Elasticity of supply measures the responsiveness of
A Demand to income
B Supply to price change
C Supply to income
D Demand to price
Elasticity of supply shows how much quantity supplied responds to a change in price of the commodity.
If a small change in price leads to a large change in quantity supplied, supply is
A Inelastic
B Unitary elastic
C Elastic
D Perfectly inelastic
Supply is elastic when quantity supplied responds more than proportionately to price change.
Perfectly inelastic supply has elasticity equal to
A Zero
B One
C Less than one
D Infinity
With perfectly inelastic supply, quantity supplied remains constant irrespective of price.
Perfectly elastic supply is represented by
A Vertical supply curve
B Downward sloping curve
C Upward sloping curve
D Horizontal supply curve
Perfectly elastic supply means any quantity can be supplied at a given price, shown by a horizontal line.
When elasticity of supply is equal to one, supply is
A Elastic
B Inelastic
C Unitary elastic
D Perfectly elastic
Unitary elasticity means percentage change in quantity supplied equals percentage change in price.
Elasticity of supply is generally higher in
A Short period
B Market period
C Very short period
D Long period
In the long run, producers can adjust all factors of production, making supply more elastic.
Supply of agricultural products in the short run is usually
A Elastic
B Inelastic
C Perfectly elastic
D Unitary elastic
Agricultural output cannot be quickly adjusted, making short-run supply inelastic.
Elasticity of supply of manufactured goods is generally
A Zero
B Low
C High
D Negative
Manufactured goods can be produced more easily by adjusting inputs, making supply elastic.
Which factor makes supply more elastic?
A Perishability
B Limited storage
C Availability of substitutes in production
D Time constraint
When resources can be shifted easily among products, supply becomes more elastic.
Elasticity of supply is influenced by
A Cost structure
B Time period
C Nature of commodity
D All of the above
Elasticity depends on production conditions, time, and flexibility of resources.
If quantity supplied does not change with price, elasticity of supply is
A One
B Zero
C Infinite
D Negative
No response of quantity to price implies zero elasticity.
Supply of land is
A Elastic
B Perfectly elastic
C Unitary elastic
D Perfectly inelastic
Total supply of land is fixed and cannot be increased.
Elasticity of supply is measured by
A Change in price ÷ change in supply
B Change in supply ÷ change in price
C Percentage change in supply ÷ percentage change in price
D Percentage change in price ÷ percentage change in supply
Elasticity uses percentage changes to allow comparison.
A straight-line supply curve through origin shows
A Increasing elasticity
B Decreasing elasticity
C Constant elasticity
D Zero elasticity
Proportional changes in price and supply give constant elasticity.
Elasticity of supply at the midpoint of a straight-line supply curve is
A Zero
B Less than one
C Greater than one
D Equal to one
At midpoint, elasticity equals unity.
Elasticity of supply of perishable goods in very short period is
A Perfectly elastic
B Perfectly inelastic
C Elastic
D Unitary elastic
Perishable goods must be sold immediately, fixing supply.
Which good has relatively inelastic supply?
A Manufactured goods
B Agricultural goods
C Capital goods
D Consumer durables
Agricultural output cannot be quickly expanded.
Production function shows relationship between
A Cost and output
B Inputs and output
C Price and supply
D Revenue and output
Production function expresses output as a function of inputs used.
Short-run production function is characterized by
A All factors variable
B All factors fixed
C Some factors fixed, some variable
D No fixed factors
In the short run, at least one factor remains fixed.
Long-run production function assumes
A All factors fixed
B Some factors fixed
C All factors variable
D No factors available
In the long run, firms can change all inputs.
Total product refers to
A Output per unit of input
B Output from one unit of input
C Total output produced
D Marginal output
Total product is the total quantity produced with given inputs.
Marginal product is
A Total output ÷ total input
B Additional output from one more unit of input
C Total output
D Average output
Marginal product measures contribution of an additional unit of variable input.
Average product is calculated as
A TP ÷ MP
B MP ÷ TP
C TP ÷ units of variable factor
D MP ÷ units of variable factor
Average product equals total product divided by quantity of variable input.
