case study on theory of supply class 11

Theory of Supply Class 11 | Chapter 11 | Economics | Notes |

Table of Contents

Theory of Supply Class 11| Chapter 11 | Economics

Supply of a commodity refers to all the quantities of a commodity that the sellers are willing to sell at different price at a point of time.

Quantity Supplied 

It refers to a specific amount offered for sale at the specific price of the commodity.

Supply Schedule

It is a table showing all the quantities of a commodity that the sellers are willing to sell at different price at a point of time. It is of two types:

1 ) Individual Supply Schedule – It is a table showing all the quantities of a commodity that a single seller is willing to sell at various prices at a point of time.

2) Market Supply Schedule – It is a table showing all the quantities of a commodity that all seller or willing to sell at various price at a point of time.

Supply Curve

It is a diagrammatic representation of all the quantities of a commodity that the sellers are willing to sell at different prices at a point of time.

1) Individual Supply Curve – It is a diagrammatic representation of all the quantities of a commodity that a single seller is willing to sell at different price at a point of time.

2)  Market Supply Curve – It is a diagrammatic representation of all the quantities of commodity that all sellers are willing to sell at different price at a point of time.

Supply Function

It shows the functional relationship between the quantity supplied of a commodity and its various determinants of factors affecting it. Supply function can be expressed as:

Determinants Affecting Supply Curve

• Own Price of a Commodity – Price of a commodity and its quantity supplied holds direct relationship. Other things remain constant, with rise in price quantity supplied extend and with fall in price quantity supplied contracts.

• Price of Related Goods – Supply of a good depends upon the price of related goods. Consider a firm selling two substitute goods, if price of a good rises in the market the firm will be willing to sell less of other good at its existing price.

• Price of Factor of Production – If price of production increases, then profit will decrease and supply will also decrease. Curve will observe a backward shift. If price of production decreases, then supply will increase. Curve will observe a rightward shift.
• Government Policy – Profit and supply will decrease with decrease in tax resulting in backward shift of curve. Profit and supply will increase if government will provide subsidy resulting in forward shift of curve.
• Goal of the Firm – If goal of the firm is to maximize sales, more quantity will be supplied even at the same price and opposite if goal is to maximize sale.
• Number of Firms in the Industry – Increase in the number of firms implies increase in the market supply. Decrease in the number of firms results in decrease in the market supply.
• Stage of Technology – Improvement in the technique of production reduces cost of production consequently, more of the commodity is supplied at its existing price.
• Business Expectation – In situations of bullish expectations, investment tends to rise and supply starts increasing. Just the opposite may happen in situation of bearish expectations.

Law Of Supply

Law of supply states that other things remaining constant, there is a positive relationship between own price of a commodity and its quantity supplied. With the rise in own price of a commodity, quantity supplied extend and with the fall in own price of a commodity, quantity supplied contract.

Assumptions of the Law

The law of supply assumes that all other determinants of supply of commodity, other than own price of the commodity remain constant

• The number of firms remain fixed.
• The government polices do not change
• There is no change in the techniques of production
• There is no change in the price of the factors of production
• There is no change in business expectations.
• There is no change in the goal of the firm. There is no change in the price of related goods.

Exceptions to the Law of Supply

The positive relationship between own price & quantity supplied of a commodity may not always hold good, or may not firmly hold good in certain situations as under:

• The law of supply does not apply to agricultural products whose supply is governed by natural factors.
• Supply of goods having social distinction will remain limited even if their price tends to rise
• At a given point of time, sellers may be willing to sell more of a perishable commodity even at a lower price
• Sale of old stock
• Artistic goods
• Labour supply in under developed countries.

Movement along Supply Curve and Shift in Supply Curve

1) Change in Quantity Supplied – Change in quantity supplied is caused by the change in price of the commodity. It is the movement along a supply curve. It is shown on the same supply curve.

2) Change in Supply – Change in supply is caused by the factors other than the price of the commodity viz., change in prices of other commodities, change in technology, change in prices of inputs etc. It is a shift of the supply curve. It is shown on the new supply curve.

Price Elasticity of Supply 

It measures the degree of extension and contraction of supply in response to a given change in own price of the commodity.

Measurement of Price Elasticity of Supply 

1) Proportionate Method  – According to this, elasticity of supply is ratio between ‘percentage change in quantity supplies’ and ‘percentage change in price of commodity’.

Es= (percentage change in QS)/ (percentage change in price)

Es= ∆Q/∆P×P/Q

2) Geometric Method –

Factor Affecting Elasticity Of Supply

• Nature of Inputs Used – If commonly available inputs are used supply will be elastic. If inputs used are not commonly available, supply will be inelastic.
• Natural Constraints – Elasticity of Supply s is significantly influenced by the natural constraints. If we wish to produce more teak wood, it will take several of years. Therefore, supply of teak wood will be less elastic.
• Nature of the Commodity – Perishable goods are relatively less elastic in supply than durable goods because perishable goods have a shorter shelf-life than the durable goods.
• Time Factor – Longer the time period, greater will be the elasticity of supply because over a long period of time, factors are easily available & supply can be increased.
• Technique of Production – Supply will be less elastic in case production of a commodity involves use of a complex and expensive technology.
• Risk Taking – If entrepreneurs are willing to take risk of higher output, the supply will be more elastic and vice versa.
• Cost of Production -Supply will be less elastic in case increase in production causes a substantial increase in the cost of production.

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Thanks a lot for such a greats notes…. Can u also provides the notes of political science and geography of class 11. Thanks for Economic notes.

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Commerce Aspirant » Economics Class 11 » Theory of Supply Class 11 Notes

Theory of Supply Class 11 Notes

Theory of supply class 11 notes are presented in this post for easy access to the students. By taking these notes, you can stay active and engaged throughout your reading, revision, and lectures. They also help with clear thinking and understanding. Choose the most important ideas to focus on. These notes provide a useful record of important information and its sources. You’ll be able to recall better what you heard with these notes.

• Individual Supply determinants
• Market supply determinants

Supply function

Supply schedule.

• Supply Curve
• Assumptions

Important points

• Causes of the Law of Supply
• Exceptions of the Law of Supply
• Change in quantity supplied
• Change in supply

Percentage method

• Factors affecting price elasticity of supply
• Types of supply elasticity

  Stock under Theory of supply class 11

The term “stock” refers to the total quantity of a given commodity a company has at any given time.

Stock refers to the total quantity of a particular product available in a firm at a particular time.

Supply under Theory of Supply class 11

Supply refers to the number of products a company is willing to sell at a specific price during a specific period.

• To put it another way, supply is the portion of stock that is actually offered for sale in the market. There can never be less supply than stock.
• For example, a seller has 50 tonnes of sugar in storage. If the seller is prepared to sell 30 tons for Rs. 37 per kilogram, 30 tonnes of supply constitute 50 tonnes of total stock.

The definition of supply highlights the following required elements;

• Quantity of a good
• Willingness to sell
• Price of the good

Individual Supply determinants under Theory of Supply class 11

• Price of the good- (i) There is a positive relationship between the commodity’s supply and price. ii) This indicates that when the price of a commodity rises, so does the supply of that commodity, and vice versa.
• Prices of other goods- (i) Assume a company uses its resources to produce multiple products. (ii) In order to increase profits, a company produces more of other goods at a higher price than it does of goods whose prices have not changed.
• Prices of the factors of production- (i) Because the cost of producing a commodity is determined by the price of factors (rent, wages, interest, and profit), this also affects supply. (ii) A commodity’s supply curve may shift to the left due to an increase in the price of a factor of production. (iii) On the other hand, if the prices of factors fall, the supply curve moves to the right, and a producer may be able t sell more of a product at a given price.
• State of technology- (i) A company’s profit margin will rise as a result of a decrease in production costs as a result of technological advancement, thereby reversing the supply curve. (ii) The supply curve will shift to the left if goods are produced with outdated, inferior technology, which raises production costs and lowers total output.
• Objectives of the firm- (i) Occasionally, a company may be compelled to increase the supply of a product not because it is more profitable but because the product’s supply is a source of market status and prestige. (ii) A company may also increase production for the sole purpose of maximizing sales or employment.

Market supply determinants under Theory of Supply class 11

• Prices of the factors of production- (i) Because the cost of producing a commodity is determined by the price of factors (rent, wages, interest, and profit), this also affects supply. (ii) A commodity’s supply curve may shift to the left due to an increase in the price of a factor of production. (iii) On the other hand, if the prices of factors fall, the supply curve moves to the right, and a producer may be able to sell more of a product at a given price.
• The number of firms in the market- Market supply also increases when the number of firms in the industry increases due to the large number of producers producing that commodity. (ii) On the other hand, if some businesses begin to leave the industry due to losses, the market supply will decrease.
• Price Expectations in the Future- (i) Current market supply will decrease to raise supply in the future at higher prices if sellers anticipate a price rise shortly. (ii) On the other hand, to avoid future losses, sellers will increase the current supply if they are concerned that prices will fall in the future.
• Transportation and communication- Maintaining a sufficient supply of the commodity is made easier by proper development of the infrastructure, such as improvements to transportation and communication methods.

The supply function shows the functional relationship between the supply of a particular good and the factors that influence it.

• The individual supply function refers to the functional relationship between supply and the factors that influence the supply of goods.
• The market supply function refers to the function between market supply and the factors that influence the market supply of goods.

The supply schedule is a table showing different quantities of goods delivered at different prices over a specific period.

An individual supply schedule is a tabular list of different quantities of goods that a producer is willing to sell at different prices during a particular period.

The Market Supply schedule refers to a tabular list showing the different quantities of goods that all manufacturers are willing to sell at different prices during a particular period.

