Micro

Production & Costs

Easy

The collection of all possible combinations of goods and services that can be produced from a given amount of resources and a given stock of technological knowledge.

Production Possibility Frontier.

Production Possibility Set.

Isoquant Curve.

Production Function.

✅ Correct Option: 2

Option 1 -> Represents only the boundary/frontier showing maximum efficient production combinations, not the entire collection.

Option 2 -> Represents the complete collection/set of all feasible production combinations given available resources and technology.

Option 3 -> Shows input combinations producing the same output level, not different output combinations.

Option 4 -> A mathematical function relating inputs to maximum output, not a collection of output combinations.

Hence, Production Possibility Set -> The Production Possibility Set encompasses all possible combinations of goods and services that can be produced with given resources and technology. This includes points inside the frontier (inefficient production), on the frontier (efficient production), and conceptually outside (unattainable with current resources). The Production Possibility Frontier is merely the outer boundary of this set, showing maximum efficient combinations. The key distinction is that the 'set' refers to the entire collection, while the 'frontier' refers only to the efficient boundary. -> correct

2026: 31 May Shift 1

Input	Output	Marginal productivity of factor
$10\ L_1$	$20\ Q_1$	$MP_L = ?$
$12\ L_2$	$25\ Q_2$
$8\ K_3$	$16\ Q_3$	$MP_K = ?$
$10\ K_4$	$20\ Q_4$

Where labour input $L_1$ and $L_2$ are related to output $Q_1$ and $Q_2$ respectively

Capital input $K_3$ and $K_4$ are related to output $Q_3$ and $Q_4$ respectively

Find the values of $MP_L$ and $MP_K$ .

2026: 21 May Shift 1

Which of the following cost curve takes the shape of rectangular hyperbola?

2025: 3 June Shift 2

If all the resources are used in the production of cloth, the curve which gives the maximum amount of cloth produced in the economy for any given amount of machine is called?

2026: 23 May Shift 1

The average fixed cost (AFC) decreases as output (q) increases. If we multiply any value q of output with its corresponding AFC, we always get a constant, namely ___________.

2026: 15 May Shift 1

An isoquant ________

A. Represents the same level of output and input.

B. Yield the same maximum possible level of output from the set of all possible combinations of two inputs.

C. Yield different level of output from the set of all possible combinations of two inputs.

D. Is an alternative way of presenting the production function.

Choose the correct answer from the options given below:

2025: 31 May Shift 1

Select the INCORRECT condition for profit maximisation in the perfect market.

The price must equal to MC.
Marginal cost must be non-decreasing.
Price must be less than the average cost.
Price must be greater than the average cost.

The collection of all possible combinations of goods and services that can be produced from a given amount of resources and a given stock of technological knowledge.

Solution

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