Law of diminishing marginal returns applies in
A Long run only
B Short run only
C Both short and long run
D Market period
The law applies when at least one factor is fixed, which is the short run.
According to law of diminishing returns, marginal product
A Increases continuously
B Remains constant
C Eventually decreases
D Becomes infinite
With continuous addition of variable factor to fixed factor, MP eventually falls.
When marginal product is maximum, average product is
A Maximum
B Minimum
C Rising
D Falling
MP reaches maximum before AP, while AP is still rising.
When marginal product equals average product, average product is
A Rising
B Falling
C Maximum
D Zero
AP is maximum when MP equals AP.
When marginal product becomes zero, total product is
A Maximum
B Minimum
C Rising
D Negative
TP reaches maximum when MP becomes zero.
Negative marginal product indicates
A Efficient use of inputs
B Increasing returns
C Overuse of variable factor
D Optimal production
Excessive use of variable input reduces total output.
Which law explains three stages of production in short run?
A Law of supply
B Law of returns
C Law of demand
D Law of costs
Law of diminishing returns explains increasing, diminishing, and negative returns.
Stage II of production is considered rational because
A AP is rising
B MP is negative
C MP is positive but falling
D TP is decreasing
Stage II ensures efficient use of variable factor.
Stage I of production ends where
A MP is maximum
B AP is maximum
C TP is maximum
D MP becomes zero
Stage I ends where AP reaches its maximum.
Stage III of production begins when
A MP becomes zero
B AP becomes zero
C MP becomes negative
D TP is maximum
Stage III begins when MP turns negative.
Rational producer operates in
A Stage I
B Stage II
C Stage III
D Any stage
Only Stage II gives maximum profit with efficient input use.
Law of diminishing returns assumes
A All factors variable
B Constant technology
C Increasing scale
D Change in technique
Technology is assumed constant for the law to operate.
Which curve is derived from production function?
A Demand curve
B Supply curve
C Cost curve
D Revenue curve
Cost curves are derived from production function.
Production function in long run shows
A Law of supply
B Law of variable proportions
C Returns to scale
D Law of demand
Long-run production studies returns to scale.
Increasing returns to scale occur when output increases
A Less than proportionately
B More than proportionately
C Proportionately
D Negatively
Output increases more than proportionate increase in inputs.
Decreasing returns to scale occur due to
A External economies
B Managerial inefficiency
C Better technology
D Division of labour
Managerial difficulties arise with large scale production.
Constant returns to scale imply that output increases
A More than proportionately
B Less than proportionately
C Proportionately
D Negatively
Inputs and output change in the same proportion.
Returns to scale is a
A Short-run concept
B Long-run concept
C Market concept
D Price concept
All factors vary only in the long run.
Law of variable proportions is applicable in
A Short run
B Long run
C Market period
D Secular period
At least one factor must be fixed, which is short run.
Which factor remains fixed in short run?
A Labour
B Raw material
C Capital
D Technology
Capital is usually fixed in short run.
Marginal product curve intersects average product curve at
A Minimum AP
B Maximum AP
C Zero AP
D Negative AP
MP cuts AP at its highest point.
Which stage of production should be avoided?
A Stage I
B Stage II
C Stage III
D Both I and III
Stage I and III are inefficient and irrational.
Law of diminishing returns operates because
A Factors are perfect substitutes
B Fixed factor limits output
C Inputs are homogeneous
D Technology improves
Fixed factor restricts productivity of variable input.
In long run, firm can change
A Labour only
B Capital only
C All factors
D None
Long run allows adjustment of all inputs.
Which return reflects proportional increase in output?
A Increasing
B Decreasing
C Constant
D Negative
Constant returns show proportional change.
Production function is purely a
A Cost concept
B Technological relationship
C Price concept
D Market concept
It shows technical relation between inputs and output.
The main objective of production is to
A Maximize cost
B Minimize output
C Maximize output from given inputs
D Reduce demand
Producers aim to get maximum output from given resources. ; mark question from 1 to 50