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Q1:

3 June Shift 2

Micro > Production & Costs

Medium

Match List-I with List-II | List-I | List-II | | --- | --- | | (A) Total revenue | (I) Minimum of LRAC curve. | | (B) Supply | (II) A firm earns only normal profit. | | (C) Shut down point | (III) Market price multiplied by the firm's output. | | (D) Break-even point | (IV) Quantity sold at a given price. | Choose the correct answer from the options given below:

(A) - (II), (B) - (I), (C) - (III), (D) - (IV)

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 4

Correct Answer

Explanation →

Q2:

3 June Shift 2

Micro > Production & Costs

Medium

Choose the correct statements considering the relationship between marginal product and average product. (A) Average product and marginal product curve are 'U'shaped. (B) Average product and marginal product curve are inverse 'U'shaped. (C) When the average product increases, the marginal product is greater than the average product. (D) When the average product decreases, the marginal product is less than the average product. Choose the correct answer from the options given below:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 4

Correct Answer

Explanation →

Q3:

3 June Shift 2

Micro > Production & Costs

Medium

In the short run, the shape of the average fixed cost curve for a typical firm is?

Vertical to y-axis.

Downward sloping left to right.

Rectangular hyperbola.

Horizontal to x-axis.

Correct Answer

Option 3

Correct Answer

Explanation →

Q4:

3 June Shift 2

Micro > Production & Costs

Medium

If all the resources are used in the production of cloth, the curve which gives the maximum amount of cloth produced in the economy for any given amount of machine is called?

Production Possibility Set.

Production Possibility Frontier.

Isoquant Curve.

Indifference Curve.

Correct Answer

Option 2

Correct Answer

Explanation →

Q5:

3 June Shift 2

Micro > Production & Costs

Easy

The relationship between an increase in variable input and output when all other inputs are held constant is referred to as.

Average Product.

Total Product.

Marginal Product.

Physical Product.

Correct Answer

Option 3

Correct Answer

Explanation →

Q6:

3 June Shift 2

Micro > Production & Costs

Medium

When a firm increases its output and the average cost rises, this phase in the production process is shown as?

Returns to Scale.

Constant returns to scale.

Increasing Returns to Scale.

Decreasing Returns to Scale.

Correct Answer

Option 4

Correct Answer

Explanation →

Q7:

3 June Shift 2

Micro > Production & Costs

Easy

Match List-I with List-II | List-I | List-II | | --- | --- | | (A) Payments by a firm for inputs. | (I) Cost of production | | (B) Output sold by a firm in the market. | (II) Revenue | | (C) Inputs are transformed into output. | (III) Production | | (D) Objective of a firm to maximize. | (IV) Profit | Choose the <b>correct</b> answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (II), (B) - (I), (C) - (III), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 1

Correct Answer

Explanation →

Q8:

3 June Shift 2

Micro > Production & Costs

Medium

When the additional unit of input is 'crowded' in the production, the output is proportionally less and............

Total product begins to fall.

Marginal product begins to fall.

Average product begins to rise.

Total product begins to rise.

Correct Answer

Option 2

Correct Answer

Explanation →

Q9:

3 June Shift 2

Micro > Production & Costs

Easy

The cost of a firm has increased from Rs. $67$ to Rs. $80$ when the units of cotton production rose from $8$ to $9$. Calculate the marginal cost of a firm?

Rs. $80$

Rs. $13$

Rs. $536$

Rs. $720$

Correct Answer

Option 2

Correct Answer

Explanation →

Q10:

3 June Shift 1

Micro > Production & Costs

Medium

Which one of the following leads to the law of variable proportions?

One factor is constant.

Some factors are more efficient than others.

Specialisation of factors.

None of the factors are constant.

Correct Answer

Option 1

Correct Answer

Explanation →

Q11:

3 June Shift 1

Micro > Production & Costs

Medium

Identify the correct statements from the following: (A) As long as MP>AP, the average Product (AP) can rise even when the Marginal Product (MP) is falling. (B) The law of variable proportions operates only if the factor ratio happens to change. (C) Total Product (TP) must increase no matter if there are increasing or decreasing returns to a factor. (D) Marginal Product (MP) = Average Product (AP), when AP is maximum. 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 Answer

Option 3

Correct Answer

Explanation →

Q12:

3 June Shift 1

Micro > Production & Costs

Medium

Chronologically, arrange the following statements in the context of shape of AP curve. (A) MP starts falling, the AP continues to rise as long as MP remains higher than AP. (B) At the first level of output, the MP and the AP are the same. (C) MP fall sufficiently, its value becomes less than the AP and the AP also falls. (D) MP rises, AP being the average of marginal products, also rises, but rises less than MP. Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q13:

