Micro

Production & Costs

Medium

In given production function $q = f(x_1, x_2)$ what is depicted by $f(tx_1, tx_2) < tf(x_1, x_2)$ .

Constant returns to scale.

Increasing returns to scale.

Decreasing returns to scale

Marginal returns to scale.

✅ Correct Option: 3

Option 1 -> When inputs are scaled by factor t, output scales exactly by factor t: f(tx₁, tx₂) = tf(x₁, x₂).

Option 2 -> When inputs are scaled by factor t, output increases more than proportionally: f(tx₁, tx₂) > tf(x₁, x₂).

Option 3 -> When inputs are scaled by factor t, output increases less than proportionally: f(tx₁, tx₂) < tf(x₁, x₂).

Option 4 -> This is not a standard economic term for returns to scale.

Hence, Option 3: Decreasing returns to scale -> The inequality f(tx₁, tx₂) < tf(x₁, x₂) indicates that when all inputs are multiplied by factor t, the output increases by less than factor t. For example, if we double all inputs (t=2), output less than doubles. This diminishing response characterizes decreasing returns to scale, often occurring due to coordination difficulties or resource constraints as production scale increases. -> correct

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Identify the incorrect statement about the relation between Marginal Product(MP) and Average Product (AP).

2025: 30 May Shift 1

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2025: 22 May Shift 1

When more workers are hired, the land begins to get 'crowded'. Each worker now has insufficient land to work efficiently. So the output added by each additional worker is now proportionally less as a result the marginal product begins to __________.

2025: 13 May Shift 2

When we have proportionately more output than input this economic concept is known as .........

2025: 16 May Shift 1

Which of the following is true regarding supply of a commodity?

(A) Technological progress leads to a decrease in the supply of a commodity.

(B) When the price of inputs rises, the supply curve of the good shifts to the left.

(D) Imposition of a unit tax on a firm shifts the supply curve of the goods produced by the firm to the left.

Choose the correct answer from the options given below:

2025: 22 May Shift 1

If there is a positive level of output at which a firm's profit is maximized in the short run, that condition must not hold at that output level:

In given production function q=f(x1,x2)q = f(x_1, x_2)q=f(x1​,x2​) what is depicted by f(tx1,tx2)<tf(x1,x2)f(tx_1, tx_2) < tf(x_1, x_2)f(tx1​,tx2​)<tf(x1​,x2​).

Solution

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CUET Economics Past Year Questions (Topic-Wise)

In given production function $q = f(x_1, x_2)$ what is depicted by $f(tx_1, tx_2) < tf(x_1, x_2)$ .