The supply curve of a normal good is ____________ sloping. It depicts ___________ on the x-axis and ___________ on the y-axis.
upward, quantity supplied, price.
Understanding the Supply Curve of a Normal Good
The question asks about the characteristics of the supply curve for a normal good, specifically its slope and what is represented on the x and y axes of the graph.
In economics, a supply curve is a graphical representation showing the relationship between the price of a good or service and the quantity supplied by producers at that price, assuming all other factors remain constant. A normal good, in the context of supply, is simply a standard good where the law of supply applies.
The Slope of the Supply Curve
For most goods, including normal goods, the supply curve is upward sloping. This relationship is based on the Law of Supply.
- The Law of Supply states that, all else being equal (ceteris paribus), as the price of a good or service increases, the quantity supplied increases, and conversely, as the price decreases, the quantity supplied decreases.
- Producers are typically willing and able to supply more of a good at higher prices because higher prices can cover higher production costs (like overtime pay or using less efficient resources) and lead to greater profits.
Therefore, the first blank in the question should be filled with "upward".
Axes on the Supply Curve Graph
The standard convention for graphing supply and demand curves in economics is to place:
- Quantity (either quantity demanded or quantity supplied) on the horizontal axis (x-axis).
- Price on the vertical axis (y-axis).
This convention is widely used to depict how quantity supplied changes in response to a change in price.
Following this convention, the second blank (depicting the x-axis) should be filled with "quantity supplied", and the third blank (depicting the y-axis) should be filled with "price".
Completing the Statement
Putting it all together, the completed statement is:
The supply curve of a normal good is upward sloping. It depicts quantity supplied on the x-axis and price on the y-axis.
Analyzing the Options
Let's compare this completed statement with the given options:
| Option | Slope | X-axis Depiction | Y-axis Depiction | Matches? |
|---|---|---|---|---|
| 1 | downward | price | quantity supplied | No |
| 2 | upward | quantity supplied | price | Yes |
| 3 | upward | price | quantity supplied | No |
| 4 | downward | quantity supplied | price | No |
Based on the analysis, Option 2 correctly identifies the upward slope, quantity supplied on the x-axis, and price on the y-axis.
Revision Table: Key Concepts
| Concept | Description |
|---|---|
| Supply Curve | Graph showing relationship between price and quantity supplied. |
| Law of Supply | Higher price leads to higher quantity supplied (ceteris paribus). |
| Supply Curve Slope | Upward (for normal goods). |
| X-axis | Quantity (supplied or demanded). |
| Y-axis | Price. |
Additional Information on Supply
Understanding the supply curve involves more than just its slope and axes. Here are some related concepts:
- Movement along the Supply Curve: A change in the price of the good causes a movement along the existing supply curve, leading to a change in the quantity supplied.
- Shift of the Supply Curve: Changes in factors other than the price of the good itself (like input costs, technology, number of sellers, expectations, government policies like taxes or subsidies) can cause the entire supply curve to shift either to the left (decrease in supply) or to the right (increase in supply).
- Individual vs. Market Supply: An individual supply curve shows the quantity supplied by a single producer. The market supply curve is the horizontal summation of all individual supply curves in the market.
These concepts help to build a complete picture of how supply works in a market.
Similar Questions
The supply curve of cars is expected to shift rightwards with:
i. An increase in the price of cars
ii. A decrease in fuel prices
The demand curve gives the quantity demanded by the consumer at each ____________.
Which of the following statements is INCORRECT in the context of demand function?
Marginal Product is defined as:
The cross elasticity of demand means responsiveness of the quantity demanded of a good to a change in:
In case of inferior goods, income elasticity of demand is _____________.
A perfectly elastic supply curve means:
i. A horizontal supply curve
ii. Price Elasticity of Supply = Infinity
The law of demand holds good when:
For normal goods, the demand curve has a/an ______ slope.
Which of the following is/are constant along a demand curve?
(1) Income of the consumers
(2) Price of related goods
Important Questions from Demand analysis
Tea and coffee are _______ goods.
Sweezy's kinked demand curve model to explain the price and output determination relates to which type of market structure?
Arrange the following goods in the ascending order of the underlying income elasticity of demand.
(A) Necessities
(B) Inferior goods
(C) Normal goods
(D) Luxury goods
(E) Giffen goods
Choose the correct answer from the options given below:
The steps involved in development of a project are given below. Arrange them in proper sequence:
(A) Selection of business idea for a detailed analysis from the competing ideas
(B) Project installation and initiation
(C) Feasibility analysis
(D) Identification of investment opportunity
(E) Arrangements for financing
Choose the correct answer from the options given below:
Match List I with List II
List I
List II
A.
Snob effect
I.
If firms are disproportionately powerful, the market leader makes the first move and captures two-thirds of the market.
B.
Small-world model
II.
When some people demand a smaller quantity of a commodity as more people consume it, in order to be different and exclusive
C.
Stackelberg model
III.
Oligopolistic firms seek to maximise sales after an adequate rate of profit has been earned to satisfy stockholders.
D.
Sales maximisation model
IV.
Theory that a corporate giant can be made to operate as a small firm by linking well connected individuals from each level of the organisation to one another.
Choose the correct answer from the options given below:
