Read the following hypothetical information carefully and answer the questions 1-6 on the basis of the same:
| Price (₹) | Supply (Units) |
| 1 | 5 |
| 5 | 10 |
| 10 | 15 |
1. On the basis of the data given above when price changes from 1 to 5, that situation will be called ______.
(a) extension of supply
(b) contraction of supply
(c) increase in supply
(d) decrease in supply
2. On the basis of your answer of the above question, what will be the shape of new supply curve?
(a) There is upward movement on the same supply curve
(b) There is downward movement on the same supply curve
(c) There is forward shift in supply curve
(d) There is backward shift in supply curve
3. On the basis of the data given above when price changes from ₹ 10 to ₹ 1, that situation will be called ______.
(a) extension of supply
(b) contraction of supply
(c) increase in supply
(d) decrease in supply
4. On the basis of your answer of the above question, what will be the shape of new supply curve?
(a) There is upward movement on the same supply curve
(b) There is downward movement on the same supply curve
(c) There is forward shift in supply curve
(d) There is backward shift in supply curve
5. Read the following statements carefully and choose the correct alternative among those given below:
Statement 1: Increase in supply occurs when more is supplied at the existing price.
Statement 2: Decrease in supply leads to a backward shift in supply curve.
(a) Both the statements are true
(b) Both the statements are false
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false
6. If the producer expects price of the commodity to rise in the near future, current supply of the commodity will reduce. (True or False)