Supply curve

The supply curve refers to the graph display of the supply schedule.

The individual supply curve refers to the graphic representation of individual supply.

The market supply curve refers to the graphical representation of the market supply plan.

Law of supply

The law of supply shows the direct relationship between the price and quantity offered while other factors remain constant.

• Other factors remain constant (Ceteris Paribus), based on the commodity’s price; it is referred to as the Law of Supply. This indicates that as the commodity’s price rises, so does the quantity supplied of it.
• Ceteris Paribus refers to (i) The price of the other product does not change. ii) Production technology shouldn’t change. (iii) Production costs remain constant. (iv) The government’s tax policy shouldn’t change. (v) The company’s goal remains constant.

Assumptions of the law of supply under Theory of Supply class 11

• Prices of other commodities are constant
• The latest technology does not change
• Factors of production prices do not change
• Taxation does not change
• Producer’s goals do not change
• A positive relationship between prices offered and Quantity is assumed to be free of changes.
• It is a quantitative statement
• It does not establish a proportional relationship
• This law is one-sided

Causes of The Law of Supply

The supply curve has a left-to-right slope because there is a positive relationship between the commodity’s price and the quantity supplied.

This is due to the following factors:

(a) Stock fluctuation: (i) As a result of the commodity’s rising price, sellers are prepared to sell more of their accumulated inventory. (ii) On the other hand, when a commodity’s price drops, sellers want to increase their inventory to avoid losing money.

(b) Loss and gain: Producers typically increase production in response to rising prices to reap greater profits, and vice versa.

c) Companies entering or exiting: (i) When a commodity’s price rises, new businesses enter the market hoping to make a profit, which increases supply. (ii) On the other hand, when prices begin to fall, marginal businesses—also known as inefficient businesses—leave the market to avoid anticipated losses, thereby reducing supply.

Exceptions of The Law of Supply under Theory of Supply class 11

• Future expectation- (i) If future price fluctuations are anticipated, the law will not apply. (ii) For instance, sellers would be prepared to sell more, even at low prices, if they anticipate further price declines in the future.
• Perishable goods- The availability of perishable products like milk, vegetables, fish, and eggs, among others, is also unaffected by the prices they charge. These items cannot be held for long by sellers.
• Agricultural goods- Natural disasters like droughts, floods, and other natural disasters have a greater impact on agricultural product supply with lower prices.
• Rare Commodities- (i) The law of supply does not apply to some precious and rare goods as well. (ii) This category includes high-quality artistic products and poems written by outstanding poets. Even when their prices rise, there is no way to increase their supply.
• Underdeveloped countries- (i) When production and supply cannot be increased due to price increases, backward countries render the law of supply inapplicable. (ii) In this case, production-critical resources are lacking.

Change in quantity supplied or movement along the supply curve.

• If other factors remain constant and the quantity of the goods on sale changes due to changes in the price itself, this is known as a change in the quantity supplied. It is also known as movement along the same demand curve.
• There can be either a downward movement or an upward movement along the same demand curve.

Expansion in supply refers to increased supply due to higher commodity prices while other factors remain constant.

Contraction in supply refers to a decline in quantity offered due to a decline in commodity prices, and other factors remain constant.

Change in supply or shift in the supply curve

• When the supply of goods changes due to changes in factors other than the price of the goods themselves, this is called a change in supply. It is also known as a shift in the supply curve.
• Changes can be made either to the right or to the left.

An increase in supply refers to an increase in the supply of goods caused by factors other than the price of the goods.

A decrease in supply refers to a decrease in the supply of the cost of goods due to factors other than the own price of the goods.

Price elasticity

The price elasticity of a supply refers to the degree to which the offer of the product reacts to price fluctuations of this product.

The degree to which the quantity supplied responds to changes in supply determinants (such as the price of other commodities, production factors, technology, etc.) is referred to as supply elasticity.

• In other words, the Price elasticity of supply is the degree to which the quantity supplied response to changes in the commodity’s price.
• It is a quantitative statement indicating the magnitude of the price-related change in the quantity supplied.

The percentage method or the flux method is used to calculate supply price elasticity:

• According to this method, elasticity is measured as the rate of change of the quantity offered and the percentage of the price change.
• The ratio of the percentage change in the price to the percentage change in the quantity supplied is how elasticity is measured using this approach.

Es = percentage change in quantity supplied/Percentage change in price

Factors affecting Price elasticity of Supply under Theory of Supply class 11

• The nature of the product: The nature of the commodity affects supply elasticity in some way. (i) Perishable goods, on the other hand, have an inelastic supply because they cannot be increased or decreased, whereas durable goods have an elastic supply. Similarly, the supply of agricultural goods is not elastic, whereas the supply of industrial goods is.
• Production costs; (i) When production costs rise rapidly in tandem with output, there is less incentive to raise supply in response to price increases. Supply will be inelastic in such cases. (ii) On the other hand, supply will rise with price increases if production costs rise slowly with output. Supply will be more flexible in this scenario.
• Time period; (i) During the market period, a commodity’s supply is perfectly inelastic because it cannot be changed in response to a price change. (ii) Because the firm is able to alter the supply by altering the variable factors, supply is relatively less elastic over a brief period. (iii) Supply is more elastic over a long period of time because all factors can be changed, and supply can be easily adjusted in response to price changes.
• Method of production (i) A commodity’s supply will be flexible if simple production methods are used to produce it. (ii) On the other hand, complex production methods make it extremely challenging to alter supply in response to price changes.
• The availability of resources and facilities; (i) The production of a product necessitates the availability of sufficient resources as well as additional facilities like banking, power, transportation, and so on. If they are lacking, the producers feel disabled. As a result, supply becomes inflexible. (ii) On the other hand, producers can easily respond to price changes if these resources and facilities are readily available and adequate.

Types of supply elasticity under Theory of Supply class 11

• If there is an infinite supply at a certain price when the supply of such goods is called perfectly elastic, the supply will be zero, and the price will drop slightly. The perfectly elastic supply curve is a horizontal state line parallel to the x-axis
• If the supply does not change with price changes, the supply of such products is called perfectly inelastic. The perfectly inelastic supply curve is a vertical straight line parallel to the Y-axis.
• If you find that the rate of change is greater than the rate of change, then the supply of such products is considered highly elastic.
• When the percentage change in quantity supplied is less than the percentage change in price, supply is less elastic.
• If the change in quantity offered is equal to the rate of price change, then the offer of such goods is called unitary elasticity, and the supply curve is straight from the origin.

Theory of supply class 11 notes give a wholesome definition of supply and various related concepts. These notes also provide the factors affecting the price elasticity of demand. You can stay active and engaged throughout your reading, revision, and lectures by taking these notes. Additionally, they aid in clear thinking and comprehension. Selectively identify important ideas. A useful record of important information and its sources can be found in these notes. These notes will help you remember what you heard better.

• Economics Class 11 Notes
• Accountancy Class 11 Notes
• Economics Class 11 MCQs

Business Studies Class 11 MCQ

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Class 11 CBSE And ICSE Economics Important Questions With Answers

Author : Palak Khanna

Updated On : September 14, 2023

Knowing the CBSE Class 11 Economics Syllabus 2022 is a prerequisite for preparing for the main examination.

The board has divided the Economics syllabus into two parts, i.e., Part A and Part B.

Part A consists of Statistics for Economics, while Part B consists of Introductory Microeconomics. The theoretical part of the CBSE Class 11 Economics Syllabus 2022 comprises of 80 marks, while project work consists of 20 marks.

To help you with the exam preparation, we have provided chapter-wise class 11 Economics important questions with answers. 

You can go through these questions and enhance your exam preparation. You can also download free study notes for the Economics subject below. 

Economics Class 11 Important Questions with Answers

Economics is one of the optional subjects among all the 11th Commerce Subjects .  

• Important Questions for Class 11 Economics helps you focus on the specific questions and parts of the syllabus that hold more value in the exam.
• You need to focus more on topics like statistics for economics, collection, organization, presentation of data, consumer equilibrium, and demand to score good marks in this section.
• With the help of important questions for class 11 economics, you can increase your efficiency and accuracy.

Chapter Wise NCERT Class 11 Economics Important Questions

Let us have a look at the chapter-wise important questions for class 11 economics from below and improve your speed and accuracy in the exam.

Solving Class 11 Economics Sample Papers will help you know the paper's difficulty level and the type of questions asked in the exam.

Chapter – 01: Introduction to Micro Economics

Check the list of some important questions for class 11 economics chapter 1 provided here and enhance your preparation.

Q. Explain Diamond Water Paradox?

Ans. It is based on the principle of scarcity. Like water is useful, yet it is cheap due to its abundance in the economy. Diamonds are very expensive because they are scarce so,  people are ready to pay a high price.

Download Free Study Material for Class 11 Economics by Super Grads

Q. Only scarce goods attract price.” Comment.

Ans. The given statement is correct. All resources are not scarce in the economy. For example, the air we breathe is abundant in relation to wants. Such goods are available free of cost. These goods are known as Non-Economic Goods. On the other hand, some goods are scarce in relation to their wants. For example, petrol, electricity, etc. are scarce in relation to wants. These goods command price and are known as Economic Goods. So, it is rightly said that only scarce goods attract price.

Q. What does the slope of PPF indicate?

Ans. PPF is a downward sloping concave shaped curve.

      (i)       Its downward slope indicates that in order to increase production of one good, another good need to be sacrificed

      (ii)      Its concave shape indicates that More and More unit of one good sacrificed in order to produce one unit of another good.

