state whether true or false and give reason:
(i) decrease on subsidy on a good decreases its supply and the curve shifts right.
(ii) if percentage in price is more the percentage change in its supply, the supply curve will pass through origin.
(iii) if a farmer grows both wheat and rice, then due to an increase in the price of wheat, the supply curve of rice shifts to the left.
Dear student,
1. A decrease in the subsidy implies that the cost of production increases. This leads to a decrease in the supply. This is represented by a parallel leftward shift of the supply curve. So, the given statement is false.
2. If the percentage change in price is more than the percentage change in supply then this suggests that the supply is price inelastic. This is graphically represented by such supply curve that originates from the horizontal axis. So, the given statement is false.
3. With an increase in the price of wheat, the farmer would shift towards the production of wheat. So, the supply of wheat would rise and that of rice would fall. This is represented by a parallel leftward shift of the supply curve of rice. So, the given statement is true.
1. A decrease in the subsidy implies that the cost of production increases. This leads to a decrease in the supply. This is represented by a parallel leftward shift of the supply curve. So, the given statement is false.
2. If the percentage change in price is more than the percentage change in supply then this suggests that the supply is price inelastic. This is graphically represented by such supply curve that originates from the horizontal axis. So, the given statement is false.
3. With an increase in the price of wheat, the farmer would shift towards the production of wheat. So, the supply of wheat would rise and that of rice would fall. This is represented by a parallel leftward shift of the supply curve of rice. So, the given statement is true.