CUET UG Booster Economics 4 Test (M5) -

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CUET UG Booster Economics 4 Test (M5)

⏱️ 30 Minutes

❓ 20 Questions

📌 Answers are locked once submitted — results and explanations appear at the end.

CUET UG Booster Economics 4 Test (M5)

1 / 20

QUESTION 1 OF 20

Which statements correctly describe the link between cost factors and a firm's supply?
I. The marginal cost curve determines the firm's short-run supply curve.
II. Average fixed cost alone determines the long-run supply curve.
III. Factors that shift the MC curve also shift the supply curve.

Answer Review

1 Which statements correctly describe the link between cost factors and a firm's supply?
I. The marginal cost curve determines the firm's short-run supply curve.
II. Average fixed cost alone determines the long-run supply curve.
III. Factors that shift the MC curve also shift the supply curve.

A I and II only

B I and III only

C II and III only

D All of the above

💡 Short Explanation

Short-run supply is derived from the MC curve. Long-run supply is not determined by AFC. Any factor shifting MC also shifts supply.

✅ Correct Answer Explanation

Evaluate each statement: Statement I: Correct. Under perfect competition, the firm's short-run supply curve is the rising portion of the MC curve above the minimum AVC. Statement II: Incorrect. In the long run, Average Fixed Cost (AFC) does not exist because all costs become variable. Long-run supply depends on LRMC and LRAC, not AFC. Statement III: Correct. Factors such as technology, input prices, and taxes shift the MC curve, which in turn shifts the firm's supply curve. Therefore, only Statements I and III are correct. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → I and II only

Statement II is incorrect because AFC is irrelevant in the long run.

Option C → II and III only

Statement II is false.

Option D → All of the above

Since Statement II is incorrect, this option is wrong.

🎯 Strategy

Used

Elimination

Application:

Evaluate each statement independently and eliminate options containing the incorrect statement.

Final Logic:

MC Determines Supply; AFC Does Not Determine Long-run Supply.

🧠 Memory Trick

MC Moves = Supply Moves

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Determinants of Supply

2 Match the supply concepts to their corresponding curves:

List 1	List 2
1. Short-run supply curve	a. Minimum of LRAC
2. Long-run supply curve	b. Rising part of LRMC
3. Break-even point	c. Point of minimum AC where supply curve cuts
4. Shut down point	d. Rising part of SMC above AVC

A 1-a, 2-b, 3-c, 4-d

B 1-c, 2-d, 3-a, 4-b

C 1-d, 2-b, 3-c, 4-a

D 1-b, 2-c, 3-d, 4-a

💡 Short Explanation

Short-run supply uses rising SMC above AVC. Long-run supply uses rising LRMC. Break-even occurs at minimum AC. Shutdown occurs at the minimum cost threshold.

✅ Correct Answer Explanation

The correct matching is: 1 → d: Short-run supply is the rising part of the SMC curve above AVC. 2 → b: Long-run supply is the rising part of the LRMC curve. 3 → c: Break-even occurs where the supply curve cuts the minimum AC. 4 → a: The long-run shutdown/exit condition is associated with the minimum LRAC. Therefore, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Incorrectly matches short-run supply with LRAC.
Option B → Reverses long-run and short-run concepts.
Option D → Incorrectly pairs break-even and shutdown conditions.

🎯 Strategy

Used

Option Grouping

Application:

Match each supply concept with its corresponding cost curve separately.

Final Logic:

SR → SMC, LR → LRMC, Break-even → AC, Shutdown → LRAC.

🧠 Memory Trick

SMC → SR | LRMC → LR

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Short-run and Long-run Supply Curves

3 An organisational innovation enables a firm to use fewer units of inputs for the same output. This increase in efficiency results in a/an _______ in the marginal cost at any given level of output.

A Decrease

B Increase

C Constant level

D Unpredictable fluctuation

💡 Short Explanation

Innovation improves production efficiency. Fewer inputs are required for the same output. Marginal cost falls.