Q.  “Scarcity and Choice go together”. Comment.

Ans. All of us want better food, clothing, housing, schooling, entertainment, etc. But resources are not enough to meet all our wants. Even the developed economies cannot satisfy all the needs of people. It means, scarcity of resources is a common feature of every economy and it gives rise to the problem of choice, i. e. how to make the best possible use of available resources. If resources were available in plenty, there would not have been any problem of choice. Hence, economics is concerned with the problem of choice under the conditions of scarcity.

Q. “An economy always produces on, but not inside, a PPC”, Defend or refute the statement .

Ans. The given statement is refuted. An economy operates on PPF, only when resources are fully and efficiently utilized, it means, if there is unemployment or inefficient use of resources, then the economy may operate inside the PPC.

Chapter – 02: Consumer’s Behaviour

Go through all the important questions for class 11 economics state board for the consumer's behavior chapter.

Q. Law of DMU operates only with continues consumption.

Ans. Law of diminishing marginal utility will operate only when consumption is a continuous process. For example, if one burger is consumed in the morning and another in the afternoon, then the second burger may provide equal or higher satisfaction as compared to the first one.

Q. “Define a budget line. When can it shift to the right?

Ans. Budget line is a graphical representation of all possible combinations of two goods which can be purchased with given income and prices, such that the cost of each of these combinations is equal to the money income of the consumer.

Budget Line shifts to the right when:

 (i) When there is an increase in income, assuming no change in prices of the two goods;

(ii) When there is decrease in prices of both the goods, assuming no change in income of the consumer.

Read more :  CBSE Class 11 Numerical applications

Q. What changes will take place in TU, when: (i) MU curve remains positive; (ii) MU becomes ‘0’ ; (iii) MU is negative.

Ans. (i) TU will increase, but a diminishing rate; (ii) TU will be maximum; (iii) TU starts falling.

Q. State the conditions of consumer’s equilibrium in the Indifference Curve Analysis and explain the rationale behind these conditions.

Ans. Let the only two goods the consumer consumes are X and Y. The two conditions of equilibrium are:

(1) MRS XY =  

(2) MRS falls as more of X is consumed in place of Y

Rationale behind these conditions:

(1) Suppose MRS XY >  it means that to obtain one more unit of X , the consumer's willing to sacrifice more units of Y as compared to what is required in the market. It induces the consumer to buy more of X. As a result, MRS falls and continue to fall till it becomes equal to the ratio of prices and the equilibrium is established.

Suppose MRS XY <  it means that to obtain one more unit of X , the consumer's willing to sacrifice less units of Y as compared to what is required in the market. It induces the consumer to buy less of X. As a result, MRS increases and continue to rise till it becomes equal to the ratio of prices and the equilibrium is established.

(2) Unless MRS falls as consumer consumes more of X, the consumer will not reach equilibrium again.

Q. A consumer consumes only two goods X and Y whose prices are Rs.4 and Rs.5 per unit respectively. If the consumer chooses a combination of the two goods with marginal utility of X equal to 5 and that of Y equal to 4, is the consumer in equilibriumRs.Give reasons. What will a rational consumer do in this situationRs.Use utility analysis.

Ans. Given P X = 10, P Y = 15 and MU X = 50, MU Y = 45. A consumer will be in equilibrium when Substituting values, we find that: Or

Since per rupee MU X is higher than per rupee MU Y , consumer is not in equilibrium.

The consumer will buy more of x and less of y. As a result MU X will fall and MU Y will rise. The reaction will continue till  are equal and consumer is in equilibrium.

   Read more :  Class 11 Accountancy Sample Papers

Chapter – 03: Theory of Demand

Here, we have provided economics class 11 important questions chapter wise for the theory of demand.

Q.  “Law of Demand is a Qualitative statement”. Comment.

Ans. Law of demand is only an indicative, and not a quantitative statement. It indicates only the direction, in which the demand will change with a change in price. It says nothing about the magnitude of such a change. For example, price of Pepsi rises from  Rs.10 to  Rs.12 per bottle, then, as per law of demand, wecan say that the demand for Pepsi will fall. But the law does not give the actual amount by which the demand for Pepsi will decline.

Q. Distinguish between an inferior good and a normal good. Is a good which is inferior for one consumer also inferior for all the consumers? Explain.

Ans. When with the rise in income of the consumer demand fora good increases, that good is a normal good for that consumer. If with rise in income demand for the good decreases than that good is inferior for that consumer. A good is not necessarily inferior for all the consumers. A good which is inferior for a higher income consumer may be a normal good for the lower income consumer. It is not the consumer but the income level of the consumer which determines whether a good is normal or inferior.

Q. Derive the law of demand from the single commodity equilibrium condition “Marginal utility = Price” .

Ans. According to single commodity equilibrium condition, consumer purchases that much quantity of a good at which marginal utility (MU) is equal to price. Given, MU = price. Now suppose, price falls. It will make MU greater than the price and will encourage the consumer to buy more. It shows that when price falls demand rises.

Q. Distinguish between demand by an individual consumer and market demand of a good. Also state the factors leading to fall in demand by an individual consumer.

Ans. Demand by an individual refers to the quantity of a good the consumer is willing to buy at a price during a period of time. While market demand refers to the quantity of a good the consumers of that good are willing to buy at a price during a period of time.

The factors leading to fall in demand by an individual consumers are:

(I) Rise in own price of the normal good.

(ii) Fall in the price of substitute good.

Read more :  Short tricks to prepare for Class 11 Commerce

Q. Suppose there are two consumers in the market for good and their demand functions are as follows:

• d 1 (p) = 20 – p for any price less than or equal to 15, and d 1 (p) = 0 at any price greater than 15.
• D 2 (p) = 30 – 2p for any price less than or equal to 15, and d 1 (p) = 0 at any price greater than 15.

Find out the market demand function.

Ans. From the given demand functions, it can be seen that both the consumers do not want to demand the good for any price above Rs. 15. Both of them demand only at a price less than or equal to Rs. 15. Hence, the market demand will be: 

d market (p) = d 1 (p) + d 2 (p)

d market (p) = 20 – p + 30 – 2p

d market (p) = 50 – 3p for any price less than or equal to 15 and d market (p) = 0 at any price greater than 15.

Chapter – 04: Elasticity of Demand

Candidates can go through the economics class 11 important questions with answers for the elasticity of demand chapter.

Q. Price elasticity of demand for Milk and Wheat are respectively (-) 0.9 and (-) 0.5. Demand for which one is more elastic and Why?

Ans. Demand for Milk is more elastic as with 1% fall in price of milk, its demand rises by 0.9%. However, in case of wheat, 1 % fall in price raises the demand by just 0.5%.

Q. Differentiate between law of demand and price elasticity of demand.

Ans. (i) Law of demand states the inverse relation between price of a commodity and its quantity demanded, assuming no change in other factors. On the other hand, price elasticity of demand indicates the rate of change in quantity demanded of the commodity due to change in its price.

(ii) Law of Demand reflects the direction of change in demand, whereas, price elasticity of demand measures the magnitude of change in demand.

Q. What is the price elasticity of demand for following demand curves: (i) Straight line demand curve parallel to X-axis; (ii) Straight line demand curve parallel to Y-axis.

Ans. The price elasticity of demand in the following cases will be: (i) Perfectly Elastic Demand; (ii) Perfectly Inelastic Demand.

Q. State with reasons, whether the following items will have elastic or inelastic demand: (i) Matchbox;

(ii) Cold Drink; (iii) Medicines; (iv) Salt; (v) Electricity; (vi) Cigarettes; (vii) Butter for a poor person.

Ans. (i) Matchbox has inelastic demand as consumer has to spend a very small proportion of his income.

(ii) Coke has elastic demand as it has number of substitutes.

(iii) Medicines have inelastic demand as their consumption cannot be postponed.

(iv) NCERT Textbook has inelastic demand as it is a necessity item.

(v) Electricity has elastic demand as it can be put to several uses.

(vi) Cigarettes have inelastic demand as its consumers are habituated.

(vii) Butter for a poor person has elastic demand as it is a luxury item for the poor person.

Read more :  Short tricks to prepare for Class 11 Business Studies

Q.The price elasticity of demand for good × is known to be twice that of good Y. Price of X falls by 5% while that of good Y rises by 5%. What is the percentage change in the quantities demanded of X and  Y?

Percentage fall in price of X = 5%; Percentage rise in price of Y = 5%

Also, price elasticity (E d ) of X is twice of good Y Suppose, ed of Y is 1, then ed of X will be 2.

Therefore, a 5% fall in the price of good × will lead to a 10% rise in the demand for X and  a 5% rise in the price of good Y will lead to a 5% fall in the demand for Y.

Ans. Quantity of X will rise by 10%; Quantity of Y will fall by 5%

Chapter – 05: Theory of Production

Check the class 11 economics chapter 5 important questions from below.

Q. Why MP curve cuts AP curve at its maximum point?

Ans. It happens because when AP rises, MP is more than AP. When AP falls, MP is less than AP So, it is only when AP is constant and at its maximum point, that MP is equal to AP. Therefore, MP curve cuts AP curve at its maximum point.

Q. Can AP rise when MP starts declining?

Ans. Yes, AP can rise when MP starts declining. It can happen as long as falling MP is more than AP. However, when MP becomes equal to AP, then further decline in MP will also reduce the AP.

Q. What are the different phases in the Law of Variable Proportions in terms of Total Product? Give reasons behind each phase. Use diagram.

Ans. The Phases are:

Phase I: TP rises at increasing rate, i.e. upto A.

Phase II: TP rises at decreasing rate, i.e. between A and B.

Phase III: TP falls i.e. after B.

