Q.1 What does the law of supply state?
As price rises, supply falls
As price rises, supply rises
As price falls, supply rises
Supply is independent of price
Explanation - The law of supply states that, ceteris paribus, an increase in price leads to an increase in quantity supplied.
Correct answer is: As price rises, supply rises
Q.2 Which of the following is a determinant of supply?
Consumer income
Technology
Tastes and preferences
Population growth
Explanation - Technology directly affects supply because better technology increases efficiency and production.
Correct answer is: Technology
Q.3 What does a rightward shift in the supply curve indicate?
Increase in supply
Decrease in supply
Increase in demand
Decrease in demand
Explanation - A rightward shift of the supply curve indicates that producers are willing to supply more at every price level.
Correct answer is: Increase in supply
Q.4 Which of the following would NOT cause a shift in the supply curve?
Change in technology
Change in input prices
Change in tastes and preferences
Change in number of sellers
Explanation - Tastes and preferences affect demand, not supply. Supply shifts due to factors like technology, input prices, and sellers.
Correct answer is: Change in tastes and preferences
Q.5 The supply curve generally slopes:
Downward from left to right
Upward from left to right
Horizontally
Vertically
Explanation - The supply curve slopes upward as higher prices incentivize producers to supply more.
Correct answer is: Upward from left to right
Q.6 If input costs rise, the supply curve will:
Shift right
Shift left
Stay the same
Become vertical
Explanation - Rising input costs reduce profitability, so producers supply less at every price.
Correct answer is: Shift left
Q.7 Which of the following is an example of supply?
Consumer’s willingness to buy
Firm’s willingness to produce at different prices
Government tax collection
Consumer preferences
Explanation - Supply refers to the quantity of a good producers are willing to offer at various prices.
Correct answer is: Firm’s willingness to produce at different prices
Q.8 What happens to supply when subsidies are given to producers?
Supply decreases
Supply increases
Supply remains constant
Demand decreases
Explanation - Subsidies reduce production costs, encouraging producers to supply more.
Correct answer is: Supply increases
Q.9 Which of the following is a movement along the supply curve?
Increase in wages
Change in technology
Change in product price
Government regulations
Explanation - A change in price causes a movement along the supply curve, while other factors shift the curve.
Correct answer is: Change in product price
Q.10 When supply decreases, the supply curve shifts:
Leftward
Rightward
Upward
Downward
Explanation - A leftward shift indicates that producers supply less at each price point.
Correct answer is: Leftward
Q.11 What effect do improved production techniques usually have on supply?
Decrease supply
Increase supply
No effect
Shift demand
Explanation - Better techniques improve efficiency and lower costs, so producers supply more.
Correct answer is: Increase supply
Q.12 The relationship between price and supply is:
Inverse
Positive
Negative
Unrelated
Explanation - As price rises, producers are incentivized to supply more, showing a positive relationship.
Correct answer is: Positive
Q.13 Which factor would likely decrease the supply of wheat?
Improved farming technology
Decrease in fertilizer cost
Higher government taxes
Increase in rainfall
Explanation - Taxes raise costs, discouraging supply, while other factors may increase supply.
Correct answer is: Higher government taxes
Q.14 Which of the following is considered a supply-side factor?
Consumer income
Number of sellers
Advertising campaigns
Consumer tastes
Explanation - Supply-side factors include elements like the number of producers, technology, and input costs.
Correct answer is: Number of sellers
Q.15 If the supply curve shifts right, equilibrium price generally:
Increases
Decreases
Stays the same
Becomes infinite
Explanation - More supply at the same demand lowers equilibrium price.
Correct answer is: Decreases
Q.16 What is 'market supply'?
Total supply of one firm
Combined supply of all firms in the market
Supply at one price point
Government’s planned output
Explanation - Market supply is the sum of all individual supplies in the market.
Correct answer is: Combined supply of all firms in the market
Q.17 What will happen to the supply of apples if a pest attack destroys crops?
Supply increases
Supply decreases
Supply remains the same
Supply curve becomes horizontal
Explanation - Pest attacks reduce production, decreasing supply.
Correct answer is: Supply decreases
Q.18 Which one causes an expansion of supply?
Fall in wages
Increase in product price
Improvement in technology
Subsidies
Explanation - Expansion of supply refers to movement along the curve caused by price rise.
Correct answer is: Increase in product price
Q.19 If suppliers expect future prices to be higher, current supply will:
Increase
Decrease
Remain unchanged
Become unpredictable
Explanation - Producers may hold back goods now to sell later at higher prices.
Correct answer is: Decrease
Q.20 What does a leftward shift of the supply curve mean?
More supplied at each price
Less supplied at each price
Higher demand
Lower demand
Explanation - A leftward shift reflects a decrease in supply at every price level.
Correct answer is: Less supplied at each price
Q.21 Government regulations usually have what impact on supply?
Always increase supply
Always decrease supply
May restrict supply
Have no impact
Explanation - Regulations often increase costs and limit supply, though impact varies by case.
Correct answer is: May restrict supply
Q.22 Supply is best defined as:
Quantity producers are willing to sell at different prices
Quantity consumers want to buy
Goods stored in inventory
Government stockpiles
Explanation - Supply measures willingness of producers to sell at various prices.
Correct answer is: Quantity producers are willing to sell at different prices
Q.23 What does 'contraction of supply' refer to?
Decrease in supply due to non-price factors
Decrease in quantity supplied due to fall in price
Shift of supply curve left
Producers exiting the market
Explanation - Contraction of supply means movement along the curve due to lower price.
Correct answer is: Decrease in quantity supplied due to fall in price
Q.24 If the cost of raw materials falls, the supply curve will:
Shift right
Shift left
Stay fixed
Become vertical
Explanation - Lower costs increase profitability, encouraging more supply at all prices.
Correct answer is: Shift right
Q.25 What effect does an increase in the number of producers have on market supply?
Decreases supply
Increases supply
No change
Shifts demand
Explanation - More producers increase the total market supply.
Correct answer is: Increases supply