AfterBoards Logo
Skip to main contentSkip to solution

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

Easy

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.

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.

Solution

✅ Correct Option: 3

Option 1 -> Decreasing Returns to scale occurs when doubling inputs results in output increasing by less than double.

Option 2 -> Increasing Returns to scale occurs when doubling inputs results in output increasing by more than double.

Option 3 -> Constant Returns to scale occurs when doubling inputs results in output exactly doubling.

Option 4 -> Decreasing Productivity refers to decline in output per unit of input, not related to proportional input-output changes.

Hence, Option 3: Constant Return to scale -> When all inputs are doubled and output also doubles proportionally, the production function exhibits constant returns to scale. This is a fundamental concept in production theory where f(2K, 2L) = 2f(K, L), meaning the scale of production changes proportionally with inputs. The production function is homogeneous of degree 1 in this case. -> correct

More from this set:

Question 41

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.

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 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.

Keyboard Shortcuts

  • Left arrow: Previous question
  • Right arrow: Next question
  • S key: Jump to solution
  • Q key: Jump to question

CUET Economics Past Year Questions (Topic-Wise)