Micro

Production & Costs

Medium

When Marginal productivity starts decreasing but remains positive , Total Productivity is ______.

Decreasing.

Increases at constant rate.

Increases at Increasing rate.

Increases at diminishing rate.

✅ Correct Option: 4

Option 1 -> Incorrect. Total Productivity decreases only when Marginal Productivity becomes negative.

Option 2 -> Incorrect. Total Productivity increases at a constant rate when Marginal Productivity is constant and positive.

Option 3 -> Incorrect. Total Productivity increases at an increasing rate when Marginal Productivity is itself increasing.

Option 4 -> Correct. When Marginal Productivity is positive but decreasing, Total Productivity continues to rise but at a slower pace.

Hence, Option 4: Increases at diminishing rate -> When Marginal Productivity (MP) is decreasing but still positive, each additional unit of input adds to the total output, but the addition becomes smaller with each unit. This means Total Productivity (TP) continues to increase because MP > 0, but the rate of increase slows down because MP is declining. This represents the stage of diminishing marginal returns, where TP rises but at a diminishing rate until MP becomes zero (where TP reaches its maximum). -> correct

2025: 13 May Shift 1

Consider the production function $q = f(x_1, x_2)$ where the firm produces q amout of output $x_1$ amount of factor 1 and $x_2$ amount of factor 2. The firm decides to increase the employment level of both the factors t (t > 1). Identify the equation for decreasing returns to scale from the following.

2025: 30 May Shift 2

Match List-I with List-II

List-I	List-II
(A) Production function	(I) $x_1^α x_2^β$
(B) Constant return to scale	(II) $α + β = 1$
(C) Increasing return to scale	(III) $α + β < 1$
(D) Decreasing return to scale	(IV) $α + β > 1$

Choose the correct answer from the options given below:

2025: 21 May Shift 1

Manoj is a seller in a market where more can be sold only by lowering the price of the goods. Which of the following will be true about his revenue.

(A) Total revenue will increase at a constant rate.

(B) Average revenue will be more than his marginal revenue at all the levels of output sold.

(D) Marginal revenue can be zero at some level of output sold.

Choose the correct answer from the options given below:

2025: 15 May Shift 1

Choose the incorrect option from the following with reference to production in the short run.

2025: 22 May Shift 2

Which function tells us the relation between inputs and output?

2025: 13 May Shift 1

The difference between the revenue and cost is known as________

When Marginal productivity starts decreasing but remains positive , Total Productivity is ______.

Solution

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