✅ Correct Answer Explanation

Technological or organisational innovation allows the firm to produce the same output using fewer resources. This lowers the additional cost of producing one more unit. Therefore: Marginal Cost decreases. Hence, Option A is correct. Option B is incorrect because efficiency reduces cost. Option C is incorrect because technology changes costs. Option D is incorrect because the effect is predictable.

❓ Why Other Options Are Incorrect

Option B → Increase

Improved efficiency lowers marginal cost.

Option C → Constant level

Innovation changes production costs.

Option D → Unpredictable fluctuation

The direction of change is well established.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Associate organisational innovation with improved efficiency.

Final Logic:

Better Efficiency ⇒ Lower MC.

🧠 Memory Trick

Innovation = Lower Cost

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Technology and Marginal Cost

4 Assertion (A): Technological progress causes a firm to supply fewer units at any given market price.
Reason (R): Technological progress causes a rightward shift of the marginal cost curve.

A Both A and R are false

B A is true, but R is false

C Both A and R are true, and R explains A

D A is false, but R is true

💡 Short Explanation

Technology increases supply. Technology lowers marginal cost. The MC curve shifts downward (or rightward in supply terms), not rightward.

✅ Correct Answer Explanation

Evaluate both statements: Assertion (A): False. Technological progress enables the firm to produce more, not fewer, units at the same market price because production becomes more efficient. Reason (R): False. Technological progress does not shift the marginal cost curve to the right. Instead, it shifts the MC curve downward (or to the left) because the cost of producing each unit falls. Therefore: Assertion = False Reason = False Hence, Option A is the correct answer. Option B is incorrect because the Assertion is false. Option C is incorrect because both statements are not true. Option D is incorrect because the Reason is also false.

❓ Why Other Options Are Incorrect

Option B → A is true, but R is false

The Assertion is false.

Option C → Both A and R are true, and R explains A

Neither statement is true.

Option D → A is false, but R is true

The Reason is also false because MC decreases rather than shifting right.

🎯 Strategy

Used

Elimination

Application:

Evaluate the Assertion and Reason independently using the effect of technological progress on cost curves.

Final Logic:

Technology ⇒ Lower MC ⇒ Higher Supply.

🧠 Memory Trick

Technology = Lower MC = More Supply

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Technology and Supply

5 If the wage rate of labour increases, what is the immediate effect on the firm's cost curves?

A Only the average cost decreases

B Only the marginal cost decreases

C Average cost decreases but marginal cost increases

D Both average and marginal costs increase

💡 Short Explanation

Wages are an important production cost. Higher wages raise variable costs. Both average and marginal costs increase.

✅ Correct Answer Explanation

An increase in the wage rate raises the firm's labour cost. As labour is a variable input: Average Cost increases. Marginal Cost also increases. Consequently, the firm's supply curve shifts to the left. Therefore, Option D is correct. Option A is incorrect because costs do not decrease. Option B is incorrect because marginal cost increases. Option C is incorrect because both average and marginal costs rise together.

❓ Why Other Options Are Incorrect

Option A → Only the average cost decreases

Wage increases raise production costs.

Option B → Only the marginal cost decreases

Marginal cost rises with higher wages.

Option C → Average cost decreases but marginal cost increases

Both costs increase.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Relate higher wages directly to higher production costs.

Final Logic:

Higher Wage ⇒ Higher AC and Higher MC.

🧠 Memory Trick

Higher Wage = Higher Cost

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Input Prices and Cost Curves

6 Arrange the sequence of events following a change in input prices:
1. The firm supplies fewer units at any given price.
2. The price of an essential input increases.
3. The firm's supply curve shifts to the left.
4. The marginal cost curve shifts upward/leftward.

A 2, 4, 3, 1

B 1, 3, 4, 2

C 4, 2, 1, 3

D 3, 1, 2, 4

💡 Short Explanation

Input prices increase first. Production costs and marginal cost rise. Supply shifts left, reducing quantity supplied.

