CUET Economics - Consider a production function q = f (x_1, x_2) where the firm produces q amount of output using x_1 amount of factor 1 and x_2 amount of factor 2. Now suppose the firm decides to increase the employment level of both the factors t (t > 1) times. Identify the correct statement from the following. | PYQs + Solutions

CUET Economics 2025 15 May Shift 1

Micro

Medium

$f(tx_1, tx_2) = tf(x_1, x_2)$ implies constant returns to scale.

$f(tx_1, tx_2) > tf(x_1, x_2)$ implies decreasing returns to scale.

$f(tx_1, tx_2) < tf(x_1, x_2)$ implies increasing returns to scale.

$f(tx_1, tx_2) = f(x_1, x_2)$ implies constant returns to scale.

✅ Correct Option: 1

Related questions:

30 May Shift 2

As long as decreasing returns to scale operates, as the firm increases output, the average cost must be ................

26 May Shift 2

Which of the following central problems deals with the choice of technique of production?

3 June Shift 1

Match List-I with List-II

List-I	List-II
(A) Total Cost	(I) Change in total cost when an additional unit of output is produced.
(B) Marginal Cost	(II) Vertical summation of Average Fixed Cost (AFC) and Average Variable Cost (AVC) curves.
(C) Fixed Cost	(III) Explicit Costs + Implicit Costs.
(D) Short period Average Cost (AC) Curve	(IV) Does not change with increase or decrease in output.

Choose the correct answer from the options given below:

CUET Economics 2025 15 May Shift 1 PYQs