PART B: MICRO

Chapter 5 : Supply and elasticity of supply

Q. NO QUESTION MARKS
1 A steel producer finds that the price of iron ore has increased by 20 % per unit.1
But other factors of production are constant. What will happen to the supply of
steel?
a- Supply will increase
b- Supply will decrease
c- No effect on supply
Any situation can happen
2 A seller sells 5 lakh units of a commodity by Rs 10 per unit. The government 1
imposes a new tax on the product. The supply of the commodity will………..
a- Rise
b- Fall
c- Not change
Can’t be expected
3 Supply curve is positively sloped, because__________________ 1
a- There is direct relation between price and supply.
b- There is inverse relation between price and supply.
c- Price and demand are inversely related.
Supply and demand are interrelated.
4 A stationary shop provides the service of photocopy(xerox). He charges Rs 2 1
per page for photocopy. He buys a new photocopier machine which reduces the
ink cost but increases the speed of photocopy. What may happen with the
supply of the service of photocopy?
a- Increase in supply
b- Expansion of supply
c- Decrease in supply
d- Contraction of supply

5 In 2009 there were 5 bread industries in my district. In 2025 the number 1

became 11. And as on 20 August 2023, there are 16 no. of bread industries
functioning. What may be its effect?
a- Market supply of bread will expand.
b- Individual supply curve will shift to right.
c- Market supply curve will shift to right.
Individual supply curve will shift to left.
6 When quantity supplied remains same in spite of change in price, then supply 1
is___________
a- Perfectly elastic
b- Perfectly inelastic
c- Inelastic
Unitarily elastic.
7 Which of the followings can cause a movement along the supply curve? 1
a- Fall in price.
b- Rise in price of related goods
c- Rise in price of inputs.
Fall in per unit price.
8 1

The diagram presents _________________

a- Perfect elastic supply
b- Perfect inelastic supply
c- Unitary elastic supply
Zero elastic supply
9 1

The diagram presents___________

a- Expansion of supply
b- Rightward shift of supply
c- Increase of supply
Fall in supply
10 When the price of a good is Rs 10 per unit, quantity supplied is 500 units. If the 1
price rises, what must not be the quantity supplied?
a-800 units b-510 units
c-600 units d- 450 units
11 If the percentage change in quantity supplied of commodity X is more than the percentage 1
change in price of the commodity X, the coefficient of price elasticity of supply would
be............:(Choose the correct alternative)
(a) Es = 1
(b) Es< 1
(c) Es= 0
(d) Es > 1
12 Suppose when the price of shirts increases from ₹500 to ₹550, the quantity supplied increases. 1
This change is best described as …
a. movement along a supply curve.
b. a change in supply.
c. movement along a demand curve.
d. a change in demand.
e. none of the above.
13 Which of the following statements is true, regarding the supply of a particular good, and that 1
good’s own price?
a. A price increase shifts the supply curve to the right.
b. A price decrease shifts the supply curve to the right.
c. A price increase shifts the supply curve downward.
d. A price change alone does not shift the supply curve.
e. A price change is the only way to shift the supply curve
14 Read the following statements: Assertion (A) and Reason (R). Choose one of the correct 1
alternatives given below:
Assertion (A): Contraction in Supply leads to a downward movement along the same supply
curve.
Reason (R): Downward movement along the same supply curve occurs due to an increase in
price of the commodity, other factors remaining constant.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of
Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of
Assertion (A).
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) is False but Reason (R) is True.
15 Read the following statements carefully and choose the correct alternative from the following: 1
Statement 1: The coefficient of price elasticity of supply is independent of price and quantity
units.
Statement 2: Depending upon degree of responsiveness of quantity supplied to the price
change, there are seven kinds of price elasticities of supply.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false.
(d) Statement 2 is true and Statement 1 is false.
16 1

