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CUET Economics 2025 PYQs31 May Shift 1. Free, no login required.

Micro

past year questions, CUET Economics 2025 31 May Shift 1

Production & Costs

past year questions, Micro, CUET Economics 2025 31 May Shift 1

Medium

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Law of Variable Proportion and Return to Scale.

The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. What if both factors can change? Remember that this can happen only in the long run. When a proportional increase in all inputs results in an increase in output by the same proportion, the production function is said to display Constant returns to scale (CRS).

When a proportional increase in all inputs results in an increase in output by a larger proportion, the production function is said to display Increasing Returns to Scale (IRS). Decreasing Returns to Scale (DRS) holds when a proportional increase in all inputs results in an increase in output by a smaller proportion.

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.

Solution

✅ Correct Option: 1

Option 1 -> The factor proportion changes when one factor is kept constant while another is varied, which is the foundation of the law of variable proportions.

Option 2 -> Decrease in all inputs relates to returns to scale, not the law of variable proportions.

Option 3 -> Increase in all inputs also relates to returns to scale, not the law of variable proportions.

Option 4 -> If all factors remain constant, there is no change in production and no law of proportion arises.

Hence, Option 1: Factor proportion changes with keeping one factor constant -> The law of variable proportions (also called the law of diminishing returns) arises because in the short run, at least one factor of production remains fixed (like land, machinery, or capital) while other factors (like labor) are variable. As we keep adding more of the variable factor to the fixed factor, the ratio or proportion between them continuously changes. This changing factor proportion is the core reason why initially output increases at an increasing rate, then at a decreasing rate, and eventually may decline. This is a short-run phenomenon where factor proportions are variable, unlike returns to scale which considers long-run changes where all factors change proportionately. -> correct

More from this set:

Question 42

When output increases with smaller proportion compare to increase in inputs, this return is called?

  1. Decreasing Return to scale
  2. Increasing Return to scale.
  3. Constant Return to scale.
  4. Incremental Productivity.

Question 43

Suppose in a production process, all inputs get doubled. As a result, if the output gets doubled, the production function exhibits?

  1. Decreasing Return to scale.
  2. Incresing Returns to scale.
  3. Constant Return to scale.
  4. Decresing Productivity.

Question 44

When output increases with the same proportion as increase in inputs, this concept is known by?

  1. Marginal diminishing returns.
  2. Decreasing return to scale.
  3. Increasing return to scale.
  4. Constant Return to scale.

Question 45

When output increases with the larger proportion compare to increase in inputs, this return is called?

  1. Decreasing Return to scale.
  2. Increasing return to scale.
  3. Constant Return to scale.
  4. Diminishing Marginal Product.

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CUET Economics Past Year Questions (Topic-Wise)