Questions 25-29 appear to be related to supply and demand concepts. What are the definitions of 'extension in quantity supplied', 'increase in supply', 'inelastic demand', 'shortage', and 'effective d

Here are the answers to questions 25-31:

Question 25: The movement from A to B is along the same supply curve ($S_1$). As the price increases from $P_1$ to $P_2$, the quantity supplied increases from $Q_1$ to $Q_2$. This movement along the supply curve due to a change in price is called an extension in quantity supplied.

• B) An extension in quantity supplied

Question 26: The movement from B to C involves a shift from supply curve $S_1$ to $S_2$ at the same price $P_2$. Since $S_2$ is to the right of $S_1$, it indicates that a greater quantity is supplied at the same price. This is termed an increase in supply.

• C) An increase in supply

Question 27: When the coefficient of elasticity of demand is less than one (i.e., $0 < \text{PED} < 1$), it means that the percentage change in quantity demanded is proportionally smaller than the percentage change in price. This characteristic defines inelastic demand.

• C) Inelastic demand

Question 28: Excess demand over the supply of a commodity means that at a given price, the quantity consumers want to buy is greater than the quantity producers are willing to sell. This situation immediately leads to a shortage of the commodity in the market.

• D) Shortage

Question 29: Effective demand refers to the desire for a good or service backed by the ability and willingness to pay for it. It implies that the consumer has the financial means to make the purchase. This ability is known as purchasing power.

• D) Purchasing power

Question 30: When the supply of a commodity increases (shifts to the right) while demand remains constant, the market equilibrium adjusts. The increased availability of the commodity will lead to a lower equilibrium price and a higher equilibrium quantity.

• A) The price falls and the quantity increases.

Question 31: A market structure where there is only one buyer for a product or service is known as a monopsony. This is the counterpart to a monopoly, which has a single seller.

• D) Monopsony