CUET Economics 2025 22 May Shift 1 PYQs

In the short run and long run, the shapes of the cost curves for a typical firm are defined as

(A). SMC curve cuts the AVC curve from below at its minimum point.

(B). LRAC curve cuts the LRMC curve from below at the minimum point of LRMC.

(C). SMC curve cuts the SAC curve from below at the minimum point of SAC.

(D). Average fixed cost curve is downward sloping.

Choose the correct answer from the options given below:

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.

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