✅ Correct Answer Explanation

The logical sequence is: 1. The price of an essential input increases. 2. The firm's marginal cost curve shifts upward because production becomes more expensive. 3. The firm's supply curve shifts to the left due to higher costs. 4. The firm supplies fewer units at every given market price. Thus, the correct sequence is: 2 → 4 → 3 → 1 Hence, Option A is correct. Option B starts with the final outcome. Option C begins after the cost curve has already shifted. Option D places the supply shift before the increase in input prices.

❓ Why Other Options Are Incorrect

Option B → 1, 3, 4, 2

Begins with the result instead of the cause.

Option C → 4, 2, 1, 3

The marginal cost cannot shift before input prices increase.

Option D → 3, 1, 2, 4

The supply curve cannot shift before the increase in costs.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Arrange the economic events in a logical cause-and-effect sequence.

Final Logic:

Higher Input Price → Higher MC → Left Shift → Lower Supply.

🧠 Memory Trick

Cost ↑ → MC ↑ → Supply ←

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Effect of Input Prices on Supply

7 If LRMC₀ represents the original marginal cost and a unit tax of Rs t is imposed, what is the equation for the new marginal cost LRMC₁?

A LRMC₁ = LRMC₀ × t

B LRMC₁ = LRMC₀ − t

C LRMC₁ = LRMC₀ + t

D LRMC₁ = LRMC₀ / t

💡 Short Explanation

A unit tax increases the cost of every unit produced. Marginal cost rises by the amount of the tax. The new LRMC equals the original LRMC plus the tax.

✅ Correct Answer Explanation

A unit tax is imposed on each unit of output. Therefore, every additional unit produced costs Rs t more. Hence, New LRMC = Original LRMC + Unit Tax That is, LRMC₁ = LRMC₀ + t Therefore, Option C is correct. Option A is incorrect because the tax is added, not multiplied. Option B is incorrect because a tax increases rather than decreases cost. Option D is incorrect because dividing by the tax has no economic meaning.

❓ Why Other Options Are Incorrect

Option A → LRMC₁ = LRMC₀ × t

Unit tax is an addition, not a multiplication.

Option B → LRMC₁ = LRMC₀ − t

Taxes increase production costs.

Option D → LRMC₁ = LRMC₀ / t

This equation has no theoretical basis.

🎯 Strategy

Used

Substitution

Application:

Substitute the additional per-unit tax directly into the marginal cost equation.

Final Logic:

New MC = Old MC + Tax.

🧠 Memory Trick

Tax = Add to MC

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Unit Tax and Marginal Cost

8 Select the correct statements regarding the imposition of a unit tax:
I. It increases the total tax paid proportionally to the total output sold.
II. It shifts the firm's long-run supply curve to the right.
III. It reduces the quantity supplied by the firm at any given market price.

A I and II

B II and III

C I and III

D All of the above

💡 Short Explanation

Unit tax is paid on every unit sold. It raises production costs. Supply decreases at every market price.

✅ Correct Answer Explanation

Evaluate the statements: Statement I: Correct. Since the tax is imposed on every unit produced, total tax paid increases in proportion to output. Statement II: Incorrect. A unit tax increases production costs, causing the supply curve to shift left, not right. Statement III: Correct. Higher production costs reduce the quantity supplied at every price. Thus, Statements I and III are correct. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → I and II

Statement II is incorrect because supply shifts left.

Option B → II and III

Statement II is false.

Option D → All of the above

Since Statement II is incorrect, this option is wrong.

🎯 Strategy

Used

Elimination

Application:

Check each statement separately against the effect of a unit tax.

Final Logic:

Tax ↑ ⇒ Cost ↑ ⇒ Supply ↓.

🧠 Memory Trick

Unit Tax = Less Supply

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Effect of Unit Tax on Supply

9 If Firm A supplies 10 units at Rs 5, and Firm B supplies 15 units at Rs 5, what is the aggregate market supply at Rs 5?

