#1
What does the law of supply state?
As the price of a good increases, the quantity supplied increases.
ExplanationPrice and quantity supplied have a direct relationship.
#2
Which of the following factors does NOT influence supply?
Consumer preferences
ExplanationSupply is not influenced by consumer preferences.
#3
What happens to the supply curve if there is an improvement in production technology?
It shifts to the right.
ExplanationMore efficient technology increases supply.
#4
What does the term 'market equilibrium' refer to?
A situation where quantity demanded equals quantity supplied.
ExplanationSupply matches demand; no surplus or shortage.
#5
What is the slope of the supply curve?
Positive
ExplanationSupply curve slopes upward from left to right.
#6
What is the primary goal of a firm in a competitive market?
Maximizing profit
ExplanationFirms aim to earn the highest possible profit.
#7
What is the formula for calculating total revenue?
Total Revenue = Price × Quantity Demanded
ExplanationIncome generated from sales of goods.
#8
What is the difference between a movement along the supply curve and a shift in the supply curve?
A movement occurs due to a change in price, while a shift occurs due to a change in factors other than price.
ExplanationMovement: Price change; Shift: Non-price factors change.
#9
What is the concept of elasticity of supply?
It measures the responsiveness of quantity supplied to changes in price.
ExplanationHow much quantity supplied changes with price changes.
#10
What is the main determinant of the price elasticity of supply?
The time period under consideration
ExplanationLonger periods allow for greater adjustments in supply.
#11
Which of the following is a determinant of market supply but not individual supply?
Number of firms in the market
ExplanationMarket supply is affected by the total number of firms.
#12
What is the difference between a change in supply and a change in quantity supplied?
A change in supply is caused by a change in other factors, while a change in quantity supplied is caused by a change in price.
ExplanationSupply change: Factors change; Quantity supplied change: Price change.
#13
What does the concept of producer surplus represent?
The difference between the minimum price a producer is willing to accept and the market price.
ExplanationProfit gained by producers above their minimum acceptable price.
#14
Which of the following is a characteristic of a market in long-run equilibrium?
Economic profits are zero.
ExplanationMarket is in balance; no firms are making extra profit.
#15
Which of the following is an example of a perfectly elastic supply?
Labor in a perfectly competitive market
ExplanationQuantity supplied is infinitely responsive to price changes.
#16
What is the relationship between price and quantity supplied in a perfectly inelastic supply?
Neither price nor quantity supplied changes.
ExplanationSupply quantity remains constant regardless of price changes.