Test: Theory of Supply - Class 10 MCQ

According to the law of supply, as the price of a good increases, the quantity supplied also increases, reflecting the incentive for producers to maximize profits in response to higher prices.

Contraction refers to a decrease in the quantity supplied that occurs when the price of a good decreases, leading to a movement leftward along the supply curve.

A supply schedule is a table that illustrates the positive relationship between the price of a commodity and the quantity supplied. It helps visualize how supply changes with varying prices.

When producers shift their focus to producing substitute goods for higher profits, the supply of the original commodity decreases as resources are reallocated.

Heavy taxes imposed on production can increase production costs, which may lead producers to reduce the quantity supplied at the current price level as their profit margins decrease.

An upward sloping supply curve represents the concept that as prices increase, the quantity supplied also increases, illustrating the direct relationship between price and the willingness to supply.

A change in quantity supplied refers to movements along a specific supply curve due to price changes, while a change in supply involves a shift of the entire supply curve due to factors other than price.

An increase in the price of input materials can lead to a decrease in supply because higher production costs can limit the quantity that producers are willing to supply at existing price levels.

Perfectly elastic supply is often associated with homogeneous products, where even a tiny change in price can lead to an infinite change in quantity supplied due to the ease of substitutability.

A decrease in production costs typically leads to an increase in supply at all price levels, resulting in the supply curve shifting to the right.

While factors such as the price of the product, prices of production inputs, and technological advancements directly affect supply, consumer preferences are more related to demand than supply.

Supply refers specifically to the quantity of a commodity that producers are willing to sell to consumers within a given time period. It is about the willingness to sell rather than the actual sales that occur.

Market period supply refers to a situation where the supply of a commodity cannot be altered at all, even if prices increase, due to the immediate time constraints. This concept is essential in understanding short-term market behavior.

Relatively elastic supply means that the percentage change in quantity supplied is greater than the percentage change in price, indicating a high responsiveness of supply to price changes.

A decrease in supply is represented by a leftward shift of the entire supply curve, indicating that less quantity is supplied at all price levels.

The ceteris paribus assumption is crucial in supply analysis as it allows for the examination of the relationship between price and quantity supplied while holding other influencing factors constant.

The law of diminishing marginal productivity states that as more units of a variable factor are employed, the additional output produced from each unit will eventually decrease, leading to increased production costs. This understanding helps producers make informed decisions about resource allocation.

The elasticity of supply tends to be more inelastic in the short run because producers may not have enough time to adjust their production levels in response to price changes.

The law of supply indicates that, all else being equal, when the price of a good rises, the quantity supplied of that good also increases, reflecting a direct relationship between price and supply.

A perfectly inelastic supply curve indicates that the quantity supplied remains constant regardless of price changes, suggesting that suppliers cannot adjust their output in response to price fluctuations.