Phase 1: Initially variable input is too small as compared to the fixed input, As production starts, there is efficient use of the fixed input, leading to rise in productivity of the variable input on account of division of labour. As a result, TP rises at increasing rate.

Phase II: After a level of output, pressure on fixed input leads to fall in productivity of the variable input. As a result, TP continues to rise but at a decreasing rate.

Phase III: The amount of variable input becomes too large in comparison to the fixed input causing decline in TP.

Q4. Let the production function of a firm be: Q = 2L 2 K 2 . Find out the maximum possible output that the firm can produce with 5 units of L and 2 units of K. What is the maximum possible output that the firm can produce with zero unit of L and 10 units of K?

Hint: Maximum possible output with 5 units of L and 2 units of K

Given: Q = 2L 2 K 2 and L = 5 units; K-2 units

Putting the values of L and K in the given production function, we get:

Q = 2(5) 2 (2) 2 = 200 units

Maximum possible output with 0 unit of L and 10 units of K

Given: Q = 2L 2 K 2 and L = 0 unit; K = 10 units

Putting the values of Land K in the given production function, we get:

Q = 2(5) 2 (10) 2 = 0 unit.

Q. Find out the maximum possible output for a firm with zero unit of L and 10 units of K when its production function is: Q = 5L + 2K.

Hint: Given: Q = 5L + 2K. and L = 0 units; K- 10 units

Q = 5(0)+2(10)

Q or Maximum output = 20 units.

Chapter – 06: Theory of Cost

Let us have a look at Class 11 Economics important questions for theory of cost chapter.

Q.“The gap between AC and AVC keeps on decreasing with rise in output, but they never meet each other”. Comment.

Ans. The given statement is correct. The gap between AC and AVC keeps on decreasing because the difference between them is AFC, which falls with increase in output. However, AFC can never be zero. Therefore, AC and AVC can never meet each other.

Q. Why does the minimum point of AC curve fall towards right of AVC curve?

Ans. The minimum point of AC curve fall towards right of AVC curve because AC continues to fall due to decreasing AFC even after AVC starts rising.

Q.“MC can be calculated both from total cost and total variable cost and is not affected by total fixed cost”. Discuss

Ans. The given statement is correct. MC is not at all affected by total fixed cost (TFC). MC is addition to TC or TVC when one more unit of output is produced. As TFC remains same with increase in output, MC is independent of fixed cost and is affected just by change in variable costs.

Q. Calculate TFC, if AC and AVC are Rs. 22 and Rs. 18 respectively, at output of 10 units.

Ans. AFC = AC - AVC = Rs.22- Rs. 78 = Rs.4

TFC - AFC × units produced = Rs. 4×10 units

TFC = Rs. 40

Q. Classify the following as fixed cost and variable cost:

(i) Salary to manager of the company.

(ii) Wages to casual labour.

(iii) Payment of insurance premium for insurance of factory.

(iv) Payment for raw material.

(v) Payment of rent of Postpaid connection of Mobile Phone.

(vi) Interest on loan taken from ICICI.

(vii) Electricity charges beyond the minimum rent.

(viii) Payment of rent of the factory building to the landlord.

(ix) Commission to production manager on the basis of number of units produced.

(x) Payment of fuel used in machines.

Read more :  Short tricks to prepare for Class 11 Applied Mathematical Reasoning

Ans. Fixed Cost: (i), (iii), (v), (vi), (viii); Variable Cost: (ii), (iv), (vii), (ix). (x).

Chapter – 07: Theory of Revenue

Check the Class 11 Economics important questions for the chapter theory of revenue from the post below.

Q.Why AR curve under monopolistic competition is more elastic than AR curve under monopoly?

Ans . AR curve under both the markets slope downwards. However, AR curve under monopolistic competition is more elastic as compared to AR curve under monopoly because of presence of close substitutes. AR curve is less elastic in monopoly because of no close substitutes.

Q. Under what market condition does Average Revenue always equal Marginal Revenue? Explain?

Ans. It is under the market condition when a firm can sell more at the given price that AR = MR throughout as production is increased by the firm. It is because the firm is a price taker. It means that price, which is same as AR, remains unchanged throughout. By the average - marginal relationship, AR remains unchanged only when AR = MR throughout.

Q. What is the relation between market price and marginal revenue of a price-taking firm?

Ans . Market price is equal to marginal revenue (MR). It happens because the price-taking firm can sell more quantity of output at the same price. It means, revenue from every additional unit (MR) is equal to price or average revenue (AR) as Price = AR.

Q. Compute the total revenue, marginal revenue and average revenue schedules in the following table. Market price of each unit of the good is Rs. 10.

Q. What would be shape of demand curve, so that TR curve is: (a) a positively sloped straight line passing through the origin; (b) a horizontal line?

(a) Demand curve or AR curve will be a horizontal straight line parallel to the X-axis because positively sloped straight line TR curve passing through the origin indicates that price (orAR) remains constant at all levels of output.

(b) Demand curve or AR curve will slope downwards from left to right because horizontal TR indicates that TR remains same at levels of output. It is possible only when price (or AR) falls with rise in output.

Chapter – 08: Producer’s Equilibrium

 Go through the Class 11 Economics Important Questions of the producer's equilibrium provided in this post.

Q. Why should MC curve cut MR curve from below to achieve producer’s equilibrium?

Ans. One of the two conditions of the establishment of stable equilibrium of a firm is that its MC curve should cut the MR curve from below, not from above. If the MC curve cuts the MR curve from above, the equilibrium so established shall not be stable as it will be possible to add to profits by producing more. The idea is that beyond the point of equilibrium, the MC should be greater than MR so that further production becomes uneconomical.

Q. A table showing TC and TR of a firm is given. Calculate MC and MR and find out the equilibrium level of output.

The producer achieves equilibrium at 6 units of output. It is because this level of output satisfies both the conditions of producer’s equilibrium:

(i) MC is equal to MR; and

(ii) MC becomes greater than MR after this level of output.

Q. The equality of marginal cost and marginal revenue is a condition necessary for equilibrium, but it is not by itself sufficient to assure the attainment of producer’s equilibrium. Comment.

Ans. The given statement is correct. Equality of marginal revenue (MR) and marginal cost (MC) is only one condition for the equilibrium of the firm. Another condition also needs to be fulfilled for the establishment of the firm’s equilibrium and that is: ‘MC must be greater than MR after MC = MR output level’.

Q. Why is the equality between marginal cost and marginal revenue necessary for a firm to be in equilibrium? Is it sufficient to ensure equilibrium? Explain.

Ans. The producer’s equilibrium conditions are: (i) MC = MR; and (ii) MC > MR after equilibrium.

Suppose MC > MR: In this situation, it will be profitable for the firm to produce more or less depending upon relative changes in MC and MR till MC = MR.

Suppose MC < MR: It will be profitable for the producer to produce more till MC = MR.

MC= MR is not a sufficient condition to ensure equilibrium. Given MC = MR, suppose the behaviour of MC and MR is such that if one more unit is produced, MC becomes less than MR.

Then in this case it will be profitable for the firm to produce more. Therefore, in this case though MC = MR, the producer is not in equilibrium. However, if after MC = MR output, MC becomes greater than MR, it will be most advantageous for the firm to produce only upto MC = MR.

Q. Explain why will a producer not be in equilibrium if the conditions of equilibrium are not met.

Ans. The equilibrium conditions are: (i) MC = MR; and (ii) MC > MR after equilibrium.

Suppose MC = MR condition is not met. Let MC > MR. In this, it will be profitable for the firm to produce more or less depending upon the relative changes in MC and MR till MC = MR. Similarly, if MC < MR, it will also be profitable to produce more till MC = MR.

Now Suppose ‘MC > MR after equilibrium condition is not met’ and MC < MR after equilibrium. In this case, the firm will not be in equilibrium because it can increase its profits by producing more.

Chapter – 09: Supply

Here, we have provided Class 11 Economics important questions for the supply chapter. These questions will help candidates enhance their preparation for the exam.

Q. What is the price elasticity of supply, when: (a) Supply curve passes through the origin; (b) Supply curve is a vertical straight line; (c) Supply curve is a horizontal straight line.

Ans. The price elasticity of supply in the following cases will be:

(i) Unitary elastic Supply

(ii) Perfectly Inelastic Supply

(iii) Perfectly Elastic Supply

Q. There are three different supply curves passing through the origin. Curve A makes an angle of 60°. Curve B makes an angle of 45° and curve C makes an angle of 30°. What will be the price elasticity of curves A, B and C?

Ans. All the three curves: A, B and C will have unitary elastic supply as they all are passing through the origin.

Q. Give one point of difference between individual supply and market supply.

Ans. Individual supply may not strictly follow Law of supply i. e. it is not necessary that supply for an individual always varies directly with price. However, market supply always follows law of supply, i.e. market supply always varies directly with price.

Q. ‘Supply curve is the rising portion of marginal cost curve over and above the minimum of Average Variable cost curve’. Do you agree? Support your answer with valid reason.

Ans. Yes, we do agree with the given statement. No rational producer would like to supply his output to the market if he is unable to recover his per unit variable cost as it would lead to losses between the range of minimum of marginal cost and minimum of average variable cost.

Q. A firm earns a revenue of Rs. 50 when the market price of a good is Rs. 10. The market price increases to Rs. 15 and the firm now earns a revenue of Rs. 150. What is the price elasticity of the firm’s supply curve?

Price Elasticity of Supply (E s ) =  ×  =  ×  = 2

Chapter – 10: Main Market Forms

Go through the Class 11 Economics Important Questions here and prepare well for the upcoming exam.