A 5 units

B 25 units

C 150 units

D 12.5 units

💡 Short Explanation

Market supply is the sum of individual supplies. Add Firm A's output and Firm B's output. Total supply equals 25 units.

✅ Correct Answer Explanation

At the market price of Rs 5: Firm A supplies 10 units. Firm B supplies 15 units. Therefore, Market Supply = 10 + 15 = 25 units Hence, Option B is correct. Option A is obtained by incorrect subtraction. Option C results from multiplication. Option D is an incorrect average.

❓ Why Other Options Are Incorrect

Option A → 5 units

Market supply is not calculated by subtraction.

Option C → 150 units

Multiplication is incorrect.

Option D → 12.5 units

Market supply is the total, not the average.

🎯 Strategy

Used

Substitution

Application:

Add the quantities supplied by both firms directly.

Final Logic:

10 + 15 = 25.

🧠 Memory Trick

Market = Add Outputs

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Market Supply

10 The market supply curve is graphically constructed by taking the _______ of the individual supply curves of all firms active in the market.

A Vertical average

B Diagonal summation

C Vertical summation

D Horizontal summation

💡 Short Explanation

Supply curves are added horizontally. Quantities are summed at each market price. This gives the market supply curve.

✅ Correct Answer Explanation

The market supply curve is obtained by horizontally summing the quantities supplied by all firms at each market price. This means: Price remains constant. Individual quantities are added together. Therefore, Option D is correct. Option A is incorrect because vertical averaging is not used in supply analysis. Option B is incorrect because diagonal summation is not an economic method. Option C is incorrect because supply curves are not vertically summed.

❓ Why Other Options Are Incorrect

Option A → Vertical average

There is no such method for deriving market supply.

Option B → Diagonal summation

This is not an economic concept.

Option C → Vertical summation

Supply curves are horizontally, not vertically, added.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Recall the NCERT method for constructing the market supply curve.

Final Logic:

Market Supply = Horizontal Addition of Individual Supplies.

🧠 Memory Trick

Supply = Horizontal Sum

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Construction of Market Supply Curve

11 Match the price conditions with the corresponding total market supply, given:
S₁(p) = p − 10 for p ≥ 10, and
S₂(p) = p − 15 for p ≥ 15.

List 1 (Price Range)	List 2 (Total Supply S(p)
1. p < 10	a. 0
2. 10 ≤ p < 15	b. p - 10
3. p ≥ 15	c. (p - 10) + (p - 15)
4. p = 15	d. 5

A 1-b, 2-a, 3-d, 4-c

B 1-a, 2-b, 3-c, 4-d

C 1-c, 2-d, 3-a, 4-b

D 1-d, 2-c, 3-b, 4-a

💡 Short Explanation

Below ₹10, neither firm supplies. Between ₹10 and ₹15, only Firm 1 supplies. At or above ₹15, both firms supply. At ₹15, total supply equals 5 units.

✅ Correct Answer Explanation

Evaluate each price range: p < 10: Neither firm supplies because both supply functions begin at higher prices. Hence, total supply = 0 (a). 10 ≤ p < 15: Only Firm 1 supplies. Therefore, S(p) = p − 10 (b). p ≥ 15: Both firms supply. Thus, S(p) = (p − 10) + (p − 15) (c). p = 15: Firm 1 supplies 15 − 10 = 5 units and Firm 2 supplies 15 − 15 = 0 units. Hence, total supply = 5 (d). Therefore, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Incorrectly assigns positive supply below ₹10.
Option C → Incorrectly states zero supply when both firms are active.
Option D → Incorrectly matches the supply functions with the price ranges.

🎯 Strategy

Used

Substitution

Application:

Substitute each price range into the two supply equations and compute total market supply.

Final Logic:

Below 10 → 0; 10–15 → S₁; ≥15 → S₁ + S₂.

🧠 Memory Trick

10 Starts S₁, 15 Starts S₂

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Market Supply from Individual Supply Functions

12 Using the individual supply functions S₁(p) = p − 10 (for p ≥ 10) and S₂(p) = p − 15 (for p ≥ 15), what is the equation for the combined market output Sₘ(p) for p ≥ 15?

