Tag: economics

Questions Related to economics

If the quantity supplied exactly equal to the relative change in price than the elasticity of supply is?

  1. Less than one

  2. Greater than one

  3. One

  4. None of these


Correct Option: C
Explanation:

If $\Delta Q=\Delta P$ the $Es=1$(one).
So if the quantity supplied exactly equal to the relative change in price than the elasticity of supply is 1

If the percentage change in supply is less then the percentage change in price it is called.

  1. Unit elasticity of supply

  2. Perfectly elastic supply

  3. More elastic supply

  4. Inelastic supply


Correct Option: D
Explanation:

If $\%$ $\Delta$Q $<$ $\%$ $\Delta$P then there is less then one elastic supply i.e., $e < 1$.
Supply is price elastic when the percentage change in quantity supplied is greater than the percentage change in price, and supply is price inelastic when the percentage change in quantity supplied is less than the percentage change in price.

If the price of apples rises from $Rs. 30$ per kg to $Rs. 40$ per kg and the supply increases from $240\ kg$ to $300\ kg$, Elasticity of supply is _________.

  1. $.75$

  2. $.67$

  3. $(-).67$

  4. $(-).75$


Correct Option: A
Explanation:

$Es = \dfrac {\triangle q}{\triangle p} \times \dfrac {p}{q}$
$\triangle q = (300 - 240) = 60$
$\triangle p = (40 - 30) = 10$
$= \dfrac {60}{10}\times \dfrac {30}{240}$
$= .75$.

If the price of bananas rises from $Rs. 10$ per dozen to $Rs. 15$ per dozen and the supply increases from $100$ dozens to $125$ dozens. Elasticity of supply is ______________.

  1. $.50$

  2. $.65$

  3. $(-).50$

  4. $(-).65$


Correct Option: A
Explanation:

$E _{s} = \dfrac {\triangle q}{\triangle p}\times \dfrac {p}{q}$
$= \dfrac {25}{5}\times \dfrac {10}{100} = 0.5$.

When supply of a commodity remain same with change in price, this situation is called as _____________.

  1. elastic supply

  2. inelastic supply

  3. perfectly elastic supply

  4. perfectly inelastic supply


Correct Option: D

If supply of a commodity falls by $20$% due to decrease in price of the commodity by $10$%, then elasticity of supply will be _______.

  1. elastic

  2. unit elastic

  3. perfectly elastic

  4. none of the above


Correct Option: A
Explanation:

When change in supply is higher than the change in price of the commodity, the supply is elastic.

Elasticity of supply for a positively sloping supply curve that starts from price axis is ______.

  1. zero

  2. greater than one

  3. less than one

  4. equal to one


Correct Option: B

In case of perfectly elastic supply, the supply curve is _________.

  1. rising

  2. horizontal

  3. falling

  4. vertical


Correct Option: B

If elasticity of supply becomes negative, supply curve is _________.

  1. negatively sloping

  2. positively sloping

  3. horizontal

  4. vertical


Correct Option: A

When supply curve is upward sloping and originates from the starting point, elasticity is __________.

  1. infinity

  2. less than one

  3. zero

  4. one


Correct Option: D