Q. How does a firm under monopolistic competition exercise partial control over price?

Ans. A monopolistic competitive firm enjoys partial control over price. It happens because by incurring heavy selling cost, the firm is able to create a differentiated image of its product in the minds of consumers. Products are differentiated on the basis of brand, size, colour, shape, etc. Buyers are attracted to buy a particular product even at a relatively higher price.

Q. “Monopolistic Competition is competition with differentiated products.” Elucidate.

Ans. An important characteristic of monopolistic competition is product differentiation. The competing firms produce products which are close but not perfect substitutes of each other. The products are differentiated on the basis of brand, size, colour, shape, etc. It is on account of this product differentiation, firms have to incur huge selling costs to compete with other firms. So, it is rightly said that ‘Monopolistic Competition is competition with differentiated products’.

Q. Why is the number of firms small in an oligopoly market? Explain.

Ans . The main reason for small number of firms under oligopoly is the ‘Barriers to Entry’, which prevent entry of new firms into the industry. Patents, requirement of large capital, control over crucial raw materials, etc, are some of the other reasons, which prevent new firms from entering into industry. As a result, there are few firms in an oligopoly market.

Q. What happens to profits in the long run if firms are free to enter in the industry?

Ans. When existing firms are earning profit, freedom of entry induces new firms to enter the industry. This raises market supply which in turn leads to fall in market price. Profits fall and continue to fall, till each firm is earning zero economic profit or normal profit.

Q. Explain the ‘Implications’ of the following:

(i) ‘Large Number of Buyers’ under Perfect Competition

(ii) ‘Freedom of Entry and Exit’ to firms under Perfect Competition

(iii) ‘Inter-dependence between Firms’ under Oligopoly

(iv) ‘Non-price Competition’ under Oligopoly

(v) ‘Large number of Sellers’ under Perfect Competition

(vi) ‘Homogeneous Products’ under Perfect Competition

(vii) ‘Barriers to Entry of New Firms’ under Oligopoly

(viii) ‘Few Big Sellers’ under Oligopoly

(ix) ‘Product Differentiation’ under Monopolistic Competition

(x) ‘Perfect Knowledge’ under Perfect Competition

(i) Implication is that no individual buyer is in a position to influence the market price on its own by changing his individual demand.

(ii) Implication is that when existing firms are making profits, new firms enter, raise the output of industry, bring down the market price enough for the firm to earn just only normal profit in the long run. The opposite happens if the existing firms are facing losses.

(iii) Implication is that an individual firm takes into consideration the likely reaction of its rival firms before making a move to change price or output. It is possible because it is assumed that rival firms may react.

(iv) Non-price competition means competition between firms by means other than changing price, like free gift, home service, customer care etc. Implication is that firms in oligopoly prefer non-price competition to avoid price-war because the firm who starts the price-war may be the ultimate loser.

(v) Implication is that no single firm is in a position to influence the market price on its own by changing its own output. Thus, price remains unchanged.

(vi) Implication is that no firm can charge a higher price because no buyer is willing to pay the same. Thus, market price remains the same for all the firms.

(vii) Implication is that such barriers allow only a limited number of firms into oligopoly industries. Such barriers may be in the form of huge capital requirements, patent rights, availability of crucial raw materials etc.

(viii) Implication is that each big seller contributes a fairly large share of total output. This gives an individual seller the power of influencing the market price by changing its own output.

(ix) Implication is that buyers differentiate products of firms various as different. So, they are willing to pay different prices for the products of different firms. This product differentiation gives the power to an individual firm to influence the market price on their own.

(x) Implication is that buyers are fully aware of price in market and sellers of technique of production. Knowledge by buyers further implies that no buyer is willing to pay a higher price for the product of any firm. Knowledge by sellers implies that cost of production is same for all producers.

Chapter – 11: Price Determination

Here is the list of Class 11 Economics Important questions for the price determination chapter.

Q. Explain the effect of increase in income of buyers of a ‘normal’ commodity on its equilibrium price.

Ans. An increase in income of buyers will increase the demand for normal goods at the given price. It will lead to excess demand. This leads to competition among buyers, which raises the price. Increase in price leads to rise in supply and fall in demand. These changes continue till supply and demand become equal at a new equilibrium price. As there is an increase in demand only, equilibrium price rises.

Q. What will be the effect on equilibrium price and equilibrium quantity, when price of complementary goods increases?

Ans. When price of complementary goods increases, keeping other factors constant, then demand for the given commodity decreases since it becomes relatively expensive to consume the two commodities (the given commodity and its complement) together. It will lead to excess supply. This leads to competition among sellers, which reduces the price. Fall in price leads to decrease in supply and rise in demand. These changes continue till supply and demand become equal at a new equilibrium price. As there is a decrease in demand only, both equilibrium price and equilibrium quantity will fall.

Q. If market demand function is given as: Q MD = 25 - 2P and market supply as: Q MS = 3P, then what will be the equilibrium price and equilibrium

Ans. At equilibrium, Q MD = Q MS It means, 25 -2P = 3P Or, 5P = 25

P or Equilibrium Price = Rs. 5.

Putting the value of equilibrium price in the equation of market demand function:

Equilibrium Quantity= 25-2×5=15 units.

Q. Explain the effects of ‘Maximum Price Ceiling’ on the market of a good. Use diagram.

Ans.  Maximum Price Ceiling refers to imposition of upper limit on the price of a good by the government. For example, in the diagram, OP is Price Ceiling, while equilibrium price is OPv At this price, the producers are willing to supply only PA (Or OQ 1 ), while consumers demand PB (Or OQ 1 ). The effect of the ceiling is that shortage, equal to A B (Q 1 Q 2 ), is created, which may further lead to black marketing,

Q. What are the effects of ‘price-floor’ (Minimum Price Ceiling) on the market of a good? Use diagram.

Ans. When government imposes lower limit on a price that may be charged for a particular good or service, it is called Minimum Price Ceiling, e.g. price OP 1 . At this price, the producers are willing to supply P 1 B or (OQ 2 ), while consumers demand only P 1 A (= OQ 1 ). Unable to sell, all they want to sell, the producers may try to illegally sell below the minimum price.

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• Theory of Supply

Theories of Aggregate Supply

Commerce is the process of exchanging goods and services on a large scale. Commerce is an important academic stream that imparts detailed knowledge related to economy, finance, accounting, and other topics which you can easily relate to daily lives. Specifically, the subjects included in this stream are Economics, Business Studies, Accountancy, and English along with a choice of Maths or Computer Science. It is a very important subject that will help students learn about how the business world actually works. Since commerce involves a lot of processes to be completed it will have to employ lots of laborers in the process, thus it easily generates various employment opportunities in other areas such as transport and logistics, banking, and retail. Commerce overall is an essential component of national development and wealth creation which highly contributes to the economy of the country. Commerce education is mainly aimed at giving adequate knowledge about the wholesale trade, retail, export trade, import trade, and entire- port trade. Moreover, it provides some knowledge about the movement of goods, etc., Transport, Communication Insurance, Ware-housing, Money, Banking & Finance, and Mercantile Agencies.

The law of supply is a fundamental principle of economic theory that states that, keeping other factors constant, an increase in price results in an increase in quantity supplied. In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes.

Law of Supply and Theories

The law of supply says that a higher price will induce producers to supply a higher quantity to the market, therefore, increasing the normal supply of the product. Supply in a market can be depicted in a graph as an upward-sloping supply curve that shows how the quantity supplied will actively respond to fluctuations in various prices over any period of time.

Example 

A samosa shop increases the number of samosas they prepare and supply every day when the price is increased. When the selling price of a product goes up, what could be the relationship to the quantity actually supplied? It becomes practical to produce more and more of that product.

More About the Topic

What do you mean by the Theory of Supply in Economics? Supply is the amount of any commodity that sellers are willing to offer for sale at a different price per unit of time. There is a direct relationship between the price of a given commodity and the quantity offered by a seller for sale over a specified time. 

If the price of the commodity rises, then other factors remain constant. Its quality which is offered for sale starts increasing as well and when the price of the commodity falls, the quantity of commodity available for sale decreases. This relationship between the price of the commodity and the quantity which the supplier is willing to sell is called the Theory of Supply.

Law of Supply

In simple words, the law of supply states that sellers supply more goods at higher prices and supply fewer goods at lower prices. The supply function is explained in the mentioned supply curve and schedule.

Market Supply Schedule of a Commodity:

In the above schedule, it is clear that the seller is willing to sell 100 units of a good at ＄4. Observe, as the price falls the quantity that the seller is willing to sell also starts falling. Therefore, at ＄1 the quantity that is being offered to sale is 40 units only.

(Image will be Uploaded Soon)

In the figure, the price of the commodity is on the Y-axis and the quantity of the commodity is on the X-axis. The four points namely d, c, b, and a show the combination of each price and the specific quantity that is being supplied at that price. The slope is the supply curve slopes upwards from left to right, which indicates that less quantity is being offered for sale at a lower price. Economic students study the theory of supply Class 12 Economics in detail.

Theories of Aggregate Supply Explained

Theory of Aggregate Supply and Aggregate Demand was given by John Maynard Keynes which was presented in his work in The General Theory of Employment, Interest, and Money. In Macroeconomics, aggregate supply (AS) is also termed as domestic final supply (DFS). Aggregate supply is the total supply of commodities that forms in an economy plan on selling during a specified amount of time.

In simple words, the theory of aggregate supply is the total supply in an economy’s Gross Domestic Product (GDP). Typically, a positive relationship is observed between the price level and the aggregate supply. The main components of aggregate supply are consumption and saving. The aggregate supply is the sum of consumption expenditure and savings. 