3 June Shift 1

Micro > Production & Costs

Medium

Match List-I with List-II | List-I | List-II | |---|---| | (A) Total Cost | (I) Change in total cost when an additional unit of output is produced. | | (B) Marginal Cost | (II) Vertical summation of Average Fixed Cost (AFC) and Average Variable Cost (AVC) curves. | | (C) Fixed Cost | (III) Explicit Costs + Implicit Costs. | | (D) Short period Average Cost (AC) Curve | (IV) Does not change with increase or decrease in output. | Choose the correct answer from the options given below:

(A) - (III), (B) - (I), (C) - (I), (D) - (IV)

(A) - (III), (B) - (I), (C) - (II), (D) - (IV)

(A) - (III), (B) - (I), (C) - (IV), (D) - (II)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 3

Correct Answer

Explanation →

Q14:

3 June Shift 1

Micro > Production & Costs

Medium

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:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (IV), (B) - (I), (C) - (II), (D) - (III)

(A) - (IV), (B) - (II), (C) - (I), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 2

Correct Answer

Explanation →

Q15:

3 June Shift 1

Micro > Production & Costs

Easy

Extension of supply occurs due to change in _________

Own price of the commodity.

Goal of the firm.

Technique of production.

Number of firms.

Correct Answer

Option 1

Correct Answer

Explanation →

Q16:

3 June Shift 1

Micro > Production & Costs

Easy

The problem of 'what to produce' relates to?

The choice of goods and services.

The distribution of income.

The market value of goods and services.

The choice of technique.

Correct Answer

Option 1

Correct Answer

Explanation →

Q17:

2 June Shift 1

Micro > Production & Costs

Medium

When some resources are shifted from Use 1 to Use 2 (given technology), the Marginal Rate of Transformation will

increases.

decreases.

remains constant.

zero.

Correct Answer

Option 1

Correct Answer

Explanation →

Q18:

2 June Shift 1

Micro > Production & Costs

Easy

What does break even point indicate?

Total Revenue (TR) > Total Cost (TC)

Total Revenue (TR) < Total Cost (TC)

Total Revenue (TR) = Total Cost (TC)

Total Cost (TC) = 0

Correct Answer

Option 3

Correct Answer

Explanation →

Q19:

2 June Shift 1

Micro > Production & Costs

Medium

Under perfect competition, for the producer to be in equilibrium:

AR = MR = AC and AC must be rising.

AR = MR = MC and MC must be falling.

AR = MR = TC and TC must be rising.

AR = MR = MC and MC must be rising.

Correct Answer

Option 4

Correct Answer

Explanation →

Q20:

2 June Shift 1

Micro > Production & Costs

Medium

When Marginal Product is constant?

Total Product is also constant.

Total Product is zero.

Total Product is increasing at a constant rate.

Total Product is decreasing at a constant rate.

Correct Answer

Option 3

Correct Answer

Explanation →

Q21:

2 June Shift 1

Micro > Production & Costs

Medium

Average Fixed Cost (AFC) is indicated by?

A rectangular hyperbola.

A straight line parallel to X axis.

A straight line parallel to Y axis.

A U- shaped curve.

Correct Answer

Option 1

Correct Answer

Explanation →

Q22:

2 June Shift 1

Micro > Production & Costs

Medium

Stages of production are the consequences of:

Law of Diminishing Marginal Rate of Transformation.

Law of Diminishing Marginal Utility.

Law of Variable Proportions.

Law of Diminishing Returns to Scale.

Correct Answer

Option 3

Correct Answer

Explanation →

Q23:

31 May Shift 1

Micro > Production & Costs

Medium

Select the INCORRECT condition for profit maximisation in the perfect market. 1. The price must equal to MC. 2. Marginal cost must be non-decreasing. 3. Price must be less than the average cost. 4. Price must be greater than the average cost.

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.

