Micro

Production & Costs

Medium

Which of the following is true about the law of variable proportions?

(A) Total product eventually declines.

(B) Average product is an inverse U shaped curve.

(C) Marginal product becomes equal to Average product at its minimum.

(D) Marginal product can never be negative.

Choose the correct answer from the options given below:

(A) and (B) only

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

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

(A), (C) and (D) only

✅ Correct Option: 1

Option 1 -> Statements (A) and (B) are true. Total product does eventually decline in Stage III of production, and average product follows an inverted U-shaped curve.

Option 2 -> Incorrect because statement (C) is false. MP equals AP at AP's maximum, not minimum.

Option 3 -> Incorrect because both (C) and (D) are false statements.

Option 4 -> Incorrect because both (C) and (D) are false statements.

Hence, Option 1: (A) and (B) only -> Under the law of variable proportions, when a variable input is continuously increased while other inputs remain fixed, production goes through three stages. In Stage III, total product (TP) actually declines as too much of the variable input creates inefficiency. The average product (AP) curve is inverted U-shaped - it rises initially, reaches a peak, then falls. Statement (C) is false because marginal product (MP) equals average product at AP's maximum point, not minimum. Statement (D) is false because MP can become negative in Stage III when TP is declining. -> correct

2026: 15 May Shift 1

An isoquant ________

A. Represents the same level of output and input.

B. Yield the same maximum possible level of output from the set of all possible combinations of two inputs.

C. Yield different level of output from the set of all possible combinations of two inputs.

D. Is an alternative way of presenting the production function.

Choose the correct answer from the options given below:

2025: 22 May Shift 2

From the following statements about a firm's supply curve, select the correct statements:

(A) Technological progress is expected to shift the supply curve of a firm to the right.

(B) An increase in input prices is expected to shift the supply curve of a firm to the left.

(D) The imposition of a unit tax shifts the supply curve of a firm to the left.

Choose the correct answer from the options given below:

2026: 15 May Shift 1

Identify the correct statements from the following:

A. SMC curve cuts AVC curve from below at the minimum point of AVC

B. SMC curve cuts the SAC curve from below at the minimum point of SAC

C. Average fixed cost curve is upward sloping

D. LRMC curve cuts the LRAC curve from below at the minimum point of LRAC

Choose the correct answer from below:

2025: 22 May Shift 2

The total cost of a firm is Rs 80 for 3 units of output, Rs 95 for 4 units of output, and Rs. 115 for 5 units of output. What is the marginal cost for the 5th unit of output?

2025: 22 May Shift 2

Select the correct statements from the following with regard to cost curves :

(A) Short run marginal cost, average variable cost and short run average cost curves are 'U'-shaped.

(B) SMC curve cuts the AVC curve from below at the minimum point of AVC.

(D) Average fixed cost curve is downward sloping.

Choose the correct answer from the options given below:

2025: 29 May Shift 2

The shape of the average fixed cost curve is ........................

Solution

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