A 2p − 15

B p − 25

C 2p + 25

D 2p − 25

💡 Short Explanation

Market supply is the sum of individual supplies. Add both supply equations. Simplify the resulting expression.

✅ Correct Answer Explanation

For p ≥ 15, both firms produce. Given: S₁(p) = p − 10 S₂(p) = p − 15 Therefore, Sₘ(p) = (p − 10) + (p − 15) = 2p − 25 Hence, Option D is correct. Option A ignores one constant term. Option B adds only the constants incorrectly. Option C uses an incorrect sign.

❓ Why Other Options Are Incorrect

Option A → 2p − 15

The constants have not been added correctly.

Option B → p − 25

One price term is missing.

Option C → 2p + 25

The constants should be negative.

🎯 Strategy

Used

Substitution

Application:

Add the two supply equations term by term.

Final Logic:

(p − 10) + (p − 15) = 2p − 25.

🧠 Memory Trick

Add Both Supply Equations

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Combined Market Supply

13 When a highly profitable industry naturally attracts new firms, the aggregate market supply curve shifts to the right, representing a/an _______ in overall market supply.

A Decrease

B Stagnation

C Increase

D Elasticity drop

💡 Short Explanation

High profits encourage new firms to enter. More firms increase total production. Market supply increases.

✅ Correct Answer Explanation

When an industry earns high profits, new firms enter the market. As the number of producers increases, the total quantity supplied at every price also increases. Thus, the market supply curve shifts to the right, representing an increase in market supply. Hence, Option C is correct. Option A is incorrect because supply rises, not falls. Option B is incorrect because supply changes. Option D is incorrect because the question concerns supply, not elasticity.

❓ Why Other Options Are Incorrect

Option A → Decrease

Entry of firms increases supply.

Option B → Stagnation

Market supply changes significantly.

Option D → Elasticity drop

Entry affects supply, not necessarily elasticity.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Associate firm entry with greater market output.

Final Logic:

More Firms = More Supply.

🧠 Memory Trick

Entry = Increase

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Market Supply Shift

14 Assertion (A): The exit of firms from a market shifts the aggregate market supply curve to the right.
Reason (R): Exiting firms increase the overall production capacity of the remaining firms in the market.

A Both A and R are false

B A is true, but R is false

C Both A and R are true, and R explains A

D A is false, but R is true

💡 Short Explanation

Exit reduces market supply. Supply shifts to the left, not the right. Remaining firms do not automatically gain production capacity.

✅ Correct Answer Explanation

Evaluate both statements: Assertion (A): False. When firms exit, market supply decreases, causing the aggregate supply curve to shift left, not right. Reason (R): False. The exit of firms does not automatically increase the production capacity of the remaining firms. Their productive capacity remains unchanged unless they independently expand production. Therefore, Option A is correct. Option B is incorrect because the Assertion is false. Option C is incorrect because both statements are not true. Option D is incorrect because the Reason is also false.

❓ Why Other Options Are Incorrect

Option B → A is true, but R is false

The Assertion is false.

Option C → Both A and R are true, and R explains A

Neither statement is true.

Option D → A is false, but R is true

The Reason is also false.

🎯 Strategy

Used

Elimination

Application:

Evaluate the Assertion and Reason separately using the concept of market supply.

Final Logic:

Firm Exit ⇒ Left Shift ⇒ Both Statements False.

🧠 Memory Trick

Exit = Left

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Exit of Firms and Market Supply

15 The price elasticity of supply is mathematically calculated as the ratio of:

A Change in quantity to change in price

B Total revenue to total cost

C Marginal cost to average variable cost

D Percentage change in quantity supplied to percentage change in market price

💡 Short Explanation

Elasticity measures responsiveness. It compares percentage changes. Quantity change is divided by price change.