Correct Answer

Option 3

Correct Answer

Explanation →

Q24:

31 May Shift 1

Micro > Production & Costs

Medium

<img src="https://balti.afterboards.in/4g5jXzykuZZBgyK" width="400px"/> The firm's total variable cost at output q₁ is

The area of rectangle OpAq₁

The area of rectangle OEBq₁

the area of rectangle OpAq₁ – the area of rectangle OEBq₁

tan Θ

Correct Answer

Option 2

Correct Answer

Explanation →

Q25:

31 May Shift 1

Micro > Production & Costs

Medium

From the following which is incorrect with respect to firm's profit maximization in long run? 1. Price = Long Run Marginal Cost 2. LRMC is first decreasing and then increasing 3. Price = Short Run Marginal Cost 4. Price ≥ Long Run Average Variable Cost

Price = Long Run Marginal Cost

LRMC is first decreasing and then increasing

Price = Short Run Marginal Cost

Price ≥ Long Run Average Variable Cost

Correct Answer

Option 3

Correct Answer

Explanation →

Q26:

31 May Shift 1

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Law of Variable Proportion and Return to Scale. The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. What if both factors can change? Remember that this can happen only in the long run. When a proportional increase in all inputs results in an increase in output by the same proportion, the production function is said to display Constant returns to scale (CRS). When a proportional increase in all inputs results in an increase in output by a larger proportion, the production function is said to display Increasing Returns to Scale (IRS). Decreasing Returns to Scale (DRS) holds when a proportional increase in all inputs results in an increase in output by a smaller proportion.

The core reason behind the arising law of proportion is............ 1. Factor proportion changes with keeping one factor constant. 2. Decrease in all input. 3. Increase in all input. 4. All factors remain constant.

Factor proportion changes with keeping one factor constant.

Decrease in all input.

Increase in all input.

All factors remain constant.

Correct Answer

Option 1

Correct Answer

Explanation →

Q27:

31 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Law of Variable Proportion and Return to Scale. The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. What if both factors can change? Remember that this can happen only in the long run. When a proportional increase in all inputs results in an increase in output by the same proportion, the production function is said to display Constant returns to scale (CRS). When a proportional increase in all inputs results in an increase in output by a larger proportion, the production function is said to display Increasing Returns to Scale (IRS). Decreasing Returns to Scale (DRS) holds when a proportional increase in all inputs results in an increase in output by a smaller proportion.

When output increases with smaller proportion compare to increase in inputs, this return is called? 1. Decreasing Return to scale 2. Increasing Return to scale. 3. Constant Return to scale. 4. Incremental Productivity.

Decreasing Return to scale

Increasing Return to scale.

Constant Return to scale.

Incremental Productivity.

Correct Answer

Option 1

Correct Answer

Explanation →

Q28:

31 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Law of Variable Proportion and Return to Scale. The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. What if both factors can change? Remember that this can happen only in the long run. When a proportional increase in all inputs results in an increase in output by the same proportion, the production function is said to display Constant returns to scale (CRS). When a proportional increase in all inputs results in an increase in output by a larger proportion, the production function is said to display Increasing Returns to Scale (IRS). Decreasing Returns to Scale (DRS) holds when a proportional increase in all inputs results in an increase in output by a smaller proportion.

Suppose in a production process, all inputs get doubled. As a result, if the output gets doubled, the production function exhibits? 1. Decreasing Return to scale. 2. Incresing Returns to scale. 3. Constant Return to scale. 4. Decresing Productivity.

Decreasing Return to scale.

Incresing Returns to scale.

Constant Return to scale.

Decresing Productivity.

Correct Answer

Option 3

Correct Answer

Explanation →

Q29:

31 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Law of Variable Proportion and Return to Scale. The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. What if both factors can change? Remember that this can happen only in the long run. When a proportional increase in all inputs results in an increase in output by the same proportion, the production function is said to display Constant returns to scale (CRS). When a proportional increase in all inputs results in an increase in output by a larger proportion, the production function is said to display Increasing Returns to Scale (IRS). Decreasing Returns to Scale (DRS) holds when a proportional increase in all inputs results in an increase in output by a smaller proportion.

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.

Marginal diminishing returns.

Decreasing return to scale.

Increasing return to scale.

Constant Return to scale.

Correct Answer

Option 4

Correct Answer

Explanation →

Q30:

31 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Law of Variable Proportion and Return to Scale. The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. What if both factors can change? Remember that this can happen only in the long run. When a proportional increase in all inputs results in an increase in output by the same proportion, the production function is said to display Constant returns to scale (CRS). When a proportional increase in all inputs results in an increase in output by a larger proportion, the production function is said to display Increasing Returns to Scale (IRS). Decreasing Returns to Scale (DRS) holds when a proportional increase in all inputs results in an increase in output by a smaller proportion.

When output increases with the larger proportion compare to increase in inputs, this return is called? 1. Decreasing Return to scale. 2. Increasing return to scale. 3. Constant Return to scale. 4. Diminishing Marginal Product.

Decreasing Return to scale.

Increasing return to scale.

Constant Return to scale.

Diminishing Marginal Product.

Correct Answer

Option 2

Correct Answer

Explanation →

Q31:

30 May Shift 2

Micro > Production & Costs

Medium

From the following which production function exhibits increasing returns to scale?