Identify the correct sequence of alternatives given in Column II by matching them with respective
items in Column I:
Column I Column II
(i) Supply (a) A situation of contraction of supply
(ii) Law of supply (b) Percentage change in quantity supplied
Percentage change in price
(iii) Downward movement (c) Always related to price of the commodity
 along the supply curve
(iv) Elasticity of supply (d) A straight line, positively sloped supply
curve starts from Y-axis
(v ) E_{s} > 1 (e) Positive relationship between own price
of the commodity and its quantity supplied
17 1

The graph shown above depicts two possible supply curves for production of handmade rugs.
S1 is the initial supply curve, and S2 is the new supply curve after a change has occurred in the
market. Which of the following events could have caused this shift?
a. Several rug makers have left the market, making handmade rugs more scarce.
b. Several new rug makers have entered the market, making handmade rugs more plentiful.
c. The price of thread used in rugs has dropped, making it cheaper to produce rugs.
d. Rugs have come into fashion, so buyers want more of them.
e. Rugs have gone out of fashion, so buyers want fewer of them.

18 There are ten restaurants in your town. On a given night, each restaurant has the ability to 1
produce up to twenty full course dinners at a price of ₹ 200 each. What is the total market supply
of full course dinners tonight, at price of ₹200?
19 Which of the following statement is not valid with respect to 'Law of Supply'? 1
(a) Indicates the magnitude of change in supply due to change in price
(b) States one sided between price and quantity supplied
(c) Does not establish proportional relationship between change in price and change in supply
(d) States the direct relationship between price and quantity supplied
20 If the supply curve is a straight line parallel to the vertical axis (Y-axis), supply of the good is 1
called as
(a) Unitary Elastic Supply
(b) Perfectly Elastic Supply
(c) Perfectly Inelastic Supply
(d) Perfectly Elastic Demand
21 The factor causing contraction in supply of a good is 1
(a) decrease in number of firms. (b)increase in tax rate
(c) using outdated technology
(d) decrease in the price of the good

22 Co-efficient of perfectly inelastic supply is 1

(a) zero
(b)greater than one
(c) less than one (d) infinity Categories
23 Statement 1. When percentage change in quantity supplied is less than 1
percentage change in price of the good, elasticity of supply is said to be less
than unitary elastic.

Statement 2.Less than unitary elastic supply curve start from positive Y axis

Mark the correct choice :

(a) Both the statements are true.
(b) Both statements are False.
(c) Statement 1 is true and statement 2 is false
(d) Statement 2 is true and statement 1 is false.

24 Statement 1.Decrease in number of firms decreases market supply of the good 1

and market supply curve shifts towards right.
Statement 2. Market supply schedule refers to supply of all the firms/producers
in the market producing a particular good.
Mark the correct choice :
(a)Both the statements are true.
(b) Both statements are False.
(c) Statement 1 is true and statement 2 is false
(d) Statement 2 is true and statement 1 is false.

25 Statement 1: Due to decrease in price of inputs, supply curve shifts towards left. 1
Statement 2 : Due to use of advance technology , supply curve shifts towards
right
Mark the correct choice :
(a)Both the statements are true.
(b) Both statements are False.
(c) Statement 1 is true and statement 2 is false
(d) Statement 2 is true and statement 1 is false.
.

26 Assertion (A): supply is a stock concept 1

Reason (R): Stock of a commodity refers to the total quantity of that
commodity which is available with the producer at a point of time.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason but (R) is not the
correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false
(d) Assertion (A) is false but Reason (R) is true.
27 Assertion (A): Increase in number of firms is one of the causes of rightward 1
shift in supply curve.
Reason (R): Increase in price of other goods is also one of the causes of
rightward shift in supply curve.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason but (R) is not the
correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false
 (d) Assertion (A) is false but Reason (R) is true.
28 What is meant by perfectly inelasticity of supply? 1
29 1
Price (Rs.) Supply (Units)
6 12
9 18
15 35

On the basis of the above mentioned information about price and supply which
is correct
(a) A straight line downward sloping
(b) Downward sloping from left to right
(c) Upward sloping from left to right
(d) None of the above
30 10. What causes a movement along the supply curve? 1
31 Explain the reaction of the producer, when_________________. 3
a- Price of his product rises by 12.5%, but other factors are constant.
b- Government increases the tax rate by 7.5 % on production of the good.
c- Increase in electricity duty.

