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CUET Economics 2025 PYQs21 May Shift 1. Free, no login required.

Micro

past year questions, CUET Economics 2025 21 May Shift 1

Production & Costs

past year questions, Micro, CUET Economics 2025 21 May Shift 1

Easy

At the present level of production, the marginal revenue exceeds the marginal cost of production. In order to attain equilibrium, the producer should___

Solution

✅ Correct Option: 1

Option 1 -> When MR > MC, producing additional units adds more to revenue than to cost, so output should increase.

Option 2 -> Decreasing output when MR > MC would mean foregoing profitable production opportunities.

Option 3 -> Keeping output constant when MR > MC means the producer is not maximizing profit.

Option 4 -> Price reduction is not directly related to achieving equilibrium when MR > MC; output adjustment is needed.

Hence, Option 1: Increase the level of output -> When marginal revenue exceeds marginal cost (MR > MC), each additional unit produced adds more to total revenue than to total cost, increasing total profit. To reach equilibrium and maximize profit, the producer should increase output until MR = MC. At this point, producing one more unit would add equally to both revenue and cost, making it the optimal production level. -> correct

Related questions:

2025: 28 May Shift 2

Choose the correct statements in respect of returns to scale.

(A) Decreasing returns to scale occur when a proportional increase in all inputs is less than output.

(B) Constant returns to scale occur when a proportional increase in all inputs is the same as output.

(C) In the long run, factors of production are increased by the same proportion, or factors are scaled up.

(D) Increasing returns to scale occur when a proportional increase in all inputs is less than output.

Choose the correct answer from the options given below:

2025: 28 May Shift 2

Which of the following states that "The marginal product of a factor input initially rises with its employment level, but after reaching a certain level of employment, it starts falling"?

2025: 30 May Shift 1

At zero level of output ,if the total cost(TC) is 20. What will be the value of the Average Fixed cost (AFC) at the 6th level of output?

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: 28 May Shift 2

The firm must employ more of the variable inputs, in order to increase the production of output. Therefore, as output increases

2025: 31 May Shift 1

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.

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