Aggregate Supply (AS) = Consumption Expenditure + Saving (S)

The Formula for Theory of Supply:

Q x = Quantity Supplied

Φ =  Function of

Tech = technology

P x = Price

F = Features of nature

X = Taxes and subsidies

It Is Assumed That These Variables Remain Constant.

Difference Between Theory of Supply and Theory of Aggregate Supply

The theory of supply is a concept of Microeconomics and Aggregate Supply is a concept of Macroeconomics. The law of supply and demand is a fundamental economic theory that establishes a relation between what producers sell and what consumers demand. Whereas Aggregate Supply is the total supply in an economy, the total amount a nation produces and sells.

Demand and Supply Theory of Wages

Wages are the price of services that are being rendered by the labour to the employer. As product prices are determined by its supply and demand curve, similarly wages are also obtained with the hero of demand and supply of labour. The Modern Theory of wages was given by J.R. Hicks.

Did You Know?

The shift in a supply curve is caused by a change in the cost of production, change in the number of producers, change in tax rates, or changes in the state of production technology in use.

Solved Example

Q. The supply schedule for firm A and firm B is given below. Compute the market supply schedule for the same.

A1. The market supply will be the number of commodities supplied by firm A and firm B.

FAQs on Theory of Supply

1. In Theories of Aggregate Supply, What Causes the Change in Aggregate Supply?

A shift in aggregate supply can be attributed to variables such as technological innovations, an increase in wages, change in producer taxes, changes in inflation, etc. Some of the mentioned factors will lead to positive changes while others tend to cause a decline in aggregate supply. For example, if labour efficiency increases, it will raise the supply output by decreasing the labour cost per unit if supply.

Another example is government spending, an increase in government spending will shift the aggregate demand to the right and this will have an impact on aggregate supply of the economy - depending on the sector in which the government has increased its spending. The shift in aggregate supply can be short term as well as long term shift.

2. What is the Difference Between the Theories of Aggregate Supply and Aggregate Demand in the Short and the Long Run?

In the short run, the level of capital is a fixed variable, and the company will not be introducing a new technology or erect a new factory. Instead, for the company to produce more it will increase its usage of existing factors of production, which the company can achieve by assigning more work or increasing use of existing machines and resources. Whereas in the long run the aggregate supply is not at all affected by the price level and is only driven by improvements in efficiency and productivity levels. Examples of such improvements can be an increase in the skills of workers, an increase in capital, etc.

3. What is an example of the law of supply?

The law of supply simply summarizes the effect the change of price will have on the behavior and manufacturing style of the producer. For example, a business will make more video game systems if the price of those systems increases. The opposite is also true if the price of video game systems drastically decreases.

4. What is the general idea of the law of supply in the market?

Law of supply states that other factors of the business remain constant while the price and quantity supplied of a good are directly related to each other. When the price faces a good rise in the market, then the supplier will immediately increase the supply in order to earn a decent amount of profit by fixing higher prices.

5. What is an example of an increase in supply?

Here in the market nothing can be well-prepared for sudden fall and rise in products and its customers. Hence a slight change in the price of one good can bring change in the supply of another good too. It can easily replace the place of a good that can be produced in place of another good. For example, a truck and an SUV in an automobile factory. The supply of goods increases if the price of one of its substitute brand’s production falls.

6. What is the impact of pricing due to changes in demand and supply?

If supply increases and demand remains the same, then the price automatically decreases. For example: Let's take bananas and say the weather is very much perfect for growing bananas which increases the supply. This means prices will drop so that the stores can sell all the bananas they have without wasting them. So basically it is the production (quantity) that decides the price of the product in the market.

7. Does explaining supply-demand with appropriate graphs increase your marks?

Definitely yes. Students can refer to appropriate graphs and detailed explanations of every concept on the Vedantu website curated by specific subject experts for that matter. When you grow the practice of drawing a graph or any image representing the concept, you are going to explain, you can never go wrong. It will be easy for you to write all the important necessary points.

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AP®︎/College Macroeconomics

Course: ap®︎/college macroeconomics   >   unit 1.

• Law of supply
• Factors affecting supply
• Change in supply versus change in quantity supplied

Lesson summary: Supply and its determinants

The law of supply, the determinants of supply, key graphical models, common misperceptions.

• You may often hear people say, incorrectly, that higher prices lead to “more supply” and that lower prices lead to “less supply.” However, this is an incorrect use of the terms. Higher prices will result in an increased quantity supplied and lower price will result in a decrease in quantity supplied. Only a change in a non-price determinant of supply causes a good's supply to increase or decrease.

Discussion questions

• How would producers of a good, such as candy canes, adjust their current supply if they expect its price to rise in the future? Explain If businesses expect future prices to be higher, they will most likely withhold current supply, which would reduce the market supply. If prices are expected to fall in the future, they would benefit from increasing supply today in order to sell while the price is still relatively high. In the candy cane market, producers would withhold supply in the summer and early fall because they expect prices to rise around the holiday season. Towards the end of the holiday season, when they expect candy cane prices to fall in the future, they’ll supply as much as they can while prices are still high.
• How will increased regulation of producers by the government affect a good’s supply? What other government interferences in a market can influence the level supply of a good? Explain Increased government regulations cause producers costs to rise, reducing the supply of the regulated good. Other government interventions that affect supply are subsidies (payments from the government to producers, which increase supply) and taxes (payments from producers to the government, which decrease supply)
• In a correctly labelled graph, show an increase in the supply of a good. In another, correctly labelled graph, show an increase in the quantity supplied of a good. Explain why these two are different.

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Class 11 Economics Sample Papers, Notes & Mock Tests

Access CBSE class 11 Economics Sample Papers, NCERT Solutions, Notes, Test Papers, and Important Questions for practice. You can get this premium course content on the myCBSEguide app.

• CBSE Syllabus

CBSE Sample Papers

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Introduction to microeconomics & central problems, consumer’s equilibrium - utility & indifference curve, theory of demand, price elasticity of demand, production function & returns to a factor, concepts of cost, concepts of revenue, producer’s equilibrium, theory of supply & price elasticity, forms of market, introduction to statistics, price determination in perfect competition, collection of data, organisation of data, presentation of data, measures of central tendency, correlation, introduction to index number.

• CBSE Test Papers
• CBSE Revision Notes

CBSE Important Questions

Cbse value based questions, other useful resourses,   online tests,   learning videos.

As a social science subject has a great influence on every human being. Since we all are, knowingly or unknowingly, part of some sort of economic activity. Our economic life is bound to change, therefore our knowledge of economics needs to be updated according to these changes. Introduced at the secondary level, economics in the CBSE curriculum plays an important role. It grounds children's education in their own experiences. At the senior secondary level, students are exposed to this subject with an aim to make them well up on the economic realities through observation and analytical skills. One of India's best education apps myCBSEguide  brings all the course content for Class 11 Economics to the students on one platform. 

CBSE Class 11 Economics Study Material

The learners are introduced to the subject of economics as a theory of abstraction at the senior secondary level. This gives them opportunities to explore various economic issues both from their day-to-day life and also from issues, which are broader and invisible. The academic skills that they acquire in these courses would help to develop the projects and activities. They need to exercise their power of thinking and develop their perception.

Students in the first leg of senior secondary i.e., preparing for class 11 Economics, should have the comprehensive study material to drive away any confusion. Hence, they require methodically-designed course content for Class 11 Economics which is available on myCBSEguide . Here they can find everything related to the senior secondary Economics curriculum. Here's a list of useful resources for Class 11 Economics.

• CBSE Toppers Answer Sheet
• Online Tests
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Out of these, those which are available in PDF and you can easily download are CBSE Class 11 Economics Syllabus, Sample Papers, Last Year Papers, Test Papers, Revision Notes, Toppers Answer Sheet, and CBSE Important Questions.

CBSE Class 11 Economics Syllabus

The senior secondary Economics syllabus is expected to provide opportunities to use information in understanding national economic operations. It would also facilitate their learning process. Hence the chapters of the curriculum focus on honing these conceptual market skills of the students. CBSE class 11 Economics has two separate sections and respective books:  Micro Economics  and the other on Statistics , students can download the  myCBSEguide app which provides complete course content for both books. 

The senior secondary economics courses also contain many projects and activities. For details check our blog on  Class 11 Economics Syllabus 2022-23 .

CBSE Class 11 Economics Important Questions & Notes

Every chapter has some important section that carries the maximum weightage. Students must know this section very well so that they do not miss out on the chance to score good marks/grades in the exam. We at myCBSEguide have an important questions section in all the subjects. You can find the important questions for Class 11 Economics on our dashboard. The important questions or extra questions are a set of a few questions which should not be skipped by anyone taking the class 11 economics test. 

Students can find the synopsis of every chapter in our revision notes section. These notes are sorted chapter-wise notes and can come in handy for quick preparation or chapter revision of school-based annual examinations. 

Class 11 Economics Chapter Wise Revision Notes 

• Economic Reform Since 1991 class 11 Notes Economics
• Indian Economy 1950-1990 class 11 Notes Economics
• Collection of Data class 11 Notes Economics
• Organisation of Data class 11 Notes Economics
• Presentation of Data class 11 Notes Economics
• Measures of Central Tendency class 11 Notes Economics
• Measures of Dispersion class 11 Notes Economics
• Correlation class 11 Notes Economics
• Introduction to Index Number class 11 Notes Economics

Class 11 Economics Sample Papers

Following the marking scheme and blueprint of the official CBSE sample papers for 2022-23, the model question papers of class 11 Economics are now available on myCBSEguide. Every year we dish out quality sample papers for all the subjects of secondary and senior secondary levels. These question papers play a decisive role in students' grades. It is a well-known fact that students aspiring to get good grades must solve as much as sample papers as they can. This practice takes them closer to accuracy and boosts their confidence as well.  Download Class 11 Economics Sample Papers 2023  from my CBSE Guide website or app.

