply
b) Quantity supplied
c) Stock
d) None of these

Answer. B

Question. As the cost of production increases, supply of a good
a) Increases
b) Decreases
c) Remains constant
d) None of these

Answer. B

Question. Consider the following supply schedule.

It is called
a) decrease in supply
b) decrease in quantity supplied
c) decrease in demand
d) All of the above

Answer. A

Question. The supply of a good refers to
a) Actual production of goods
b) Total stock of goods
c) Stock available for sale
d) Amount of goods offered for sale at a particular price per unit time

Answer. D

Question. Consider the following supply schedule 

This refers to
a) expansion in supply
b) contraction in supply
c) increase in supply
d) Both (b) and (c)

Answer. A

Question. Expansion in supply refers to a situation when the producers are willing to supply a
a) larger quantity of the commodity at an increased price.
b) larger quantity of the commodity due to increased taxation on that commodity.
c) larger quantity of the commodity at the same price.
d) larger quantity of the commodity at the decreased price.

Answer. A

Question. Supply of a good depends upon
(i) Willingness to sell
(ii) Ability to sell
(iii) Price of the good
(iv) Time period
Choose from the options below
a) (i) and (ii)
b) (iii) and (iv)
c) (i), (ii) and (iii)
d) (i), (ii), (iii) and (iv)

Answer. D

Question. Elastic supply curve starts from the
a) X-axis
b) Y-axis
c) Origin
d) None of these

Answer. B

Question. The variable which is measured over a point in time is known as ………… .
a) stock
b) supply
c) quantity supplied
d) None of these

Answer. A

Question. Which of the following is not a cause of decrease in supply?
a) Rise in price of substitute goods
b) Increase in price of complementary goods
c) Increase in taxes
d) Rise in price of labour (i.e. wages)

Answer. B

Question. Indian government is focusing on Make in India programme, which has led to significant improvement in technology. What will be its impact on supply of goods concerned?
a) Increases
b) Decreases
c) No impact
d) Both (a) and (b)

Answer. A

Question. An increase in customers’ income will have following impact on supply curve
a) Lead to movement along supply curve
b) Lead to shift in supply curve
c) Lead to movement and shift along supply curve
d) No impact on the supply curve

Answer. D

Question. If a firm’s supply increases due to application of improved technology, this is known as
a) expansion in supply
b) contraction in supply
c) increase in supply
d) increase in quantity supplied

Answer. C

Question. When supply price increase in the short run, the profit of the producer ……… .
a) increases
b) decreases
c) remains constant
d) it may increase or decrease

Answer. D

Question. Due to 10% fall in price of Good X, quantity demanded falls by 15%. Elasticity of supply is
a) Elastic
b) Inelastic
c) Unitary elastic
d) None of the above

Answer. A

Question. Unitary elastic supply curve starts from the
a) X-axis
b) Y-axis
c) Origin
d) None of these

Answer. C

Question. As you are aware of recent outbreak of Covid-19, which has a led to lockdown in many countries around the globe. In extension of this, government has stopped imports in India from various countries. How it will impact supply of a good concerned?
a) Expansion in quantity supply
b) Contraction in quantity supply
c) Increase in supply
d) Decrease in supply

Answer. D

Question. The following are causes of shift in supply EXCEPT the one
a) Change in government policy
b) Change in cost of production
c) Change in own price of the good
d) Change in expectation about future price

Answer. C

Question. If the goal of the producer changes from profit maximisation to sales maximisation, supply will
a) increase
b) decrease
c) remains constant
d) downward movement along supply curve

Answer. A

Question. Increase in price of the good leads to ……… in total revenue.
a) increase
b) decrease
c) no change
d) either increase or decrease

Answer. D

Question. When supply is perfectly inelastic, Elasticity of Supply is equal to
a) – 1
b) zero
c) 1
d) infinity

Answer. B

Question. Recently government of India increase excise duty on import of gold. It will lead to ……… in supply.
a) increase
b) decrease
c) no change in supply
d) either increase or decrease

