Micro

Production & Costs

Easy

In long run as long as average cost is falling, marginal cost must be less than the .......

Total Fixed Cost.

Average Variable Cost.

Average cost.

Total Cost.

✅ Correct Option: 3

Option 3: Average cost -> When average cost (AC) is falling in the long run, it means each additional unit produced is adding less to the total cost than the current average. This can only happen when the marginal cost (MC) - the cost of producing one more unit - is less than the average cost. The marginal cost pulls the average down. This is a fundamental relationship: MC < AC when AC is falling, MC > AC when AC is rising, and MC = AC at the minimum point of AC. -> correct

2026: 19 May Shift 2

Match the LIST-I with LIST-II

LIST-I	LIST-II
A. Short run marginal cost	I. A rectangular hyperbola shaped curve whose value decreases with increase in output.
B. Total fixed cost	II. The shape of this cost curve is U-shaped and its value is undefined at zero output.
C. Average fixed cost	III. An upward sloping curve derived grom the vertical summation of TFC and TVC.
D. Total Cost	IV. A horizontal straight line, the value of which cannot be changed.

Choose the correct answer from the options given below:

2025: 30 May Shift 2

in the long run when the average cost is rising, marginal cost must be.

2025: 3 June Shift 1

Match List-I with List-II

List-I	List-II
(A) The minimum level of profit that is needed to keep a firm in the existing business.	(I) Super-normal profit
(B) Profit that a firm earns over and above the normal profit.	(II) Loss
(C) AR < AC	(III) Break even point
(D) The point of minimum average cost at which the supply curve cuts the AC curve.	(IV) Normal Profit

Choose the correct answer from the options given below:

2025: 22 May Shift 2

Given the production function $f(tx_1, tx_2) > tf (x_1, x_2)$ , what it exhibit:

2025: 13 May Shift 2

In which of the following conditions, output increases with the same proportion of input?

2025: 22 May Shift 2

Which function tells us the relation between inputs and output?

In long run as long as average cost is falling, marginal cost must be less than the .......

Solution

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