$f(tx, ty) > t f(x, y)$.

$f(tx, ty) < t f(x, y)$.

$f(tx, ty) = t f(x, y)$.

$x^α y^β$.

Correct Answer

Option 1

Correct Answer

Explanation →

Q32:

30 May Shift 2

Micro > Production & Costs

Medium

Choose the correct statements from the options given below in terms of the shapes of the short run cost curves. (A) Average fixed cost curve is a rectangular hyperbola. (B) Total fixed cost is horizontal straight line. (C) Average variable cost is upward sloping. (D) Marginal cost is U shaped. Choose the correct answer from the options given below:

(A), (C) and (D) only

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation →

Q33:

30 May Shift 2

Micro > Production & Costs

Easy

The collection of all possible combinations of goods and services that can be produced from a given amount of resources and a given stock of technological knowledge.

Production Possibility Frontier.

Production Possibility Set.

Isoquant Curve.

Production Function.

Correct Answer

Option 2

Correct Answer

Explanation →

Q34:

30 May Shift 2

Micro > Production & Costs

Medium

A firm wishes to maximize its profit, find the correct conditions from the following, that must be held by the firm at q₂ at which its profit is maximum. (A) The price must be less than the average variable cost (B) The price must be greater than the average variable cost (C) Marginal cost must be non-decreasing (D) The price, p, must equal MC Choose the correct answer from the options given below:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 4

Correct Answer

Explanation →

Q35:

30 May Shift 2

Micro > Production & Costs

Medium

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:

(A) - (II), (B) - (I), (C) - (III), (D) - (IV)

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 3

Correct Answer

Explanation →

Q36:

30 May Shift 2

Micro > Production & Costs

Medium

Arrange the given statements to show the impact on a firm's supply curve due to its determinants. (A) Organisational innovation allows the firm to use fewer units of inputs. (B) Any factor that affects a firm's marginal cost curve is a determinant of its supply curve. (C) At any given market price, the firm now supplies more units of output. (D) The marginal cost will shift downward. Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation →

Q37:

30 May Shift 2

Micro > Production & Costs

Medium

The point of minimum average cost at which the supply curve cuts the long run average cost curve is called?

Super Normal Profit.

Opportunity cost.

Break Even Point.

Shut Down Point.

Correct Answer

Option 3

Correct Answer

Explanation →

Q38:

30 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Long Run Costs In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

The equation of long-run marginal cost.

TC/q

(TC at q₁ units) – (TC at q₁ – 1 units)

TVC/q

TFC/q

Correct Answer

Option 2

Correct Answer

Explanation →

Q39:

30 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Long Run Costs In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

As long as decreasing returns to scale operates, as the firm increases output, the average cost must be ................

Rising

Falling

Constant

Equal to output

Correct Answer

Option 1

Correct Answer

Explanation →

Q40:

30 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Long Run Costs In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

The optimum output will be when the relationship between LRMC and LRAC.

LRAC cut LRMC from above at the minimum point LRAC.

LRAC cut LRMC from below at the minimum point LRAC.

LRMC cut LRAC from above at the minimum point LRAC.

LRMC cut LRAC from below at the minimum point of LRAC.

Correct Answer

Option 4

Correct Answer

Explanation →

Q41:

30 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Long Run Costs In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

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

Equal to average cost.

Less than the average cost.

Greater than the average cost.

Falling.

Correct Answer

Option 3

Correct Answer

Explanation →

Q42:

30 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Long Run Costs In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

The shape of the long-run average cost curve and long-run marginal cost curve.

Only LRAC is U shaped.

LRAC is U shaped and LRMC upward sloping.

Rectangular hyperbole.

U shaped.

Correct Answer

Option 4

Correct Answer

Explanation →

Q43:

30 May Shift 1

Micro > Production & Costs

Medium

When Marginal productivity starts decreasing but remains positive , Total Productivity is ______.

Decreasing.

Increases at constant rate.

Increases at Increasing rate.

Increases at diminishing rate.

Correct Answer

Option 4

Correct Answer

Explanation →

Q44:

30 May Shift 1

Micro > Production & Costs

Easy

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?

2.86

20

3.33

120

Correct Answer

Option 3

Correct Answer

Explanation →

Q45:

30 May Shift 1

Micro > Production & Costs

Medium

Which of the following cost curve has the shape of a rectangular hyperbola?

Average Cost Curve.

Marginal Cost Curve.

Average Fixed Cost Curve.

Variable Cost Curve.

