Micro

Production & Costs

Medium

Arrange the following statements considering the shape of long run marginal costs (LRMC).

(A) As output increases, LRAC initially falls (MC < AC).

(B) For the first unit of output, both LRMC and LRAC are the same.

(C) After a certain point, LRAC rises (MC > AC).

(D) LRMC curve is therefore a 'U'-shaped curve.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(B), (A), (C), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

(A), (B), (C), (D)

(B), (A), (C), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

✅ Correct Option: 2

Option 1: (A), (B), (C), (D) -> Starts with increasing output instead of establishing the initial point.

Option 2: (B), (A), (C), (D) -> Logically begins with the first unit, then describes initial decline, subsequent rise, and concludes with overall shape.

Option 3: (B), (A), (D), (C) -> Places the conclusion about U-shape before explaining the rising portion of LRAC.

Option 4: (C), (B), (D), (A) -> Illogical sequence starting with rising costs before establishing basics.

Hence, Option 2: (B), (A), (C), (D) -> The logical arrangement considering LRMC shape should be: First, establish that for the first unit LRMC = LRAC (B). Second, explain that as output increases initially, LRAC falls because MC < AC showing economies of scale (A). Third, describe that after a certain point, LRAC rises as MC > AC indicating diseconomies of scale (C). Finally, conclude that this behavior results in a U-shaped LRMC curve (D). This sequence properly explains the formation and characteristics of the U-shaped long run marginal cost curve from inception to its complete shape. -> correct

2025: 15 May Shift 1

Identify the correct sequence for a firm operating in the short run.

(A) Total product increases at a decreasing rate.

(B) Marginal product becomes zero

(D) More and more units of variable factor are employed.

Choose the correct answer from the options given below:

2026: 13 May Shift 1

Select the correct statements in the context of relation between AP and MP.

(A) As long as the value of MP remains higher than the value of the AP, the AP continues to rise.

(B) When AP falls, MP has to be less than AP.

(D) MP curve cuts AP curve from above at its minimum.

Choose the correct answer from the options given below:

2025: 28 May Shift 1

What does the rectangle OVBq₀ depicts in the given figure?

2025: 13 May Shift 1

The change in total cost per unit of change in output is known as by which name

2026: 19 May Shift 2

Which of the following statements reflect average fixed cost?

A. Its curve is 'U' shaped and at zero level of output, it is undefined.

B. When output is very close to zero, it is arbitrarily large, and as output moves towards infinity, it moves towards zero.

C. In the short run, it cannot be changed.

D. A rectangular hyperbola shaped curve whose value decreases with increase in output.

Choose the correct answer from the options given below:

2025: 30 May Shift 2

Arrange the given statements to show the impact on a firm's supply curve due to its determinants.

(A) Organisational innovation allows the firm to use fewer units of inputs.

(B) Any factor that affects a firm's marginal cost curve is a determinant of its supply curve.

(D) The marginal cost will shift downward.

Choose the correct answer from the options given below:

Solution

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