Class 11 Economics Case Study Questions

The introduction of case study questions in the CBSE question papers  left the students perplexed as it was an unexplored area. However, the noble motive behind it was to foster analytical thinking by using their acquired knowledge in a real-life case or situation. The idea is to focus on competency-based education (CBE) fortifying the Indian education system. The case study questions test students' problem-solving skills of the students and they become aware of their ability to master a skill or competency on their own.

Since it is a new kind of question, much reliable content is not easily available. The question based on the source (case) can either be subjective or objective. Hence, students need to be acquainted with both these formats. With the help of the best CBSE  teachers we bring to you  Class 11 Economics Case Study Questions . The fact that our resources have a record of being one of the most downloaded study material in India attest to the quality of our content. 

Class 11 Economics Test Papers and Mock Tests

Test papers define short-term goals for the students. It motivates them to take small steps which ultimately leads to bigger outcomes. These tests are designed to meet different learning abilities and can lead to efficient student outcomes. Our well-furnished question bank has questions of all types to cater to the needs of the students. You can practice the chapter-based Test Papers for class 11 Economics on the  myCBSEguide app . Our mock tests and online test gives an opportunity for fun experiential learning. 

In the economics course, at the initial level, the learners are introduced to the present-day economic realities along with some basic statistical tools to understand these broader economic realities. However, the level of difficulty increases at the senior secondary level. Students need to hit the books if they aim to shine.

Economics is the most preferred subject of class 11 students who opt for the Commerce or Humanities stream. CBSE has introduced the format of class 11 Economics case study questions in the syllabus for the new academic session. It is a well-integrated program that highlights the general economic terms and …

CBSE Class 11 Economics Syllabus 2022-23

CBSE Class 11 Economics Syllabus 2022-23 includes Collection, Organisation and Presentation of Data, Statistical Tools and Interpretation, Consumer’s Equilibrium and Demand, Forms of Market and Price Determination under perfect competition with simple applications etc for the session 2022 – 2023. Here is the detailed syllabus. To download class 11 Economics …

CBSE Term-1 MCQ Sample Papers 2021-22

CBSE will ask only MCQs in Term-1 Examination this year. The board will hold this first term exam in Nov-Dec 2021. As CBSE has already cleared that 1st term exam will carry 90 minutes, now it’s time to start preparation. Students can download CBSE Term-1 MCQ Sample Papers from myCBSEguide …

CBSE Class-11 New Stream Selection Rules

The New Education Policy-2020 has suggested eliminating rigid stream selection rules. We know that there are three streams in class 11 and the choices to select subjects are limited. Students have to select subjects within the stream only. Thus, if you are taking Science Stream, you have no option to …

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CBSE, New Delhi has reduced the syllabus for classes 9 to 12 by 30%. The CBSE Revised Syllabus 2020-21 is available in CBSE official website and myCBSEguide mobile app. Here is the complete circular regarding CBSE Revised Syllabus 2020-21: CBSE Reduced the Syllabus The prevailing health emergency in the country …

CBSE Released Syllabus for 2019-20

CBSE syllabus for 2019-20 is now available for download in CBSE official website and myCBSEguide Mobile App. The new syllabus for 2019 and exams to be held in March 2020. CBSE 2019-20 syllabus for March 2020 examination is released by CBSE, New Delhi. CBSE class 10 Syllabus for 2019 and …

CBSE Class 11 Economics Revision Notes

CBSE Class 11 Economics Revision Notes in PDF are available for free download in myCBSEguide mobile app. The best app for CBSE students now provides class 11 Notes latest chapter wise notes for quick preparation of CBSE exams and school-based annual examinations. Class 11 Economics Revision notes are also available …

CBSE Sample Papers Class 11 Economics 2024

CBSE Sample Question Paper for Class 11 Economics – in PDF CBSE Sample Papers Class 11 Economics for the session 2023-24 are now available on myCBSEguide app.  We have followed the new marking scheme and the blueprint released by CBSE. We are providing Economics sample papers for Class 11 CBSE …

CBSE class 11 Economics New Syllabus 2018-19

CBSE class 11 Economics New Syllabus 2018-19 in PDF format for free download. Economics New syllabus for 2018 2019 class 11 CBSE is now available in myCBSEguide app. The curriculum for March 2019 exams is designed by CBSE, New Delhi as per NCERT text books for the session 2018-19. Download …

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CBSE Class 11 Microeconomics Notes

Chapter 1: introduction.

• Introduction to Microeconomics
• Microeconomics and Macroeconomics: Meaning, Scope, and Interdependence
• Difference between Microeconomics and Macroeconomics
• Economic Problem & Its Causes
• Central Problems of an Economy
• Opportunity Cost : Definition, Types, Formula & Examples
• Production Possibilities Curve (PPC) : Meaning, Assumptions, Properties and Example

Chapter 2: Consumer's Equilibrium

• Theory of Consumer Behaviour
• Difference between Needs and Wants
• Utility Analysis : Total Utility and Marginal Utility
• Law of Diminishing Marginal Utility (DMU) : Meaning, Assumptions & Example
• Consumer's Equilibrium in case of Single and Two Commodity
• Indifference Curve : Meaning, Assumptions & Properties
• Budget Line: Meaning, Properties, and Example
• Difference between Budget Line and Budget Set
• Shift in Budget Line
• Consumer’s Equilibrium by Indifference Curve Analysis

Chapter 3: Demand

• Theory and Determinants of Demand
• Individual and Market Demand
• Difference between Individual Demand and Market Demand
• What is Demand Function and Demand Schedule?
• Law of Demand
• Movement along Demand Curve and Shift in Demand Curve
• Difference between Expansion in Demand and Increase in Demand
• Difference between Contraction in Demand and Decrease in Demand
• Substitute Goods and Complementary Goods
• Difference between Substitute Goods and Complementary Goods
• Normal Goods and Inferior Goods
• Difference between Normal Goods and Inferior Goods
• Types of Demand
• Substitution and Income Effect
• Difference between Substitution Effect and Income Effect
• Difference between Normal Goods, Inferior Goods, and Giffen Goods

Chapter 4: Elasticity of Demand

• Price Elasticity of Demand: Meaning, Types, Calculation and Factors Affecting Price Elasticity
• Methods of Measuring Price Elasticity of Demand: Percentage and Geometric Method
• Difference between Elastic and Inelastic Demand
• Relationship between Price Elasticity of Demand and Total Expenditure

Chapter 5: Production Function: Returns to a Factor

• Production Function: Meaning, Features, and Types
• What is TP, AP and MP? Explain with examples.
• Law of Variable Proportion: Meaning, Assumptions, Phases and Reasons for Variable Proportions
• Relationship between TP, MP, and AP
• Law of Returns to Scale: Meaning and Stages
• Difference between Returns to Factor and Returns to Scale

Chapter 6: Concepts of Cost and Revenue

• What is Cost Function?
• Difference between Explicit Cost and Implicit Cost
• Types of Cost
• What is Total Cost ? | Formula, Example and Graph
• What is Average Cost ? | Formula, Example and Graph
• What is Marginal Cost ? | Formula, Example and Graph
• Variable Cost: Meaning, Formula, Types and Importance
• Interrelation between Costs
• Concepts of Revenue| Total Revenue, Average Revenue and Marginal Revenue
• Relationship between Revenues (AR, MR and TR)
• Break-even Analysis: Importance, Uses, Components and Calculation
• What is Break-even Point and Shut-down Point?

Chapter 7: Producer’s Equilibrium

• Producer's Equilibrium: Meaning, Assumptions, and Determination

Chapter 8: Theory of Supply

• Theory of Supply: Characteristics and Determinants of Individual and Market Supply
• Difference between Stock and Supply
• Law of Supply: Meaning, Assumptions, Reason and Exceptions
• Changes in Quantity Supplied and Change in Supply
• Difference between Movement Along Supple Curve and Shift in Supply Curve
• Difference between Change in Quantity Supplied and Change in Supply
• Difference Between Expansion of Supply and Increase in Supply
• Difference between Contraction of Supply and Decrease in Supply
• Price Elasticity of Supply : Type, Determinants and Methods
• Types of Elasticity of Supply

Chapter 9: Forms of Market

• Market : Characteristics & Classification
• Perfect Competition Market: Meaning, Features and Revenue Curves
• Monopoly Market: Features, Revenue Curves and Causes of Emergence
• Monopolistic Competition: Characteristics & Demand Curve
• Oligopoly Market : Types and Features
• Difference between Perfect Competition and Monopoly
• Difference between Perfect Competition and Monopolistic Competition
• Difference between Monopoly and Monopolistic Competition
• Distinction between the four Forms of Market(Perfect Competition, Monopoly, Monopolistic Competition and Oligopoly)
• Long-Run Equilibrium under Perfect, Monopolistic, and Monopoly Market
• Profit Maximization : Meaning, Elements, Conditions and Formula
• Profit Maximization in Perfect Competition Market
• Profit Maximization in Monopoly Market

Chapter 10: Market Equilibrium under Perfect Competition

• Determination of Market Equilibrium under Perfect Competition
• Effects of Changes in Demand and Supply on Market Equilibrium
• Price Ceiling and Price Floor or Minimum Support Price (MSP): Simple Applications of Supply and Demand
• Difference between Price Ceiling and Price Floor

Important Formulas in Microeconomics | Class 11

Microeconomics is the study of households’, individuals’, and firms’ behaviour towards the allocation of resources and the decision-making process. In short, it deals with the choices made by people and the factors affecting their choices. GeeksforGeeks Class 11 Microeconomics Notes have been designed according to the CBSE Syllabus for Class 11. These revision notes consist of detailed Chapter-wise important topics and concepts. Here, the learners can get easy access to the Chapter-wise notes from the below-mentioned quick links. The notes contain 10 chapters covering every important topic, like Production Function, Demand, Supply, Cost Function, Forms of Market, Consumer Equilibrium, etc. 