32 Calculate prise elasticity of supply, when the price of a commodity rises from 3
Rs 10 per unit to Rs 15 per unit and the quantity supplied increases from 50
units to 100 units.
33 Draw supply curve, when 3
i- Elasticity of supply is one
ii- Elasticity of supply is greater than one
Elasticity of supply is less than one
34 The supply curve of a given commodity is given to be So. On the basis of given diagram, answer 3
the following questions from 11.1 to 11.3:

11.1. Movement from S0, to S1, is termed as:

(a) Contraction in Supply
(b) Expansion in Supply
(c) Decrease in Supply
(d) Increase in Supply
11.2. Movement from S0 to S2, is caused by:
(a) Increase in price of given product
(b) Increase in the price of inputs
 (c) Technological Upgradation
(d) Decrease in price of given product
11.3. Increase in cost of production of this commodity will lead to:
(a) Movement from So to S1,
(b) Movement from S0 to S2
(c) Upward movement along the S0
(d) No change at all

35 Consider the supply curve for sedans in an imaginary market. For simplicity, assume 3
that all sedans are identical and sell for the same price. Two factors that affect the
supply of sedans are the level of technical knowledge – in this case, the speed with
which manufacturing robots can fasten bolts, or robot speed – and the wage rate that
auto manufacturers must pay their employees. Initially, the robots can fasten 2500 bolts
per hour, autoworkers earn $25 per hour, the price of a sedan is $30,000 and the
quantity supplied (Sedans per month) is 250.

Suppose that the price of a sedan decreases from $30,000 to $25,000. This would
cause the _____ of sedans to decrease, which is reflected on the graph by a ______
supply curve.
Following a technological decline – for example, a decrease in the speed with which
robots can attach bolts to cars – there is a ______-shift of the supply curve because the
technological decline makes cars more expensive to build.
36 Due to of heavy rainfall and consequent landslides, transportation of apples from Himachal 3
Pradesh to Delhi gets disrupted. Show the situation with the help of a supply curve.
37 State giving reasons whether the following statements are true or false? 3
(a) Extension of supply occurs due to change in factors other than price of the
given commodity.
(b) In case of perfectly elastic supply, supply curve is a vertical straight line.
(c) When the technique of production becomes obsolete, the supply curve shifts
towards left.
38 (a) At the point of intersection of two supply curves the flatter curve shows 3
higher elasticity of supply. State whether the statement is true or false. Give
reason.
(b) Supply may remain constant even when quantity supplied change.