Correct Answer

Option 3

Correct Answer

Explanation →

Q46:

30 May Shift 1

Micro > Production & Costs

Easy

Read the passage carefully and answer the question based on the passage: Akriti Manufacturing Company produces flower vases. The cost of production for 100 vase includes rent of rs 10,000, salary for permanent staff of rs 10,000, cost of Labour is 12,000 and Raw material of rs 18,000. Due to increased demand of vases the company plans to increase production to 200 vases. The variable cost per vase remains Rs 300, and the fixed cost does not change.

What is the fixed cost for producing 200 vases?

40000

20,000

10,000

50,000

Correct Answer

Option 2

Correct Answer

Explanation →

Q47:

30 May Shift 1

Micro > Production & Costs

Medium

Read the passage carefully and answer the question based on the passage: Akriti Manufacturing Company produces flower vases. The cost of production for 100 vase includes rent of rs 10,000, salary for permanent staff of rs 10,000, cost of Labour is 12,000 and Raw material of rs 18,000. Due to increased demand of vases the company plans to increase production to 200 vases. The variable cost per vase remains Rs 300, and the fixed cost does not change.

What is the total variable cost for producing 200 vases?

300

30,000

60,000

18,000

Correct Answer

Option 3

Correct Answer

Explanation →

Q48:

30 May Shift 1

Micro > Production & Costs

Easy

Read the passage carefully and answer the question based on the passage: Akriti Manufacturing Company produces flower vases. The cost of production for 100 vase includes rent of rs 10,000, salary for permanent staff of rs 10,000, cost of Labour is 12,000 and Raw material of rs 18,000. Due to increased demand of vases the company plans to increase production to 200 vases. The variable cost per vase remains Rs 300, and the fixed cost does not change.

If the production is increased to 300 vases, what will happen to Fixed cost per unit?

There will be parallel increase in fixed cost and variable cost.

Fixed cost will also increase.

Fixed cost will not change.

Fixed cost will decrease.

Correct Answer

Option 4

Correct Answer

Explanation →

Q49:

30 May Shift 1

Micro > Production & Costs

Easy

Read the passage carefully and answer the question based on the passage: Akriti Manufacturing Company produces flower vases. The cost of production for 100 vase includes rent of rs 10,000, salary for permanent staff of rs 10,000, cost of Labour is 12,000 and Raw material of rs 18,000. Due to increased demand of vases the company plans to increase production to 200 vases. The variable cost per vase remains Rs 300, and the fixed cost does not change.

Calculate total cost of production for producing 100 vases ?

50,000

60,000

25,000

40,000

Correct Answer

Option 1

Correct Answer

Explanation →

Q50:

30 May Shift 1

Micro > Production & Costs

Medium

Read the passage carefully and answer the question based on the passage: Akriti Manufacturing Company produces flower vases. The cost of production for 100 vase includes rent of rs 10,000, salary for permanent staff of rs 10,000, cost of Labour is 12,000 and Raw material of rs 18,000. Due to increased demand of vases the company plans to increase production to 200 vases. The variable cost per vase remains Rs 300, and the fixed cost does not change.

What will be the average variable cost (AVC) for producing 200 vases?

150

300

250

600

Correct Answer

Option 2

Correct Answer

Explanation →

Q51:

29 May Shift 2

Micro > Production & Costs

Medium

The shape of the average fixed cost curve is ........................

Upward sloping

Rectangular hyperbola

Vertical

Horizontal

Correct Answer

Option 2

Correct Answer

Explanation →

Q52:

29 May Shift 2

Micro > Production & Costs

Medium

In a production function $q = f(x_1, x_2)$ where the firm produces q output using $x_1$ of factor 1 and $x_2$ of factor 2. Now suppose the firm decides to increase the employment level of both the factors t (t > 1) times. then which among the following is correct?

$f(tx_1, tx_2) > t f(x_1, x_2)$ i.e. constant returns to scale.

$f(tx_1, tx_2) < t f(x_1, x_2)$ i.e increasing returns to scale.

$f(tx_1, tx_2) < t f(x_1, x_2)$ i.e decreasing returns to scale.

$f(tx_1, tx_2) = t f(x_1, x_2)$ i.e decreasing returns to scale.

Correct Answer

Option 3

Correct Answer

Explanation →

Q53:

29 May Shift 2

Micro > Production & Costs

Medium

Which statement is incorrect in the context of relationship between AVC and SMC?

As long as AVC is falling, SMC must be less than the AVC.

SMC curve cuts the AVC curve from below at the minimum point of AVC.

As AVC rises, SMC must be greater than the AVC.

SMC curve cuts the AVC curve from below at the minimum point of SMC.

