Class 12 Exam > Class 12 Videos > THEORY OF SUPPLY - PART 1
THEORY OF SUPPLY - PART 1 Video Lecture - Class 12
FAQs on THEORY OF SUPPLY - PART 1 Video Lecture - Class 12
| 1. What is the theory of supply? |  |
Ans. The theory of supply is an economic concept that explains the relationship between the price of a good or service and the quantity supplied by producers. It states that as the price of a product increases, the quantity supplied by producers also increases, ceteris paribus (all other factors being constant). This is because higher prices incentivize producers to supply more of the product in order to maximize their profits.
| 2. What factors influence the supply of a product? | |
Ans. Several factors influence the supply of a product, including the price of inputs (such as raw materials and labor), technology, government regulations, and the number of producers in the market. For example, if the price of inputs increases, it becomes more expensive for producers to produce the product, leading to a decrease in supply. On the other hand, advancements in technology can lower production costs and increase supply.
| 3. Can the supply of a product be infinite? | |
Ans. No, the supply of a product cannot be infinite. Supply is limited by various factors such as available resources, production capacity, and the willingness of producers to supply the product at a given price. While supply can increase in response to higher prices or improvements in production efficiency, there will always be a limit to how much can be supplied.
| 4. What is the difference between a change in quantity supplied and a change in supply? | |
Ans. A change in quantity supplied refers to a movement along the supply curve in response to a change in price, ceteris paribus. It indicates a change in the quantity of a product supplied by producers at a specific price. On the other hand, a change in supply refers to a shift of the entire supply curve, caused by factors other than price. It indicates a change in the quantity of a product supplied at every price level.
| 5. How does the theory of supply relate to market equilibrium? | |
Ans. The theory of supply is closely related to market equilibrium. Market equilibrium occurs when the quantity demanded by consumers is equal to the quantity supplied by producers at a specific price. According to the theory of supply, if the price is too low, the quantity supplied will be less than the quantity demanded, leading to a shortage. Conversely, if the price is too high, the quantity supplied will exceed the quantity demanded, resulting in a surplus. Market equilibrium is achieved when the price reaches a level where the quantity supplied matches the quantity demanded.
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Nov 16, 2024 Last updated |
THEORY OF SUPPLY - PART 1 for Class 122024 is part of Class 12 preparation. The notes and questions for THEORY OF SUPPLY - PART 1
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