(c) How will the supply curve of Tea be affected when price of the coffee
decreases?
39 ’Supply curve is the rising portion of marginal cost curve over and above the 3
minimum of Average Variable cost curve.’ Defend or Refute.
40 1. Read the following passage and answer the questions that follow: 4
Price elasticity of Supply refers to reaction of the sellers to a particular change
in the price of the commodity. Price elasticity of supply of a commodity
quantifies the responsiveness of quantity supplied to change in its price.
It is a percentage change in quantity supplied in response to a percentage
change in price of the commodity. Es= % change in Quantity Supplied / %
change in price
Categories of price elasticity of supply:
i) Perfectly Inelastic supply: When quantity supplied remains unaffected due to
change in price. Degree of Es=0.
ii) Less than unitary supply/ Inelastic supply
 In this case percentage change in quantity supplied is less than percentage
change in price. Es<1
iii) When the percentage in quantity supplied exactly equal to percentage
change
in price. Es=1
iv) Greater than unitary Elastic Supply- When percentage in supply is greater
than percentage change in price. Ed>1
v) Perfectly Elastic Supply- Any quantity of the quantity is supplied at the same
price. Price elasticity is infinite.
Answer the following questions.
(a) A seller rises supply of a good from 100 units to 200 units at a price of
Rs.10 per unit. What will be Es?
(i) Infinity (ii) zero (iii)One (iv)less than 1
(b) If quantity supplied of a good increases by 80% due to a 40% rise increase
in its price ,then Es is :
(i) (+)2 ii)(-) 2 (iii) (+) 0.5 (iv) (-) 0.5
(c) When the supply of
the commodity is not responsive to the change in its price, it is
_____________________(unitary elastic supply/perfectly inelastic
supply/inelastic supply)
(d).State whether the given statement is true or false:
In perfectly elastic supply, price is responsive to the change in supply.
41 Read the following passage and answer the questions that follow: 4
Production activities and demand in the whole world affected in the year 2020
due to outbreak of
Corona Virus Pandemic. Since the pandemic started in November 2019 in
China, till present time our trading relation with China affected.
India had to impose lockdown for the safety of the people. It adversely affected
production and supply of essential goods and services. Employment was also
effected.
Slowly and gradually impact has been on the market as India’s fuel demand is
increased during September2020.
(a) What was the impact of lockdown in India on supply of essential goods and
services?
(i) Remain constant (ii)Increased
(iii) Decreased (iv) None of the above
(b) What will be impact on supply of fuel, if demand increases?
(i) Increase (ii) Decrease
(iii) Remain constant (iv) Depends upon availability of fuel in the
international market
(c) Define Supply
(d) Mention any two determinants which affect supply.
42 We know that there is a need to ignore the negative sign in calculation of price 4
elasticity of demand. Do you think this is also applicable in calculation of Price
elasticity of supply? Give reason.
43 The coefficient of elasticity of supply of a commodity is one. What quantity of 4
the commodity will the seller supply at a price of Rs 20 per unit, if he supplies
210 units of it at Rs 7 per unit?
44 There are three firms X, Y and Z in a market. The individual supply schedule of 4
a good is given below. Prepare a market supply schedule. Draw the market
supply curve.
Price (in Rs) Firm X Firm Y Firm Z
2 0 5 2
3 2 7 3
4 4 10 5
5 7 15 8
6 10 20 10
45 A student attaches minus sign to the elasticity of demand of a good and attaches 4
plus sign to the elasticity of supply. But he does not know the significance of
plus and minus sign with the elasticity. Can you help him to do so? Explain
with an example.
46 Read the following passage carefully and answer the question numbers 14.1 to 14.4 on 4
the basis of the same.
Agriculture provides livelihood to almost three fourth of population of India. Indian
agriculture is highly dependent on spatial and temporal distribution of rainfall. Climate
extremes such as drought and flood affect agriculture severely. An account of impact of
climate extremes viz. drought and flood, on Indian food grain production has been
presented in this paper. There are temporal fluctuations in food grain production and
area under the food grain. In secular terms, both of them increased up to mid-eighties.
After mid-eighties there is decline in the area of food grain while maintaining an increase
in production of food grain suggesting the improvement in agricultural technology and
policy. There is more temporal fluctuation in the production of food grain than the area
under food grain. The analysis reveals that impact of drought on Indian agriculture is
more than that of flood. Rabi food grain production depicts better adaptability to drought
than Kharif food grain production, mostly due to better access to irrigation infrastructure.
Among the various food crops analysed, all except jowar can effectively face flood
events. Wheat and jowar perform relatively better during drought events. Rice is the
most sensitive crop to the extreme climate events. Since rice is staple food in the
subcontinent, management of rice productions against climate extremes needs special
attention for food security and Sustainability.
14.1 Natural calamities such as drought and floods lead the supply curve shift to ______
(Right/ Left/Upward/downward).
14.2 When supply increases due to increase in price only, it is termed as _____
(Extension/ Contraction/Increase/Decrease).
14.3 Rice and Jowar are _____________goods (Substitute/ Complementary).
14.4 Supply of staple food will be ______________ (Elastic /Inelastic)

