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CUET Economics 2025 PYQs28 May Shift 2. Free, no login required.

Micro

past year questions, CUET Economics 2025 28 May Shift 2

Production & Costs

past year questions, Micro, CUET Economics 2025 28 May Shift 2

Hard

At the positive level of output, where a firm's profit is maximized, the following conditions must hold.

(A) p=LRMCp = LRMC

(B) LRMC is non-decreasing at q0q_0

(C) p≤LRACp \leq LRAC

(D) p≥p \geq min. LRAC

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 1

Option 1 -> At profit maximization, p = LRMC (first-order condition), LRMC is non-decreasing (second-order condition), and p ≥ min. LRAC (firm stays in business). Condition (C) is incorrect as p ≤ LRAC would mean zero or negative profit.

Option 2 -> Incorrect because it includes (C) which suggests p ≤ LRAC, implying the firm makes no profit or losses, which is not required for profit maximization.

Option 3 -> Incorrect because it includes (C). Condition (C) stating p ≤ LRAC contradicts profit maximization where firms can earn positive economic profits (p > LRAC).

Option 4 -> Incorrect because it excludes (A) which is the fundamental first-order condition p = LRMC, essential for profit maximization.

Hence, Option 1: (A), (B) and (D) only -> For profit maximization: (A) p = LRMC ensures the firm produces at optimal output where marginal revenue equals marginal cost; (B) LRMC non-decreasing ensures second-order condition for maximum (not minimum) profit; (D) p ≥ min. LRAC ensures the firm covers its long-run costs and stays in business. Condition (C) is false because p ≤ LRAC would mean zero or negative economic profit, which is not a requirement for profit maximization. -> correct

Related questions:

2025: 28 May Shift 1

Which of the following statements are correctly explaining the relationship between the marginal revenue (MR) and price elasticity of demand?

(A). Price elasticity is less than 1 when MR is negative.

(B). Price elasticity is more than 1 when MR is negative.

(C). Price elasticity is more than 1 when MR is positive.

(D). Price elasticity is less than 1 when MR is positive.

Choose the correct answer from the options given below:

  1. (A) and (D) only
  2. (A) and (B) only
  3. (B) and (D) only
  4. (A) and (C) only

2025: 26 May Shift 2

According to the law of variable proportions. Which among the the following option is correct?

2025: 2 June Shift 1

Average Fixed Cost (AFC) is indicated by?

2025: 13 May Shift 2

In which of the following conditions, output increases with the same proportion of input?

2025: 31 May Shift 1

The core reason behind the arising law of proportion is............

  1. Factor proportion changes with keeping one factor constant.
  2. Decrease in all input.
  3. Increase in all input.
  4. All factors remain constant.

2025: 21 May Shift 1

Which of the following is true about the law of variable proportions?

(A) Total product eventually declines.

(B) Average product is an inverse U shaped curve.

(C) Marginal product becomes equal to Average product at its minimum.

(D) Marginal product can never be negative.

Choose the correct answer from the options given below:

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