1. Let be a linear supply function of the form Qs = a+bP, which intersects the...

1. Qs = a+bP

When Q=0, P= -a/b

This means if supply curve intersects the price axis at some positive value , then "a" must be negative because when a<0 , then -a/b > 0 i.e positive. Hence, option(A) is correct.

2. Wheat is used to produce bread. If price of wheat rises ,then the supply of bread will decrease because wheat is an input in bread production.

Increase in the price of wheat increases the cost of production of bread, so producers will produce less of bread. Hence, option(D) is correct.

3. On the middle of the demand curve, the elasticity of demand is unit elastic. So, at point M , the price elasticity of demand , |Ed| =1. Hence, option(C) is correct.