Correct Answer

Option 4

Correct Answer

Explanation →

Q54:

29 May Shift 2

Micro > Production & Costs

Hard

Arrange the following statements in chronological order in respect to the impact of a unit tax on supply: (A) Imposition of unit tax increases the price of commodities. (B) Increased prices will lead to an increase in LRAC and LRMC. (C) The firm's long run supply curve shifts to the left. (D) At any given market price, the firm supplies fewer units of output. Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q55:

29 May Shift 2

Micro > Production & Costs

Medium

When the output added by each additional worker is proportionally less, what it shows?

Marginal product fall and average product rises.

Marginal product rises.

Marginal product falls.

Marginal product rise and average product falls.

Correct Answer

Option 3

Correct Answer

Explanation →

Q56:

29 May Shift 2

Micro > Production & Costs

Medium

Match List-I with List-II | List-I | List-II | |---|---| | (A) Production function | (I) $f(tx_1, tx_2) > t f(x_1, x_2)$ | | (B) Constant returns to scale | (II) $f(tx_1, tx_2) < t f(x_1, x_2)$ | | (C) Increasing returns to scale | (III) $f(x_1, x_2)$ | | (D) Decreasing returns to scale | (IV) $f(tx_1, tx_2) = t f(x_1, x_2)$ | Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (II), (B) - (I), (C) - (III), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 4

Correct Answer

Explanation →

Q57:

29 May Shift 2

Micro > Production & Costs

Medium

Choose the correct equations in the context of costs. (A) TFC = AFC × quantity (B) LRMC = (TC at $q_n$ units) – (TC at $q_{n-1}$ units) (C) TC = TVC × TFC (D) LRAC = TC/q Choose the correct answer from the options given below:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q58:

29 May Shift 2

Micro > Production & Costs

Medium

The set of all possible combinations of the two inputs that yield the same maximum possible level of output is known as...........

Isocost.

Indifference curve.

Isoquant.

Budget line.

Correct Answer

Option 3

Correct Answer

Explanation →

Q59:

29 May Shift 1

Micro > Production & Costs

Easy

The relationship between inputs and outputs of a firm is given by ___________

Cost Function

Production function

Opportunity cost

Revenue function

Correct Answer

Option 2

Correct Answer

Explanation →

Q60:

29 May Shift 1

Micro > Production & Costs

Easy

The slope of Production Possibility curve is represented by ___________.

Marginal rate of substitution

Marginal rate of Transformation

Marginal rate of Exchange

Opportunity Cost

Correct Answer

Option 2

Correct Answer

Explanation →

Q61:

29 May Shift 1

Micro > Production & Costs

Medium

A firm will shut down in the short run if__________.

Price < Average Variable Cost.

Price < Average Fixed Cost.

Total Revenue > Total Cost.

Price = Average Cost.

Correct Answer

Option 1

Correct Answer

Explanation →

Q62:

29 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Demand and Technology Consider the case of a local coffee shop that faces rising demand for its products. In response to the increase in demand, the shop owner decided to increase the price of a cup of coffee. As a result, suppliers in the market respond by increasing their supply, hoping to capitalize on the higher price. If the coffee shop invests in a new espresso machine that makes coffee more efficiently, the cost of producing each cup decreases. This leads to an increase in supply and sell more coffee at the same or lower price, benefiting both the producers and consumers. This cost-reduction technology is helpful in the context of the real world.

Which of the following is an example of Cost-Reduction Technology in a business?

Increased advertising cost.

Implementation of a new machine that speeds up production.

Raising prices to increase revenue.

Hiring more employees to expand the business.

Correct Answer

Option 2

Correct Answer

Explanation →

Q63:

29 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Demand and Technology Consider the case of a local coffee shop that faces rising demand for its products. In response to the increase in demand, the shop owner decided to increase the price of a cup of coffee. As a result, suppliers in the market respond by increasing their supply, hoping to capitalize on the higher price. If the coffee shop invests in a new espresso machine that makes coffee more efficiently, the cost of producing each cup decreases. This leads to an increase in supply and sell more coffee at the same or lower price, benefiting both the producers and consumers. This cost-reduction technology is helpful in the context of the real world.

In Microeconomics, what does supply refer to?

The total amount of goods and services which consumers are willing to buy.

The total amount of goods and services which producers are willing to sell at different price.

The total market demand for a product.

The amount of goods produced by the government.

Correct Answer

Option 2

Correct Answer

Explanation →

Q64:

29 May Shift 1

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Demand and Technology Consider the case of a local coffee shop that faces rising demand for its products. In response to the increase in demand, the shop owner decided to increase the price of a cup of coffee. As a result, suppliers in the market respond by increasing their supply, hoping to capitalize on the higher price. If the coffee shop invests in a new espresso machine that makes coffee more efficiently, the cost of producing each cup decreases. This leads to an increase in supply and sell more coffee at the same or lower price, benefiting both the producers and consumers. This cost-reduction technology is helpful in the context of the real world.