✅ Correct Answer Explanation

Price elasticity of supply measures how responsive quantity supplied is to a change in price. Its formula is: Price Elasticity of Supply = Percentage Change in Quantity Supplied ÷ Percentage Change in Market Price Therefore, Option D is correct. Option A uses absolute changes instead of percentage changes. Option B is unrelated to elasticity. Option C compares cost concepts rather than responsiveness.

❓ Why Other Options Are Incorrect

Option A → Change in quantity to change in price

Elasticity requires percentage changes, not absolute changes.

Option B → Total revenue to total cost

This is not an elasticity measure.

Option C → Marginal cost to average variable cost

These are cost concepts, not elasticity.

🎯 Strategy

Used

Odd One Out

Application:

Identify the only option that states the standard NCERT elasticity formula.

Final Logic:

Elasticity = %ΔQ ÷ %ΔP.

🧠 Memory Trick

%Q over %P

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Price Elasticity of Supply

16 Arrange the steps required to calculate the price elasticity of supply:
1. Divide the percentage change in quantity by the percentage change in price.
2. Note the initial and new market prices.
3. Note the initial and new quantities supplied.
4. Calculate the percentage changes in both price and quantity.

A 1, 2, 3, 4

B 2, 3, 4, 1

C 3, 2, 1, 4

D 4, 3, 2, 1

💡 Short Explanation

Record price data first. Record quantity data next. Compute percentage changes before calculating elasticity.

✅ Correct Answer Explanation

The correct procedure for calculating price elasticity of supply is: 1. Note the initial and new market prices. 2. Note the initial and new quantities supplied. 3. Calculate the percentage changes in price and quantity. 4. Divide the percentage change in quantity supplied by the percentage change in price. Thus, the correct sequence is: 2 → 3 → 4 → 1 Hence, Option B is correct. Option A starts with the final calculation. Option C performs the calculation before finding percentage changes. Option D follows an illogical reverse order.

❓ Why Other Options Are Incorrect

Option A → 1, 2, 3, 4

Division cannot be performed before calculating percentage changes.

Option C → 3, 2, 1, 4

Percentage changes must be calculated before division.

Option D → 4, 3, 2, 1

The logical sequence is reversed.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Arrange the calculation steps in the correct mathematical order.

Final Logic:

Price → Quantity → % Changes → Elasticity.

🧠 Memory Trick

Price → Quantity → % → Divide

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Calculation of Price Elasticity of Supply

📄 Passage

"Suppose the market for cricket balls is perfectly competitive. When the price of a cricket ball is Rs 10, let us assume that 200 cricket balls are produced in aggregate. When the price rises to Rs 30, 1,000 cricket balls are produced.

The percentage change in quantity supplied:
(1000 − 200) / 200 × 100 = 400%
The percentage change in market price:
(30 − 10) / 10 × 100 = 200%"
According to the passage, what is the calculated percentage change in the quantity supplied?

A 400%

B 200%

C 800%

D 1000%

💡 Short Explanation

Quantity rises from 200 to 1000. Increase equals 800 units. Percentage increase equals 400%.

✅ Correct Answer Explanation

Using the formula: Percentage Change in Quantity Supplied = (Change in Quantity / Initial Quantity) × 100 = (1000 − 200) / 200 × 100 = 800 / 200 × 100 = 4 × 100 = 400% Hence, Option A is correct. Option B is the percentage change in price. Option C results from an incorrect calculation. Option D is not obtained from the given data.

❓ Why Other Options Are Incorrect

Option B → 200%

This is the percentage increase in price, not quantity supplied.

Option C → 800%

The increase is 800 units, not 800%.

Option D → 1000%

This value is not supported by the calculation.

🎯 Strategy

Used

Substitution

Application:

Substitute the given quantities directly into the percentage change formula.

Final Logic:

(800 ÷ 200) × 100 = 400%.

🧠 Memory Trick

800 over 200 = 4 = 400%

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Percentage Change in Quantity Supplied

📄 Passage

The percentage change in quantity supplied:
(1000 − 200) / 200 × 100 = 400%
The percentage change in market price:
(30 − 10) / 10 × 100 = 200%"
Based on the data provided in the passage, what is the final price elasticity of supply for cricket balls?

