Micro

Production & Costs

Medium

Manoj is a seller in a market where more can be sold only by lowering the price of the goods. Which of the following will be true about his revenue.

(A) Total revenue will increase at a constant rate.

(B) Average revenue will be more than his marginal revenue at all the levels of output sold.

(C) Marginal revenue curve will be downward sloping from left to the right.

(D) Marginal revenue can be zero at some level of output sold.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A), (B) and (C) only

(A), (B), (C) and (D)

(B), (C) and (D) only

✅ Correct Option: 4

Option 1 -> Incorrect. Total revenue does not increase at a constant rate in imperfect competition; it increases at a decreasing rate initially and may eventually decline.

Option 2 -> Incorrect. Statement (A) is false as TR doesn't increase at a constant rate in markets with downward sloping demand.

Option 3 -> Incorrect. Statement (A) is false, so this option cannot be correct.

Option 4 -> This correctly identifies statements (B), (C), and (D) as true while excluding the false statement (A).

Hence, Option 4: (B), (C) and (D) only -> In imperfect competition where price must be lowered to sell more: (B) AR > MR because when price is reduced to sell additional units, all previous units also sell at the lower price, making MR less than AR (price). (C) The MR curve slopes downward because each additional unit sold requires a further price reduction. (D) MR becomes zero at the output level where total revenue is maximized (unit elastic point on demand curve), and beyond this point MR becomes negative. Statement (A) is false because TR increases at a decreasing rate, not a constant rate. -> correct

2025: 13 May Shift 1

Which of the following conditions must hold for a firm to maximise its profit.

(A) Price= Short run marginal Cost

(B) Short Run marginal cost curve is non-decreasing

(D) Price ≥ Average variable cost

Choose the correct answer from the options given below:

2026: 21 May Shift 1

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

2025: 13 May Shift 2

Set of all possible combinations of the two inputs that yield the same maximum possible level of output is known as.........

2025: 15 May Shift 1

Choose the correct options with reference to short-run average costs.

(A) Average total cost = total cost / quantity of output

(B) Average total cost = average variable cost + average fixed cost

(D) Average fixed cost = average variable cost - average cost

Choose the correct answer from the options given below:

2026: 12 May Shift 1

Choose the correct statement with respect to long run production function-

(A) There is no fixed factor of production.

(B) All inputs can be varied.

(D) Decreasing Returns to Scale is not applicable.

Choose the correct answer from the options given below:

2026: 15 May Shift 1

Match the LIST-I with LIST-II

LIST-I	LIST-II
A. When a proportional increase in all inputs results in an increase in output by a larger proportion	I. Constant Returns to Scale
B. When a proportional increase in all inputs results in an increase in output by the same proportion	II. Law of variable proportion
C. When a proportional increase in all inputs results in an increase in output by a smaller proportion	III. Increasing Returns to Scale
D. The tendency of the marginal product first increase and then fall	IV. Decreasing Returns to Scale

Choose the correct answer from the options given below:

Solution

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