In the above paragraph, which factor is affecting the supply of Coffee?

Change in consumer's preference.

Change in price of related goods.

Advancement of technology.

Government policy.

Correct Answer

Option 3

Correct Answer

Explanation →

Q65:

29 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Demand and Technology Consider the case of a local coffee shop that faces rising demand for its products. In response to the increase in demand, the shop owner decided to increase the price of a cup of coffee. As a result, suppliers in the market respond by increasing their supply, hoping to capitalize on the higher price. If the coffee shop invests in a new espresso machine that makes coffee more efficiently, the cost of producing each cup decreases. This leads to an increase in supply and sell more coffee at the same or lower price, benefiting both the producers and consumers. This cost-reduction technology is helpful in the context of the real world.

What is the main purpose of Cost Reduction Technologies in business?

To increase demand for a product.

To maintain price level and to increase profit margins.

To maintain high price in the market.

To reduce number of suppliers in the market.

Correct Answer

Option 2

Correct Answer

Explanation →

Q66:

29 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Demand and Technology Consider the case of a local coffee shop that faces rising demand for its products. In response to the increase in demand, the shop owner decided to increase the price of a cup of coffee. As a result, suppliers in the market respond by increasing their supply, hoping to capitalize on the higher price. If the coffee shop invests in a new espresso machine that makes coffee more efficiently, the cost of producing each cup decreases. This leads to an increase in supply and sell more coffee at the same or lower price, benefiting both the producers and consumers. This cost-reduction technology is helpful in the context of the real world.

How does an increase in price affect supply?

It decreases the quantity supplied.

It does not affect the quantity supplied.

It increases the quantity supplied.

It decreases demand.

Correct Answer

Option 3

Correct Answer

Explanation →

Q67:

28 May Shift 2

Micro > Production & Costs

Medium

Arrange the following statements in the context of "U" shaped SAC curve. (A) SAC is the sum of AVC and AFC. (B) SAC falls when AVC and AFC decrease. (C) When the fall in AFC is greater than the rise in AVC and SAC is still falling. (D) When a rise in AVC becomes greater than the fall in AFC, SAC rises. Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q68:

28 May Shift 2

Micro > Production & Costs

Easy

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"?

Diminishing Returns to Scale.

Law of Variable Proportions.

Law of Diminishing Marginal Rate of Substitution.

Increasing Returns to Scale.

Correct Answer

Option 2

Correct Answer

Explanation →

Q69:

28 May Shift 2

Micro > Production & Costs

Hard

At the positive level of output, where a firm's profit is maximized, the following conditions must hold. (A) $p = LRMC$ (B) LRMC is non-decreasing at $q_0$ (C) $p \leq LRAC$ (D) $p \geq$ min. LRAC Choose the correct answer from the options given below:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q70:

28 May Shift 2

Micro > Production & Costs

Medium

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:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 4

Correct Answer

Explanation →

Q71:

28 May Shift 2

Micro > Production & Costs

Medium

At the market price of Rs 10, a firm supplies 200 units of a good. If the market price increases to Rs 30, and the price elasticity of the firm's supply is 2. Then at new price what quantity will be supplied by the firm?

1200

1400

1000

800

Correct Answer

Option 3

Correct Answer

Explanation →

Q72:

28 May Shift 2

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Short run Costs In the short run, some of the factors of production cannot be varied. The cost that a firm incurs to employ fixed inputs is called the total fixed cost. Whatever amount of output the firm produces, this cost remains fixed for the firm. To produce any required level of output, the firm, in the short run, can adjust only variable inputs. Accordingly, the cost that a firm incurs to employ these variable inputs is called the total variable cost. Adding the fixed and the variable costs, we get the total cost of a firm. In order to increase the production of output, the firm must employ more of the variable inputs. As a result, the total variable cost and total cost will increase. Therefore, as output increases, the total variable cost and total cost increase. Marginal cost is the increase in total variable cost due to an increase in production of one extra unit of output. For any level of output, the sum of marginal costs up to that level gives us the total variable cost at that level.

An increase in production of one extra unit of output will lead to an increase in ..........

Marginal Cost.

Total Fixed Cost.

Total Variable Cost.

Average Cost.