47 The following headline appeared in the Economic Times: 4

"Import duty on crude & refined edible oil up by 5%."
Use a diagram and economic theory to analyse the impact of the statement on the supply of
crude and refined edible oil in the domestic market.
48 When the price of a commodity changes from ₹ 12 per unit to ₹15 per unit, its market 4
supply rises from 500 units to 650 units. Calculate the price elasticity of supply. Is supply
elastic? Give reason
49 Owing to political considerations, Russia has banned the import of seafood from the European 6
Countries. How would you analyse the impact of this decision (i) on the export of seafood from
the Indian market, and (ii) on the domestic supplies of seafood in India?
50 From the data shown in given Table about supply of alarm clocks, calculate the price elasticity 6
of supply from: i)point J to point K, ii) point L to point M, and iii)point N to point O. Classify the
elasticity at each point as elastic, inelastic, or unit elastic.

Point Price Quantity supplied

J $8 50
K $9 70
L $10 80
M $11 88
N $12 95
O $13 100
51 6
Explain the distinction between "change in quantity supplied" and "change in supply". Use
diagram.
52 The price of a commodity is Rs.10 per unit and total revenue from it is Rs.1000. 6
Its price elasticity of supply is 0.8. Its price falls by 10 percent .Calculate the
total revenue at the reduced price.
53 Differentiate between Contraction of supply and Decrease in supply. 6
54 i) Identity two situations when Es is low even when there is a substantial rise in 6
price due to rise in demand for a commodity.
(ii) Owing to political consideration, Russia has banned the import of sea food
from the European countries. How would you analyse the impact of this
decision (a) on export of sea food from Indian market and (b) on domestic
supplies of seafood in India?
55 A company produces pens. It finds that the supply curve of supplying pens 6
shifts to right. Explain any three probable causes.
56 6

What may be the reason of loss of the firms? Explain its effect using a diagram.
57 Indicate true or false. Give reasons of your answer. 6
a- Supply of cabbage and cauliflower is inelastic.
b- Supply of railway service is elastic.
Supply of entry tickets in an international cricket match between India and
Pakistan in a stadium in New Delhi is elastic.
 ANSWER
1 b- Supply will decrease
2 Fall
3 There is direct relation between price and supply.
4 Increase in supply
5 Market supply of bread will expand.
6 a- Perfectly inelastic

7 a- Fall in price.

8 a- Perfect elastic supply

9 a- Expansion of supply

10 d- 450 units
11 (d) Es > 1
12 a. movement along a supply curve.

13 d. A price change alone does not shift the supply curve

14 (c) Assertion (A) is True but Reason (R) is False.

15 (c) Statement 1 is true and Statement 2 is false.

16 (i)-(c),(ii)-(e),(iii)-(a),(iv)-(b),(v)-(d)
17 a. Several rug makers have left the market, making handmade rugs more scarce.

18 ₹ 2000
19 (a) Indicates the magnitude of change in supply due to change in price
20 (c) Perfectly Inelastic Supply
21 (d) decrease in the price of the good
22 (a) zero
23 (c) Statement 1 is true and statement 2 is false.

24 (d) Statement 1 is false and statement 2 is true.

25 (d) Assertion (A) is false but Reason (R) is true.

26 (d) Statement I False but Statement II is true.

27 (c) Assertion (A) is true but reason(R) is false.

28 When quantity supplied does not respond to any change in price

29 (c) Upward sloping from left to right.