Answer. B

Question. When the price of a good rises from Rs 20 per unit to Rs 30 per unit, the revenue of the firm producing this good rises from Rs 100 to Rs 300. Calculate Price Elasticity of Supply.
a) 0
b) 1
c) 2
d) −1

Answer. C

Question. During year 2019-20, world recession led to fall in income levels drastically. Automobile market in India faced a major setback due to fall in demand. To deal with these, Automobile companies offered huge discounts to attract buyers. This is an example of
a) Expansion in quantity supplied
b) Contraction in quantity supplied
c) Increase in supply
d) Decrease in supply

Answer. C

Question. Elasticity of Supply is defined as a measure of the responsiveness of quantity supplied of a good to change in
a) price of concerned good
b) price of substitute good
c) demand
d) None of these

Answer. A

Question. Total Revenue is Rs 400 when the price of the commodity is Rs 2 per unit. When price rises to Rs 3 per unit, the quantity supplied is 300 units. Calculate the Price Elasticity of Supply?
a) 0
b) – 1
c) 1
d) ¥

Answer. C

Question. A firm supplies 500 units of a good at a price of Rs 5 per unit. The Price Elasticity of Supply of a good is 2. At what price will the firm supply 700 units?
a) Rs 5
b) Rs 1
c) Rs 6
d) Rs 4

Answer. C

Question. Why is AC curve in the short run U-shaped?
Answer. AC curve is U-shaped in short run due to operation of law of returns to factors (i.e., law of variable proportion). Initially production is subject to law of increasing returns (i.e. decreasing cost), then law of constant return (i.e. constant cost) and ultimately to law of diminishing return (i.e. increasing cost). As output is increased, AC first falls, reaches its minimum and then rises. Hence, AC curves become Ushaped.

Question. How do changes in MR affect TR?
Answer. 1. If MR increases, TR increases at increasing rate.
2. If MR is constant, TR increases at constant rate.
3. If MR falls, TR increases at diminishing rate.

Question. What is MR? How is it related to AR?
Answer. MR refers to the change in TR due to sale of an additional unit.
Relation –
1. If AR (Price) is constant, MR = AR
2. If AR (Price) falls, MR < AR.
3. If AR (Price) rises, MR > AR.

Question. What will be the price elasticity of supply if the supply curve is a positively sloped straight line?
Answer. Es = 1 if the curve starts from the origin point.
Es>1 if the curve starts from the y-axis and E<1 if the curve starts from the x-axis.

Question. Define marginal revenue. State the relation between marginal revenue and average revenue when a firm:
(i) is able to sell more quantity of output at the same price.
(ii) is able to sell more quantity of output only by lowering the price.
Answer. Marginal revenue is the addition to total revenue from producing one more unit of output.
1. MR = AR at all levels of the output. (In case of perfect competitive market)
2. MR will be less than AR at all levels of the output. (In case of monopoly and monopolistic market)

Question. Explain how do the following determine price elasticity of supply:
(i) Nature of the good (ii) Time period.
Answer. 1. Nature of Commodity - Elasticity of industrial goods is more than that of agricultural goods. Similarly supply of durable goods e.g. table is more elastic than that of perishable goods e.g. vegetables.
2. Time Period- Generally elasticity of supply is more in the long period than in shorter period of time. The reason is that in the long period, all adjustments to the changed price can be made easily and supply of commodity can be varied accordingly.

Question. Draw average cost, average variable cost and marginal cost curves on a single diagram and explain their relations.

Answer.

Relation of AC, AVC and MC

1. MC intersects to AC and AVC at their minimum level

2. AC and AVC decreases before the intersection by MC, but remain greater than MC.

3. AC and AVC starts to increase after the intersection by MC, and becomes less than MC.

4. As output increases, AC and AVC tends to be closer but the difference between AC and AVC can never be zero.

 

Question. With the help of example distinguish between total fixed cost and total variable cost.

Answer. 

 

Question. Explain the likely behaviour of total product under the stage of increasing return to a factor with the help of numerical example.

Answer. Increasing return to a factor is the first phase of the Law of return to a factor. When more and more units of a variable factor is combined with fixed factor up to a certain level total physical product increases with increasing rate.