20 + Interview Questions in SUPPLY-AND-PRICE-ELASTICITY-OF-SUPPLY IN GENERAL AWARENESS Page 1 InterviewSolution

1.	A statement about supply of a good includes information on :A. QuantityB. PriceC. Period of timeD. All of above
Answer» Correct Answer - D

Discussion

2.	Explain any three factors determining supply of a good.
Answer» Price:Refers to the main factor that influences the supply of a product to a greater extent. Unlike demand, there is a direct relationship between the price of a product and its supply. If the price of a product increases, then the supply of the product also increases and vice versa. Change in supply with respect to the change in price is termed as the variation in supply of a product. Factor Prices and their Availability:Act as one of the major determinant of supply. The inputs, such as raw material, equipment, and machines, required at the time of production are termed as factors. If the factors are available in sufficient quantity and at lower price, then there would be increase in production.This would increase the supply of a product in the market. Technology:Refers to one of the important determinant of supply. A better and advanced technology increases the production of a product, which results in the increase in the supply of the product. For example, the production of fertilizers and good quality seeds increases the production of crops. This further increase the supply of food grains in the market.

Discussion

3.	Define supply and state the assumptions behind this defination.
Answer» Supply refers to the quantity of a good, which a producer is willing to bring to the market at a particular price during a period of time. Assumption :- Other factors affecting the supply of the commodity other than the price of the good remain constant.

Discussion

4.	Explain any two factors determining supply.
Answer» Technology:Refers to one of the important determinant of supply. A better and advanced technology increases the production of a product, which results in the increase in the supply of the product. For example, the production of fertilizers and good quality seeds increases the production of crops. This further increase the supply of food grains in the market. Factor Prices and their Availability:Act as one of the major determinant of supply. The inputs, such as raw material man, equipment, and machines, required at the time of production are termed as factors. If the factors are available in sufficient quantity and at lower price, then there would be increase in production.This would increase the supply of a product in the market.

Discussion

5.	State the law of supply ?
Answer» The law of supply statesthat there is a positive relationship between price and quantity supplied of a commodity assuming all the other factors constant.

Discussion

6.	What causes a downward movement along the supply of a commodity ?
Answer» An increase in price of the commodity leads to a downward movement along the supply curve.

Discussion

7.	Explain the meaning of price elasticity of supply.
Answer» Image result for Explain the meaning of price elasticity of supply.www.tutor2u.netThe price elasticity of supply (PES or Es) is a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price.

Discussion

8.	What causes a movement along the supply curve of a commodity ?
Answer» A change in price of the commodity leads to a movement along the same supply curve.

Discussion

9.	"Change in supply" of a good can be caused by :A. Change in technologyB. Change in price of other goodsC. Change in government policy on productionD. All of above
Answer» Correct Answer - D

Discussion

10.	State any three causes of leftward shift of supply curve.
Answer» Three causes of leftward shift in supply curve are as follows:(i) Rise in the price of substitute goods.(ii) Rise in the price of factors of production.(iii) Outdated technology.

Discussion

11.	How does subsidy the supply of a good by a firm ? Explain.
Answer» Suppose the government gives subsidy on production of good. This raises the total revenue. Cost remaining unchanged, profit rise. This provides incentive to producer to supply more.

Discussion

12.	List any three determinants of supply of a commodity.
Answer» 1. Price of inputs. 2. Available technology. 3. Nature of goods.

Discussion

13.	Explain the meaning of market supply schedule.
Answer» The market supply schedule is a table that lists the quantity supplied for a good or service that suppliers throughout the whole economy are willing and able to supply at all possible prices.

Discussion

14.	What can government possibly do to promote pollution-free vehicles through the market ? Explain.
Answer» The government can provide subsidies on such vehicles. A subsidy reduces the price that the consumer pay for the commodity, hence increasing the demand for the good.

Discussion

15.	Price elasticity of supply of a good is 2. It shows that :A. When price falls by `1%` supply rises by `2%`.B. When supply falls by `1%` ,price rises by `2%`.C. When price rises by `1%`, supply rises by `2%`.D. When supply rises by `1%` , price rises by `2%`.
Answer» Correct Answer - C

Discussion

16.	Price elasticity of supply measure shows :A. Response of supply to change in priceB. Response of price to change in supplyC. The rate at which supply responds to one percent change in price.D. The rate at which price responds to one percent change in supply.
Answer» Correct Answer - C

Discussion

17.	Define market supply of a good. Give three causes of a rightward shift of supply curve.
Answer» Market supply is the total amount of a good that all the suppliers in the market are willing to supply at different prices of the commodity. 1. One of the reasons of such increase in quantity at the same price might be an increase in efficiency due to technological advancement of the supply side. For instance, with the development of trucks people have developed a technology to carry more products from one place to another. 2. The number of suppliers is another cause of such shift. To illustrate, let’s assume we have only one farmer’s field in the economy. The number of workers drastically change the capacity and efficiency of production in such system. One worker might collect 10 unit of food, while 10 might collect 100. 3. The cost of the inputs goes down, improving the amount of units the firms are able to produce.

Discussion

18.	Price elsticity of supply is 1.2 . Is its supply elastic or inelastic and why ?
Answer» Since the elasticity of supply is greater than one, the supply is elastic.

Discussion

19.	Define market supply .
Answer» The market supply is the total quantity of a good or service all producers are willing to provide at the prevailing set of relative prices during a defined period of time. The market supply is the sum of all individual producer supplies.

Discussion

20.	The price elasticity of supply of a commodity is 2. When its price falls from Rs. 10 to Rs. 8 per unit, its quantity supplied falls by 500 units . Calculate the quantity supplied at the reduced price.
Answer» `E_(s)=(P)/(Q)xx(DeltaQ)/(DeltaP),2=(10)/(Q)xx(-500)/(-2),4Q=5000,Q=1250` Supply at `Rs 8=Q+ DeltaQ=1250 +(-500)=750` units.

Discussion

Explore topic-wise InterviewSolutions in .

A statement about supply of a good includes information on :A. QuantityB. PriceC. Period of timeD. All of above

Explain any three factors determining supply of a good.

Define supply and state the assumptions behind this defination.

Explain any two factors determining supply.

State the law of supply ?

What causes a downward movement along the supply of a commodity ?

Explain the meaning of price elasticity of supply.

What causes a movement along the supply curve of a commodity ?

"Change in supply" of a good can be caused by :A. Change in technologyB. Change in price of other goodsC. Change in government policy on productionD. All of above

State any three causes of leftward shift of supply curve.

How does subsidy the supply of a good by a firm ? Explain.

List any three determinants of supply of a commodity.

Explain the meaning of market supply schedule.

What can government possibly do to promote pollution-free vehicles through the market ? Explain.

Price elasticity of supply of a good is 2. It shows that :A. When price falls by `1%` supply rises by `2%`.B. When supply falls by `1%` ,price rises by `2%`.C. When price rises by `1%`, supply rises by `2%`.D. When supply rises by `1%` , price rises by `2%`.

Price elasticity of supply measure shows :A. Response of supply to change in priceB. Response of price to change in supplyC. The rate at which supply responds to one percent change in price.D. The rate at which price responds to one percent change in supply.

Define market supply of a good. Give three causes of a rightward shift of supply curve.

Price elsticity of supply is 1.2 . Is its supply elastic or inelastic and why ?

Define market supply .

The price elasticity of supply of a commodity is 2. When its price falls from Rs. 10 to Rs. 8 per unit, its quantity supplied falls by 500 units . Calculate the quantity supplied at the reduced price.