When the supply of the commodity changes due to factors, other than the price of the commodity like change in technology, change in price of inputs etc., is called 'change in supply'.

Yes, the supply curve is the rising portion of the MC curve over and above the minimum of AVC curve. This is so because no rational producer would like to supply his output to the market, if he is not able to cover his per unit variable cost, as it would lead to losses between the range of minimum of MC and minimum of AVC.

Average revenue refers to revenue per unit of commodity.

                        Average Revenue = \(\frac { Total\quad Revenue }{ Units\quad of\quad Output\quad Sold } \)

                                 ​Total Revenue = \(Price\quad \times \quad Units\quad Of\quad Output\quad Sold\)

   \(\therefore\)                                              AR = \(\frac { P\quad \times \quad Q }{ Q } \quad \)  price

This shows that AR and price are always same

From the given schedule, we can say that AR is always equal to price

(i) Interest paid on borrowed money to start a business is an explicit cost.
(ii) The imputed value of the salary of the producer is implicit cost as he is supplying his own service in the business.

Determination of firm's equilibrium

MR_n=TR_n-TR_n-1,MC_n=TC_n-TC_n-1
Level of output Firms fulfilled the following two production necessary conditions at 4th unit of output.
(i) MR=MC
(ii) MC must be rising after the equilibrium output.
Reason Firm's in equilibrium at 4th unit of output because at this unit MR=MC, i.e Rs.7 and MC is rising, thereafter.Profit at 4th unit of output is Rs.0

(i) False, this is because of decline in Marginal Product. Falling Marginal Product implies that Total Product continues to increase at a diminishing rate.
(ii) False, Average Product can rise even when Marginal Pqroduct falls.

Yes, I agree that a loss-making firm has inelastic supply.This is mainly because the firm cannot adjust its production as quickly as the price increase.Such firm will not have enough money to invest in additional production.This will result in less percentage of increase in supply than the percentage of increase in price.

A reduction in marginal cost of stainless steel raises the supply of stainless steel.When the supply of stainless steel increases, the supply of goods using stainless steel as the raw material shall also increase, because their cost of production will also fall, implying that the supply curve of stainless steel utensils will shift to the right.

This is true developing countries have supply constraints.Supply is limited due to underdeveloped technology, inadequate transportation and infrastructural facilities and scarce resources etc.Producers are willing to increase supply but do not have the resources do so.

Producer's equilibrium refers to a situation, where a producer is producing that level of output, at which its profits are maximum. In other words, it is a situation of profit maximisation or cost minimisation (under MR and MC approach). Following schedule explain the producer's equilibrium:

Conditions of producers equilibrium Following are the two conditions of producer's equilibrium:
(i) MR=MC (Marginal Revenue = Marginal Cost)
(ii) MC must be rising at the point of equilibrium or MC curve must cut MR curve from below. In the given schedule MR = MC, both at 2 units and 10 units of output, but the second condition of rising MC is fulfilled only at 10th unit of output. So, the producer is in equilibrium when he is producing io units.

Cost in economics refers to the sum of all the direct and indirect expenditure on inputs and some minimum profit (normal profit).

The direct expenditure means expenses incurred on actual purchase or hiring of inputs such as wages and salaries paid to labour, payments for raw materials, payments for the purchase of machinery and equipment etc. It is called' explicit cost'. The indirect expenditure refers to the estimated value of inputs provided by the owners/firms. Theowner may own certain factor services which he may use in his own business. For example, the owner may contribute his own land, his own capital and may provide managerial services etc.

It called 'implicit cost'. Minimum profit (or called normal profit) refers to the amount of profit which a producer must get in the long run to continue to produce the given good. It is a part of cost of production. Thus, cost in economics consists of these components: (i) Explicit cost, (ii) Implicit cost and

(iii) Minimum profit (or normal profit).

The law of variable proportions states that if we go on using more and more units of a variable factor (labour), keeping other inputs fixed, the total product increases at an increasing rate in the beginning, then increases at a diminishing rate and after a level of output, it ultimately falls. In accordance with law, the marginal product increases in the beginning, then it starts falling but remains positive and ultimately it continues to fall and becomes negative also. The following schedule and diagram illustrate the law:

Elasticity of supply may be defined as the degree of responsiveness of the quantity supplied of a commodity to change in its price.

Under geometric method, the elasticity of supply is measured at a point on the supply curve. To explain this method, let us draw three straight line supply curves.

