Micro

Production & Costs

Medium

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

Increasing returns to scale.

Constant returns to scale.

Decreasing returns to scale.

Returns to scale.

✅ Correct Option: 1

Option 1 -> When scaling input x₂ by factor t yields output greater than t times original output, indicating increasing returns.

Option 2 -> Would require f(x₁, tx₂) = tf(x₁, x₂), showing proportional relationship.

Option 3 -> Would require f(x₁, tx₂) < tf(x₁, x₂), showing diminishing returns.

Option 4 -> Too general; doesn't specify the type of returns.

Hence, Increasing returns to scale -> The condition f(x₁, tx₂) > tf(x₁, x₂) shows that when input x₂ is scaled by factor t (while x₁ remains constant), output increases by MORE than t times. This superproportional increase in output relative to the input increase is characteristic of increasing returns to scale, indicating that the production technology becomes more productive as scale increases. This suggests economies of scale where doubling inputs leads to more than doubling of output. -> correct

2025: 16 May Shift 1

Which of the following is true regarding supply of a commodity?

(A) Technological progress leads to a decrease in the supply of a commodity.

(B) When the price of inputs rises, the supply curve of the good shifts to the left.

(D) Imposition of a unit tax on a firm shifts the supply curve of the goods produced by the firm to the left.

Choose the correct answer from the options given below:

2026: 20 May Shift 1

When 2 units of labour are used then Total Product (TP) = 35. When 3 units of labour are used then TP = 41. Find the value of MPL

2025: 30 May Shift 2

Match List-I with List-II

List-I	List-II
(A) Production function	(I) $x_1^α x_2^β$
(B) Constant return to scale	(II) $α + β = 1$
(C) Increasing return to scale	(III) $α + β < 1$
(D) Decreasing return to scale	(IV) $α + β > 1$

Choose the correct answer from the options given below:

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?

2026: 19 May Shift 2

Which of the following statements reflect average fixed cost?

A. Its curve is 'U' shaped and at zero level of output, it is undefined.

B. When output is very close to zero, it is arbitrarily large, and as output moves towards infinity, it moves towards zero.

C. In the short run, it cannot be changed.

D. A rectangular hyperbola shaped curve whose value decreases with increase in output.

Choose the correct answer from the options given below:

2025: 31 May Shift 1

Select the INCORRECT condition for profit maximisation in the perfect market.

The price must equal to MC.
Marginal cost must be non-decreasing.
Price must be less than the average cost.
Price must be greater than the average cost.

Given the production function f(tx1,tx2)>tf(x1,x2)f(tx_1, tx_2) > tf (x_1, x_2)f(tx1​,tx2​)>tf(x1​,x2​), what it exhibit:

Solution

Related questions:

Keyboard Shortcuts

CUET Economics Past Year Questions (Topic-Wise)

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