Supply Quiz - ICSE Class 12 Economics

Free practice quiz: Supply (ICSE Class 12 Economics). 42 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

This ICSE Class 12 Economics practice quiz has 42 multiple-choice questions on Supply, and 42 of them come with an explanation. Try the 5 sample questions below (tap an option to check yourself), then play the full quiz online. No sign-up needed.

Sample questions

1. The law of supply states that, ceteris paribus, as the price of a good increases, the quantity supplied will:

   1. Decrease, because producers are less willing to sell.
   2. Increase, because producers are more willing to sell at higher prices.
   3. Remain the same, as supply is fixed in the short run.
   4. Decrease, due to the substitution effect for producers.
   Show answer

   Answer: B. Increase, because producers are more willing to sell at higher prices.

   The law of supply posits a direct relationship between the price of a good and the quantity supplied. Higher prices generally incentivize producers to supply more as it leads to higher potential profits.

2. Consider a market where the supply curve is upward sloping and the demand curve is downward sloping. If the government introduces a subsidy for producers, what will happen to the equilibrium quantity and price?

   1. Equilibrium quantity will decrease, and equilibrium price will increase.
   2. Equilibrium quantity will increase, and equilibrium price will decrease.
   3. Equilibrium quantity will increase, and equilibrium price will increase.
   4. Equilibrium quantity will decrease, and equilibrium price will decrease.
   Show answer

   Answer: B. Equilibrium quantity will increase, and equilibrium price will decrease.

   A subsidy to producers effectively lowers their cost of production, causing the supply curve to shift to the right. With a downward-sloping demand curve, this rightward shift in supply leads to a higher equilibrium quantity and a lower equilibrium price.

3. If a producer expects the price of their good to fall in the future, how might this influence their current supply decisions?

   1. They might increase current supply to sell more at the current higher price.
   2. They might decrease current supply to save inventory for the future.
   3. They will likely keep current supply the same, awaiting price confirmation.
   4. They will reduce production capacity immediately.
   Show answer

   Answer: A. They might increase current supply to sell more at the current higher price.

   If producers anticipate lower prices in the future, they have an incentive to sell as much as they can at the current, higher prices. This can lead to an increase in current supply.

4. If the price of inputs used in producing good X increases, and the price of inputs for producing good Y (a substitute in production) decreases, what is the most likely combined effect on the supply of good X?

   1. Supply of X will definitely increase.
   2. Supply of X will definitely decrease.
   3. Supply of X might increase or decrease, depending on the relative magnitude of changes.
   4. Supply of X will remain unchanged.
   Show answer

   Answer: B. Supply of X will definitely decrease.

   An increase in the cost of inputs for good X directly increases production costs, leading to a leftward shift (decrease) in the supply of X. The change in the cost of inputs for good Y affects the supply of Y, and potentially the incentive to produce X if they are substitutes in production, but the primary and direct effect on X's supply comes from its own input costs.

5. If a government imposes a price ceiling below the equilibrium price, what is the likely effect on the quantity supplied?

   1. Quantity supplied will increase.
   2. Quantity supplied will decrease.
   3. Quantity supplied will remain at the equilibrium level.
   4. The supply curve will shift to the right.
   Show answer

   Answer: B. Quantity supplied will decrease.

   A price ceiling set below the equilibrium price forces producers to sell at a lower price than they would prefer. This lower price reduces their incentive to produce and sell, leading to a decrease in the quantity supplied.

More questions in this quiz

Answers and explanations are in the full quiz.

1. If the cost of raw materials used in producing a good increases significantly, what is the most likely effect on the supply curve for that good?
2. The price elasticity of supply (PES) measures:
3. A perfectly inelastic supply curve is:
4. Which of the following factors would cause a movement *along* the supply curve, rather than a shift *of* the supply curve?
5. An improvement in production technology typically leads to:
6. Which of the following best describes the 'time horizon' as a determinant of supply elasticity?
7. If a government imposes a tax on each unit sold of a product, what is the immediate effect on the supply curve?
8. The supply of agricultural products in the short run is often inelastic because:
9. The 'number of sellers' in a market is a determinant of:
10. If the supply of a good is perfectly elastic, what is the price elasticity of supply value?
11. Which of the following is *not* a factor that influences the price elasticity of supply?
12. If the government imposes a per-unit subsidy on a good, this effectively:
13. What is the relationship between the supply curve and the marginal cost (MC) curve for a firm in a perfectly competitive market, assuming the firm is profit-maximizing?
14. A firm has a production function where doubling all inputs leads to more than double the output. This indicates:
15. Which of the following best describes the relationship between the supply of labor and the wage rate?
16. Consider the market for a durable good that can be easily stored. If producers expect a significant increase in demand and prices in the next period, what is the likely impact on the current supply?
17. The concept of 'producer surplus' is best represented by:
18. A firm's supply curve is derived from its:
19. If the government sets a price floor above the equilibrium price, what is the likely outcome in the market?
20. Which of the following would likely make the supply of a product more elastic?
21. What is the 'law of diminishing marginal returns' in the context of production?
22. Which of the following represents a change in the quantity supplied, rather than a change in supply?
23. What does a concave (bowed inward) supply curve imply about the elasticity of supply?
24. In a perfectly competitive market, a firm will shut down in the short run if the price falls below its:
25. What is the likely effect on the supply of electric vehicles (EVs) if the government significantly increases subsidies for EV charging infrastructure?
26. Which of the following best describes the 'responsiveness of producers to price changes' that the law of supply addresses?
27. If the cost of labor for a particular industry increases, what is the expected impact on the supply curve for that industry's products?
28. Which of the following conditions would lead to a perfectly inelastic supply?
29. The supply of natural resources like oil is often considered inelastic in the short run primarily because:
30. Which of the following pairs are substitutes in production?
31. A firm's supply curve shows the relationship between the price of a good and the:
32. If the number of firms in an industry decreases, what will happen to the market supply curve?
33. The supply of a good is considered 'elastic' when a 10% increase in price results in:
34. If a tax is levied on the production of a good, it will typically lead to:
35. Consider the market for a good whose production is pollution-intensive. If the government introduces stricter environmental regulations that increase the cost of production, what is the most likely outcome for the supply of this good?
36. If the price of a factor of production for good A decreases, while the price of a factor of production for good B (which is a complement in production) also decreases, what is the likely effect on the supply of good A?
37. What does a backward-bending supply curve of labor imply?

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