Micro

Production & Costs

Medium

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.

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

(D) Average fixed cost curve is downward sloping.

Choose the correct answer from the options given below:

(A), (B) and (D) only

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

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

(B), (C) and (D) only

✅ Correct Option: 1

Statement (A) -> Short run marginal cost (SMC), average variable cost (AVC), and short run average cost (SAC) curves are all U-shaped due to the law of diminishing returns. Initially costs decrease, then increase. -> Correct

Statement (B) -> SMC curve intersects AVC curve at its minimum point, cutting from below. This is a fundamental principle: when marginal is below average, it pulls average down; when marginal is above average, it pulls average up. -> Correct

Statement (C) -> SMC curve does NOT cut AFC curve at minimum because AFC has no minimum point. AFC continuously declines as output increases (rectangular hyperbola), approaching zero but never reaching it. -> Incorrect

Statement (D) -> AFC = TFC/Q. Since total fixed cost (TFC) is constant and output (Q) increases, AFC continuously falls, creating a downward sloping curve. -> Correct

Hence, Option 1: (A), (B) and (D) only -> Statement (C) is incorrect because the Average Fixed Cost curve never reaches a minimum point - it continuously decreases as output increases. The SMC curve cannot intersect AFC at a minimum point that doesn't exist. The other three statements correctly describe the behavior of cost curves in the short run. -> correct

2025: 15 May Shift 1

Identify the correct sequence for a firm operating in the short run.

(A) Total product increases at a decreasing rate.

(B) Marginal product becomes zero

(D) More and more units of variable factor are employed.

Choose the correct answer from the options given below:

2025: 22 May Shift 1

The set of all possible combinations of the two inputs, labour and capital, that yield the same maximum possible level of output is called...........

2026: 20 May Shift 1

Given,

TC at 4 level of output is Rs.49

TC at 5 level of output is Rs.53

TC at zero level of output is Rs.20

Find the value of AVC (in Rs.) at 5 level of output?

2026: 12 May Shift 1

Output increases with which of the following reasons?

(A) Increase in capital.

(B) Increase in labour.

(D) Increase in level of technology.

Choose the correct answer from the options given below:

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:

2025: 16 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Land	(I) Interest
(B) Labor	(II) Profit
(C) Capital	(III) Wages
(D) Entrepreneurship	(IV) Rent

Choose the correct answer from the options given below:

Solution

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CUET Economics Past Year Questions (Topic-Wise)