To measure elasticity of supply at a point, we extend the supply curve so that its meets the x-axis at point B in its negative range, positive range and exactly at the point of origin. Elasticity of supply at a point (say A) is equal to the horizontal segment BC divided by the quantity supplied at point A. Thus,

\({ e }_{ s\quad }=\quad { BC }/{ OC }\)

In Fig.  (i), \({ e }_{ s }=\frac { BC }{ OC } >1\)                                              \(\left[ \because \quad BC\quad >\quad OC \right] \)

In Fig,  (ii), \({ e }_{ s }=\frac { BC }{ OC } <1\)                                                 \(\left[ \because \quad BC\quad <\quad OC \right] \)

In Fig,  (iii), \({ e }_{ s }=\frac { OC }{ OC } =1\)                                                  \(\left[ \because \quad BC\quad =\quad OC \right] \)

Thus, it can be concluded that:

a straight line supply curve which intersects the x-axis in its negative range implies e_s > 1

a straight line supply curve which intersects the x-axis in its positive range implies e_s < 1.

a straight line supply curve passing the origin implies e_s = 1irrespective of how steep or flat it is.

Under percentage method,  elasticity of supply is measured by dividing the percentage change in quantity supplied of a commodity by percentage change in its price.

                                          \({ e }_{ s }=\frac { Percentage\quad change\quad in\quad quantity\quad supplied }{ Percentage\quad change\quad in\quad price } \)

                                              \(=\frac { \triangle { q }/{ p\quad }\times \quad 100 }{ \triangle { p }/{ q\quad \times \quad 100\quad } } =\frac { \triangle { q }_{ s } }{ \triangle { p } } .\frac { p }{ { q }_{ s } } \)

 \(\therefore\)                                       \({ e }_{ s }=\frac { \triangle { q }_{ s } }{ \triangle { p } } .\frac { p }{ { q }_{ s } } \)

Example. 

                                           \({ e }_{ s }=\frac { \triangle { q }_{ s } }{ \triangle { p } } \times \frac { p }{ { q }_{ s } } =\frac { 100 }{ 10 } \times \frac { 10 }{ 100 } =1\)

Thus, \({ e }_{ s }\) is unity of 1.

The producer's equilibrium condition's are (i) MC = MR and (ii) MC > MR after equilibrium, i.e., MC = MR.

  (i) When MC > MR: In this situation, it will be profitable for the given firm to produce more or less depending upon relative changes in MC and MR till MC = MR.

  (ii) When MC < MR: It will be profitable for the producer to produce more till MC = MR.

MC = MR is not a sufficient condition to ensure equilibrium. Given MC = MR, suppose the behaviour of MC and MR is such that if one more unit is produced MC becomes less than MR. Then, in this case, it would be profitable for the firm to produce more. Therefore, in this case, though MC = MR, the producer is not in equilibrium.

However, if after MC = MR output, MC becomes greater than MR, it will be most advantageous for the firm to produce only upto MC = MR.

(a) When there is Increasing Returns to a Factor, the total product (TP) increases at an increasing rate. Marginal product (MP) is increasing till it reaches its maximum.

Reasons for increasing returns to a factor:

    (i) Optimum combination of factors. In the beginning, when quantities of a variable factor are applied to fixed factor, the system moves towards achievement of optimum combination of factors because then underutilised fixed factors (like machinery, building) are better and more fully used leading to increasing returns.

   (ii) Specialisation. The second reason for getting increasing returns to a factor is that with a larger scale, we can introduce more division of labour or specialisation.

A greater degree of division of labour greatly raises productivity of labour and other factors.

(b) In the second phase, we have diminishing returns to a factor. The total product (TP) increases at a diminishing rate till it reaches the maximum point. Marginal product (MP) is falling but is positive. This phase is crucial because the firms would like to produce in this stage.

Diminishing returns to a factor may occur due to following reasons:

        (i) Fixity of the factor. Fixity of factor(s) is the principal cause that explains
the occurrence of the diminishing returns to a factor. As more and more units of the variable factor continue to be combined with the fixed factor, the latter gets overutilised. Hence, the diminishing returns occur.

       (ii) Imperfect substitution. Factors of production are imperfect substitutes of each other. More and more of labour, for example, cannot be continuously used in place of capital. Accordingly, diminishing returns to the variable factor. becomes inevitable.