30 Change in own price of the good causes a movement along the supply curve.

31 a- Increase in quantity supplied and supply will expand.

b- Fall in supply of the good.
 Fall in supply of the good.
32
P=Rs 10 Q=50units
P1=Rs15 Q1=100units
Change in P=Rs 5 change in Q=50 units
Pes= (change in Q/change in P) x (P/Q)=(50/5) x (10/50)= 2
33

34 11.1- c
11.2. c
11.3. a
35 a) Quantity Supplied
b) Movement along the supply curve
c) Leftward
36 Supply of apples will decrease. Supply curve will shift to the leftward as in figure bellow supply curve shift from SS
to SS1 .Which shows decreased supply of apple.

37 (a) False : Extension of supply occurs due to increase in price of the given commodity other
factors remaining constant.
(b) False: In case of perfectly elastic supply, supply curve will be a horizontal straight line
parallel to the Y-axis.
(c) True: Using obsolete technique means fall in productivity and increases per unit cost of
production. As a supply curves shifts towards right.

38 (a) True. Because corresponding to a given change in the price (at the point of intersection)
flatter curve shows greater change in quantity.
 (b) True. Because, supply refers to the entire supply schedule (or supply curve) while quantity
supplied refers to a specific point on the supply curve which changes with change in own price
of the commodity.
(c) The supply curve of Tea will shift towards right.
39 Ans. Defended. It is because no producer (seller) would be prepared to sell his production in
the market if he is not able to recover AVC as it would bring losses to him between the range
of minimum MC and minimum AVC.
40 Ans. a (i)Infinity
Ans. b (i) (+2)
Ans. c Perfectly inelastic supply
Ans .d False
41 Ans. a (iii) Decreased
Ans. b (iv) Depends upon availability of fuel in the international market
Ans. c Supply of a commodity refers to various amounts of a commodity that the producers are
willing and able to sell at different possible prices of that commodity at a point of time.
ANS d (i) Own price of the commodity (ii) Price of related goods
42 The actual value of price elasticity of demand is always in negative sign as an inverse
relationship existing between Price and Demand. It will be not possible to categorize price
elasticity of demand into five categories if the negative sign is not ignored. It is not required in
case of price elasticity of supply because they have positive relationship.
43 P=Rs 7 Q=210 units
P1=Rs 20 Q1=?
Change in P= Rs13 change in Q=?
Pes= (change in Q/change in P) x (P/Q)
Or 1= (change in Q/13) x (7/210)
Or change in Q= (13x210)/7= 390
Or Q1=Q+ change in Q= 210+390=600 units
44 Price (in Firm X Firm Y Firm Z Market
Rs) (QX) (QY) (QZ) supply(QX+QY+QZ)
2 0 5 2 7
3 2 7 3 12
4 4 10 5 19
5 7 15 8 30
6 10 20 10 40
45 Minus sign is attached to elasticity of demand because there is inverse relation between price
and demand of a goo. But there is no minus sign with the elasticity of supply because of direct
relationship between price and supply of a good.

46 14.1 Left
14.2 Extension
14.3 Substitute
14.4 Inelastic
47

Ans. When import duty on crude and refined edible oil is up by 5% (other things remaining constant), it causes a
rise in the cost of imports. Accordingly, producers will supply less of crude and refined edible oil at the existing
price, or they will sell the same quantity only at a higher price. This implies a backward shift in supply curve or
decrease in supply as in Fig
 S1, is the initial supply curve. When government increases import duty, supply curve shifts to the left from S₁ to S₂.
48 ∆𝑄 𝑃
Price elasticity of supply =∆𝑃x𝑄
150 12
= 3 x500
=1.20
Es=1.20
Supply is highly elastic as Es >1
When percentage change in quantity supplied is more than the percentage change in price, then supply for such a
commodity is said to be highly elastic.
In such a case, Es > 1 and the supply curve has an intercept on the Y-axis.

49 (i) If Russia has banned the import of seafood from the European Countries, it generates an opportunity for the
Indian exporters to send supplies of seafood to the Russian market. India can earn foreign exchange which can be
used to import military hardware from Russia.

