Chapter MCQ Test 2 — Supply
10 Questions • 12 min • Chapter MCQ
12:00
Question 1 of 10
The price of tomatoes rises and farmers bring more tomatoes to the market. This is best described as a:
Movement (extension) along the supply curve
Rightward shift
Leftward shift
New supply curve
Explanation: The good's own price rose, so we slide up the same curve — an extension of supply.
Question 2 of 10
A new machine halves a factory's production cost. At every price the firm now offers more, so the supply curve:
Shifts to the right (increase in supply)
Shifts left
Stays fixed
Becomes vertical
Explanation: Lower cost from better technology raises supply at each price, shifting the curve right.
Question 3 of 10
Price of a good rises from ₹40 to ₹50 and quantity supplied rises from 200 to 260. The elasticity of supply is:
1.2
0.83
2.5
0.3
Explanation: %ΔQ = (60/200)×100 = 30%; %ΔP = (10/40)×100 = 25%; Eₛ = 30 ÷ 25 = 1.2 (elastic).
Question 4 of 10
Fresh fish that cannot be stored has very inelastic supply in the short period mainly because the quantity:
Cannot be increased quickly when price rises
Always doubles
Falls with price
Is unlimited
Explanation: Perishable goods that take time to produce cannot respond quickly to price, so supply is inelastic short-term.
Question 5 of 10
A heavy tax imposed on cigarettes raises their cost of production. This will:
Decrease supply (shift the curve left)
Increase supply
Not affect supply
Make supply vertical
Explanation: A tax raises costs, reducing the quantity firms will supply at each price — a leftward shift.
Question 6 of 10
Why is supply usually more elastic in the long run than in the short run?
Firms can change all factors and expand capacity over time
Prices never change
Demand disappears
Stocks vanish
Explanation: Given time, producers adjust all inputs and build capacity, making quantity supplied more responsive.
Question 7 of 10
If the price of wheat (which a farmer could also grow) rises sharply, the farmer's supply of rice may:
Fall, as he switches land to wheat
Rise
Stay exactly the same
Become infinite
Explanation: A more profitable alternative good can draw resources away, decreasing the supply of this good.
Question 8 of 10
Distinguishing supply from stock matters because only supply is the part of the stock that is:
Actually offered for sale at a price
Destroyed
Demanded
Taxed
Explanation: Stock is everything available; supply is just what producers choose to offer for sale at the price.
Question 9 of 10
A perfectly inelastic supply (Eₛ = 0) means that when price changes, quantity supplied:
Does not change at all
Changes a lot
Falls to zero
Doubles
Explanation: With Eₛ = 0 the quantity is fixed regardless of price — a vertical supply curve.
Question 10 of 10
A single rule to separate a movement from a shift in supply is:
Own price → movement; any other factor → shift
Any change → shift
Any change → movement
Tax → movement; price → shift
Explanation: Own-price changes move us along the curve; changes in other determinants shift the whole curve.