Concept of Supply Short
Answer Type Questions Question
1. Distinguish between stock and supply. Answer: Stock
of a commodity refers to the total quantity of that commodity which at any
given time is available in the market with the seller, whereas supply refers to
that part of the stock that the seller is prepared to sell considering
different possible prices of the commodity, at a given time. Question
2. Distinguish between ‘decrease in supply’ and ‘contraction of supply’. Answer: When due to fall in price of a commodity, the quantity of its supply
decreases, and the supply is reduced, it is called contraction of supply. When
the quantity of supply decreases due to factors other than change in price, it
is called decrease in supply. In contraction of supply, we proceed along the
same supply curve, while in decrease of supply, the entire curve shifts
towards’the left. Question
3. State and explain the law of supply. Answer:
According to the law of supply, when the price of a commodity rises, its quantity
sup…