The first chapter of Class 11th Microeconomics covers the introductory section of the subject. It talks about microeconomics and macroeconomics, along with the differences between them. Other important topics of this chapter that covers the basics of the subject are Economic Problem, Central Problems of an Economy, and the Production Possibility Curve. 

• Economic Problem & Its Causes
• Opportunity Cost : Definition, Types, Formula & Examples
• Difference between Centrally Planned Economy and Market Economy

Chapter 2: Consumer’s Equilibrium

The second chapter of Class 11th Microeconomics is Consumer’s Equilibrium. A consumer is a person who buys goods and services for the satisfaction of their needs and wants. The consumer is the main part of a market and an economy. Therefore, this chapter entails important information regarding the consumer, their behaviour, equilibrium, and utility. The notes of this chapter cover other important topics like Diminishing Marginal Utility, Indifference Curve, and Budget Line. 

• Law of Diminishing Marginal Utility (DMU) : Meaning, Assumptions & Example
• Consumer’s Equilibrium in case of Single and Two Commodity
• Indifference Curve : Meaning, Assumptions & Properties
• Consumer’s Equilibrium by Indifference Curve Analysis
• Difference between Cardinal Utility and Ordinal Utility

Demand for a commodity or service helps an organization in deciding its production, marketing, and other essential things. It is important for the learners to understand the Individual and Market Demand for a product or service. The third chapter of Class 11th Microeconomics notes covers everything required to know about demand. The notes also cover the change in demand and quantity demanded. 

• Demand Curve

The fourth chapter of Class 11th Microeconomics Elasticity of Demand explains in detail how a change in the price or other factors affecting the demand of a commodity changes its demand. There are three types of elasticity of demand, but the notes cover Price Elasticity of Demand in detail as per the CBSE Curriculum 2022-2023. 

The next chapter of Class 11th Microeconomics, Production Function: Returns to a Factor explains in detail how an organization can produce the maximum number of outputs with the given set of inputs or resources. It also consists of important topics like Product: Total Product, Marginal Product, and Average Product, Law of Variable Proportion, Relationship between TP, MP, and AP, and Law of Diminishing Returns. 

• What is TP, AP and MP? Explain with examples

Chapter 6: Concepts of Cost and Revenue 

The sixth chapter of Class 11th Microeconomics is Concepts of Cost and Revenue. The notes of this chapter cover in detail the Cost Function, fixed and variable cost, Interrelation between Costs, Revenue, and the Relationship between Revenues. 

• What is Cost ? | Types of Cost
• Difference between Total Variable Costs and Total Fixed Costs

Chapter 7: Producer’s Equilibrium

Producer’s Equilibrium is a situation in Microeconomics in which an organization maximizes its profits. The seventh chapter Producer’s Equilibrium of Class 11th Microeconomics covers everything required to know about producer’s equilibrium, including assumptions and determination. 

• Producer’s Equilibrium: Meaning, Assumptions, and Determination

The eighth chapter of Class 11th Microeconomics Theory of Supply explains how a change in the price of a commodity changes its supply in the market. The notes also cover everything required to know about the Law of Supply, Changes in Quantity Supplied, Change in Supply, and Price Elasticity of Supply. 

• Supply Function and Supply Schedule
• Supply Curve
• Difference between Movement Along Supply Curve and Shift in Supply Curve
• Difference between Expansion in Supply and Increase in Supply

The next chapter of Class 11th Microeconomics is Forms of Market. There are four forms of the market in microeconomics, viz., Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly. The notes of this chapter cover features, characteristics, and revenue curves of the four forms of the market. 

• Market : Characteristics & Classification
• Monopolistic Competition: Characteristics & Demand Curve
• Oligopoly Market: Types and Features

A market is said to be in equilibrium when the quantity demanded is equal to the quantity supplied of the commodity. The notes of the chapter include Equilibrium Price, Equilibrium Quantity, a shift in demand and supply and equilibrium price, Special cases of equilibrium, and Simple applications of supply and demand. 

Important Formulas:

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100 MCQS of Supply Microeconomics class 11

• December 19, 2021

Looking for important MCQs of supply chapter with answers and explanation of Microeconomics class 11 CBSE, ISC, and other State Boards.

Multiple Choice Questions of supply chapter with answers of Microeconomics class 11

Let’s Practice

In the long period, the supply for a commodity is:

a) Perfectly Inelastic b) Less Elastic c) Highly Elastic d) Perfectly Elastic

Ans – c)

All the supply curves, which pass through the origin are:

a) Highly elastic b) Unitary elastic c) Perfectly inelastic d) Less elastic

Ans – b)

Which one of the following is an essential element of supply?

a) Price of the commodity b) Period of time c) willingness to buy d) Quantity of the commodity

Ans – a), b), d)

Which one of the following is not the result of an increase in the price of factors of production?

a) Rightward shift in the supply curve b) Leftward shift in the supply curve c) Expansion in supply d) Contraction in supply

Ans – a), c), d)

The market period is a time period during which:

a) Supply can not be adjusted to meet changed demand conditions b) Supply can be fully adjusted to meet changed demand conditions c) Change in supply is limited to available capacity d) Any change in supply is possible

Ans – a)

In the case of ____________, supply falls at the same price.

a) Decrease in supply b) Contraction in supply c) Increase in supply d) Expansion in supply

In the case of __________, supply curve is a vertical straight line parallel to the Y-axis.

a) Perfectly Elastic Supply b) Unitary Elastic Supply c) Perfectly Inelastic Supply d) Less Elastic Supply

Which one of the following is not a determinant of Individual supply?

a) Price of the given commodity b) Taxation Policy c) Means of Transportation and Communication d) Number of Firms

Ans – c), d)

A straight line supply curve cuts the Y-axis in its negative range. What is the elasticity of supply?

a) Highly elastic b) Unitary elastic c) Less elastic d) Perfectly inelastic Supply

Change in the price of the given commodity will lead to:

a) Expansion in supply b) Either a) or c) c) Contraction in Supply d) Neither a) nor b)

Price Elasticity of Supply of good is 2. It shows that:

a) When Price falls by 1%, supply falls by 2% b) When the price rises by 1%, supply rises by 2% c) When supply falls by 1%, price rises by 2% d) Either a) or b)

Ans – d)

The elasticity of supply is said to be perfectly inelastic when:

a) Supply doesn’t change with change in price b) There is an infinite supply at a particular price c) When percentage change, is supply is equal to the percentage change is price d) When percentage change is supply is more than percentage change is price

Which of the following statement is valid with respect to the ‘Law of supply’?

a) Indicates the magnitude of change in supply due to change in price b) States one-sided between price and quantity supplied c) Establishes proportional relationship between change in price and change in supply d) States the direct relationship between price and quantity supplied

Ans – b), d)

Supply is said to be unitary elastic, when:

a) Supply curve is a straight line passing through the origin b) Supply curve makes an intercept on the positive Y-axis c) Supply curve makes an intercept on the positive X-axis d) Supply curve is a horizontal straight line parallel to the X-axis

Due to the installation of a machine with the latest technology, the cost of production has decreased. It will lead to:

a) Expansion in supply b) Increase in supply c) Contraction in supply d) Decrease in supply

The market supply of a commodity is affected by:

a) the State of Technology b) Number of firms c) Government policy d) All of the above

In case of less elastic supply, supply curve:

a) Makes an intercept on the positive X-axis b) is a vertical straight line parallel to the Y-axis c) Makes an intercept on the positive Y-axis d) is a horizontal straight line parallel to the X-axis

“Increase in Supply” of a product is caused by:

a) Improvement in Technology b) Fall in the prices of other goods c) Fall in Prices of Factors of Production d) All of these

If quantity supplied increases by 60% due to 50% increase in price, then elasticity of Supply is:

a) (-) 1.2 b) (+) 1.2 c) (-) 0.83 d) (+) 0.83

The supply function of a product X is given as Sx = 6Px + 3, where Px stands for price. At what price the firm will be willing to supply 27 pieces in the market?

a) ₹2 b) ₹5 c) ₹3 d) ₹4

The supply function of a product X is given as Sx = 6Px + 3, where Px stands for price. If there are 1,000 firms in the market, then market supply for the product at a market price of ₹4 will be:

a) 20,000 units b) 23,000 units c) 27,000 units d) 21,000 units

Which of the following measures of price elasticity shows elastic supply?

a) 0 b) 0.5 c) 1 d) 1.5

Which of the following does not cause a shift of the supply curve of a good?

a) Price of input b) Price of the good c) Goods and Services Tax d) Subsidy

If the supply curve is a straight line parallel to the vertical axis (Y-axis), the supply of the good is called as ____________ .

a) unitary Elastic Supply b) Perfectly Elastic Supply c) Perfectly Inelastic Supply d) Perfectly Elastic Demand

Which of the following statement is correct with respect to supply?

a) Price and quantity have a direct relationship b) Supply curve rises from left to right c) Supply is affected by many factors d) All the above

Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

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The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Jonah E. Bromwich covers criminal justice in New York, with a focus on the Manhattan district attorney’s office and state criminal courts in Manhattan. More about Jonah E. Bromwich

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