Q.Distinguish between 'supply' and 'stock' as used in economics.

Cost incurred on a fixed factor = Fixed cost.

Fixed cost (also called supplementary or overhead cost) is the expenditure incurred by a firm on fixed factors of production such as machinery, buildings, rent of the plant and salaries of permanent staff. These costs remain constant whatever the level of output — the firm must bear them even when production is zero — because the fixed factors cannot be changed in the short run.

The economic term is Marginal cost — the addition to total cost from producing one additional unit of output. Answer: Marginal cost.

Why: As a firm expands output, its total cost rises. Marginal cost (MC) measures the extra cost of the last unit produced — i.e. the change in total cost divided by the change in output (for one unit, simply the addition to total cost). It is central to a producer's supply decision, since a firm compares marginal cost with the price/marginal revenue to decide how much to supply.

Both (A) and (R) are true, and (R) is the correct explanation of (A).

Assertion (A): Supply is a relative term — true. Supply is meaningful only in relation to given conditions, never as an isolated absolute figure.

Reasoning (R): Supply is always expressed in relation to price, time and quantity — true. The quantity a seller offers depends on the price at which it is offered, the time period considered, and it is stated as a definite quantity.

Why R explains A: It is exactly because supply must always be quoted with reference to a specific price, time and quantity that it is described as a relative term. Hence R correctly explains A.

The economic term is the Long period (Long run) — the time span long enough for all factors of production, including fixed factors, to become variable.

Economists classify time by the adjustability of factors:

Because the long period is long enough for a firm to change its scale of plant and every input, all factors of production become variable in it — hence the definition points to the long period.