A 0.5

B 1.5

C 2.0

D 4.0

💡 Short Explanation

Elasticity equals percentage change in quantity divided by percentage change in price. Quantity change = 400%. Price change = 200%.

✅ Correct Answer Explanation

Price elasticity of supply is calculated as: Price Elasticity of Supply = Percentage Change in Quantity Supplied ÷ Percentage Change in Price = 400% ÷ 200% = 2.0 Therefore, Option C is correct. Option A incorrectly reverses the ratio. Option B is not obtained from the calculation. Option D incorrectly uses only the percentage change in quantity.

❓ Why Other Options Are Incorrect

Option A → 0.5

This is the reciprocal of the correct value.

Option B → 1.5

This value is not obtained from the given data.

Option D → 4.0

This represents only the percentage change in quantity.

🎯 Strategy

Used

Substitution

Application:

Use the percentage values given in the passage directly in the elasticity formula.

Final Logic:

400% ÷ 200% = 2.

🧠 Memory Trick

400 ÷ 200 = 2

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Price Elasticity of Supply

19 Which of the following statements about elasticity types is/are correct?
I. A perfectly vertical supply curve has an elasticity of 0.
II. A supply curve cutting the positive price-axis has eₛ > 1.
III. A supply curve passing directly through the origin has eₛ < 1.

A I and II only

B I only

C II and III only

D I, II, and III

💡 Short Explanation

Vertical supply has zero elasticity. A positive price-axis intercept implies elasticity greater than one. A supply curve through the origin has unit elasticity.

✅ Correct Answer Explanation

Evaluate each statement: Statement I: Correct. A vertical supply curve has zero elasticity because quantity supplied does not change with price. Statement II: Correct. A straight-line supply curve cutting the positive price-axis has elasticity greater than one. Statement III: Incorrect. A supply curve passing through the origin has unit elasticity (eₛ = 1), not less than one. Therefore, only Statements I and II are correct. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → I only

Statement II is also correct.

Option C → II and III only

Statement III is incorrect.

Option D → I, II, and III

Statement III is false.

🎯 Strategy

Used

Elimination

Application:

Evaluate each statement separately using standard elasticity rules.

Final Logic:

Vertical = 0, Price-axis = >1, Origin = 1.

🧠 Memory Trick

Vertical 0 | Origin 1 | Price-axis >1

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Types of Price Elasticity of Supply

20 If the elasticity of a straight-line supply curve passing exactly through the origin is denoted by eₛ, then what must be true?

A eₛ < 1

B eₛ > 1

C eₛ = 1

D eₛ = 0

💡 Short Explanation

A supply curve through the origin has unit elasticity. Elasticity remains equal to one at every point. This is a standard NCERT result.

✅ Correct Answer Explanation

For a straight-line supply curve passing through the origin, the price elasticity of supply is exactly one at every point on the curve. Therefore: eₛ = 1 Hence, Option C is correct. Option A is incorrect because elasticity is not less than one. Option B is incorrect because elasticity is not greater than one. Option D is incorrect because zero elasticity applies only to a vertical supply curve.

❓ Why Other Options Are Incorrect

Option A → eₛ < 1

This applies to a supply curve cutting the positive quantity-axis.

Option B → eₛ > 1

This applies to a supply curve cutting the positive price-axis.

Option D → eₛ = 0

This applies only to a perfectly inelastic (vertical) supply curve.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Recall the standard elasticity properties of straight-line supply curves.

Final Logic:

Supply Through Origin ⇒ Unit Elasticity (eₛ = 1).

🧠 Memory Trick

Origin = One

📚 Class XI – Introductory Microeconomics – Chapter: The Theory of the Firm under Perfect Competition – Topic: Types of Price Elasticity of Supply

CUET UG Booster Economics 4 Test (M5)

Test Complete!

Answer Review