Supply is a concept:
Options
AStock
BFlow
CBoth
DNone
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Theory of Demand and SupplyPYQ - Dec 2023Question 34 of 20
All Questions Correct Answer
✅ Option b — Flow
All Options:
- AStock
- BFlow
- CBoth
- DNone
Detailed Solution & Explanation
To understand the concept of supply, we need to break it down into its basic components.
• Supply refers to the quantity of a good or service that producers are willing and able to produce and sell at a given price level over a specific period of time.
• This concept is closely related to the idea of a flow, which represents a rate of change or a quantity per unit of time.
• In economics, the law of supply states that as the price of a good or service increases, the quantity supplied also increases, ceteris paribus.
• The concept of supply is dynamic, meaning it changes over time in response to changes in price, technology, and other factors.
The correct answer is based on the idea that supply represents a flow of goods and services into the market, rather than a stock, which represents a quantity at a single point in time.
• Option A, stock, is incorrect because it represents a static quantity, whereas supply is a dynamic concept.
• Option C, both, is also incorrect because supply is more accurately described as a flow, rather than a combination of stock and flow.
About This Chapter: Theory of Demand and Supply
Paper
Paper 4: Business Economics
Weightage
10%
Key Topics
Law of Demand/Supply, Elasticity, Consumer Behavior
One of the most important chapters in the entire CA Foundation Economics paper. It covers the Law of Demand, Law of Supply, Elasticity of Demand (Price, Income, and Cross), Consumer Behavior (Cardinal and Ordinal approaches), and the concept of Consumer Surplus. Understanding demand and supply curves and their shifts is essential for grasping market dynamics.
View Official ICAI SyllabusExam Strategy Tip
Master the difference between 'Change in Demand' (shift) and 'Change in Quantity Demanded' (movement). This distinction alone can secure 3-5 marks. Also practice Elasticity numerical calculations.
Key Concepts to Understand
Related Comparison Tables
More Questions from Theory of Demand and Supply
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Contraction of demand is the result of:
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If the price of Coffee increases, the demand for Tea will:
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