(ii) If seafood is exported to Russia, domestic supplies will reduce in India. Supply curve of seafood in the Indian
domestic market will shift to the left. Other things remaining constant, it would lead to increase in price in the
domestic market.
50 i) From point J to K, Price rises from $8 to $9 and quantity rises from 50 to 70 .So
% change in quantity= (70 - 50)/((70 + 50) / 2) x 100
20
=60x100
= 33.33
9−8
% change in price=9+8/2x100
1
=8.5x100
=11.76
%𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦
Elasticity of Supply= %𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒
33.33%
=11.76%
Es=2.83
The supply curve is elastic in this area; that is, its elasticity value is greater than one.
ii) From point L to M, Price rises from $10 to $11 and quantity rises from 80 to 88 .So
88−80
% change in quantity=88+80/2x100
8
=84x100
=9.52
11−10
% change in price=11+10/2x100
1
=10.5x100
=9.52
%𝑐ℎ𝑐𝑐𝑐𝑐 𝑐𝑐 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐
Elasticity of Supply=
%𝑐ℎ𝑐𝑐𝑐𝑐 𝑐𝑐 𝑐𝑐𝑐𝑐𝑐
9.52
=9.52
 =1
The supply curve is unitary elastic in this area.
ii) From point N to O, Price rises from $12 to $13 and quantity rises from 95 to 100 .So
∆𝑐 𝑐
Elasticity of Supply= x
∆𝑐 𝑐
5 12
=1x95
=5x.12
=.64
The supply curve is inelastic in this region of the supply.

51 Basis Change in Quantity Supplied Change in Supply

Meaning When the quantity supplied changes due to When the supply changes due to
change in price, keeping other factors constant, change in any factor other than the
it is known as change in quantity supplied. own price of the commodity, it is known
as change in supply.
Effect on supply It leads to a movement along the same supply It leads to shift in the supply curve
curve curve (either upward (known as Expansion in (either rightward (known as Increase in
supply) or downward (known as Contraction in supply) or leftward (known as decrease
supply). in supply).

Reason It occurs due to an increase or decrease in the It occurs due to a change other factors,
price of the given commodity. like change in the price of inputs,
change in taxes, change in technology
etc.
52 Given, P=10, TR=Rs.1000 Es=0.8
Q=TR/P=1000/10=100
If price falls by 10% i.e., 10% of Rs.10 is Re.1
Therefore the new price is Rs.9
Thus, Es’ =Change in Quantity supplied/ Change in price x P/Q
0.8=Change in Quantity/1 x 10/100
Change in Quantity= 8
As price falls quantity supply will rise
 Therefore Q1=Q + Change in Quantity=100+8=108
TR=P1 X Q1 =9 x 108= Rs. 972
53 Contraction of Supply Decrease in Supply
i)Contraction of supply refers to decrease Decrease in supply refers to decrease in
in quantity supplied due to decrease in own quantity supplied even when own price of the
price of the commodity. commodity is constant.
ii) Other determinants remaining constant. ii) Own price of the commodity remaining
constant,
iii) It leads to downward movement along iii) It leads to leftward/backward shift of
the supply curve. supply curve.
54 (a) When existing stocks of the supplier are low.
b) When owing to non-availability of factor and non-factor inputs, it is difficult to increase
output in a given time period.
(ii) (a)If Russia has banned import of the sea food from European countries, it gives an
opportunity for the Indian exporter to send supplies of sea food to Russia.
(b)If sea food is exported to Russia, domestic supplies will reduce in India.
The supply curve of sea food in the Indian domestic market will shift to the left.
55 i- Decrease in input cost.
ii- Decrease in tax rate.
iii- Advancement of technology.
Rise in subsidy.
56 It is because of decrease in the subsidies.
As subsidies by the government reduced, the supply of the vehicles reduced.
The supply curve of the vehicles will shift to the left.

57 a) True. Because vegetables are perishable goods.

b) False. There is no close substitute of railway service. The supply is not affected by the
change in price.
c) False. It is inelastic. It is a rare occasion. So, supply is not affected by price of
tickets.