Correct Answer

Option 3

Correct Answer

Explanation →

Q73:

28 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Short run Costs In the short run, some of the factors of production cannot be varied. The cost that a firm incurs to employ fixed inputs is called the total fixed cost. Whatever amount of output the firm produces, this cost remains fixed for the firm. To produce any required level of output, the firm, in the short run, can adjust only variable inputs. Accordingly, the cost that a firm incurs to employ these variable inputs is called the total variable cost. Adding the fixed and the variable costs, we get the total cost of a firm. In order to increase the production of output, the firm must employ more of the variable inputs. As a result, the total variable cost and total cost will increase. Therefore, as output increases, the total variable cost and total cost increase. Marginal cost is the increase in total variable cost due to an increase in production of one extra unit of output. For any level of output, the sum of marginal costs up to that level gives us the total variable cost at that level.

The total cost is equal to Rs.95 for 7 units of output and Rs.115 for 8 units of output. What is the marginal cost at the quantity of 8th unit?

Rs.15

Rs.10

Rs.20

Rs.25

Correct Answer

Option 3

Correct Answer

Explanation →

Q74:

28 May Shift 2

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Short run Costs In the short run, some of the factors of production cannot be varied. The cost that a firm incurs to employ fixed inputs is called the total fixed cost. Whatever amount of output the firm produces, this cost remains fixed for the firm. To produce any required level of output, the firm, in the short run, can adjust only variable inputs. Accordingly, the cost that a firm incurs to employ these variable inputs is called the total variable cost. Adding the fixed and the variable costs, we get the total cost of a firm. In order to increase the production of output, the firm must employ more of the variable inputs. As a result, the total variable cost and total cost will increase. Therefore, as output increases, the total variable cost and total cost increase. Marginal cost is the increase in total variable cost due to an increase in production of one extra unit of output. For any level of output, the sum of marginal costs up to that level gives us the total variable cost at that level.

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

Total Variable Cost and Total Cost increase.

Total Variable Cost and Total Cost decrease.

Total Variable Cost decrease and Total Cost increase.

Total Variable Cost increase and Total Cost decrease.

Correct Answer

Option 1

Correct Answer

Explanation →

Q75:

28 May Shift 2

Micro > Production & Costs

Easy

Comprehension: Read the passage carefully and answer the questions based on the passage: Short run Costs In the short run, some of the factors of production cannot be varied. The cost that a firm incurs to employ fixed inputs is called the total fixed cost. Whatever amount of output the firm produces, this cost remains fixed for the firm. To produce any required level of output, the firm, in the short run, can adjust only variable inputs. Accordingly, the cost that a firm incurs to employ these variable inputs is called the total variable cost. Adding the fixed and the variable costs, we get the total cost of a firm. In order to increase the production of output, the firm must employ more of the variable inputs. As a result, the total variable cost and total cost will increase. Therefore, as output increases, the total variable cost and total cost increase. Marginal cost is the increase in total variable cost due to an increase in production of one extra unit of output. For any level of output, the sum of marginal costs up to that level gives us the total variable cost at that level.

In the short run, some of the factors of production of a firm ......

Flexible.

Remain Constant.

Increases.

Decreases.

Correct Answer

Option 2

Correct Answer

Explanation →

Q76:

28 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Read the passage carefully and answer the questions based on the passage: Short run Costs In the short run, some of the factors of production cannot be varied. The cost that a firm incurs to employ fixed inputs is called the total fixed cost. Whatever amount of output the firm produces, this cost remains fixed for the firm. To produce any required level of output, the firm, in the short run, can adjust only variable inputs. Accordingly, the cost that a firm incurs to employ these variable inputs is called the total variable cost. Adding the fixed and the variable costs, we get the total cost of a firm. In order to increase the production of output, the firm must employ more of the variable inputs. As a result, the total variable cost and total cost will increase. Therefore, as output increases, the total variable cost and total cost increase. Marginal cost is the increase in total variable cost due to an increase in production of one extra unit of output. For any level of output, the sum of marginal costs up to that level gives us the total variable cost at that level.

When the output is zero in the short run. Which of the following costs are undefined?

AVC, AFC and MC.

AFC and TC.

VC and MC.

TC and FC.

Correct Answer

Option 1

Correct Answer

Explanation →

Q77:

28 May Shift 1

Micro > Production & Costs

Easy

How is the value of the average product calculated in the short-run? 1. By dividing the total product by the number of labor. 2. By dividing the change in total product by the change in labor. 3. By dividing the change in total product by the number of labor. 4. By dividing the total product by the change in labor.

By dividing the total product by the number of labor.

By dividing the change in total product by the change in labor.

By dividing the change in total product by the number of labor.

By dividing the total product by the change in labor.

Correct Answer

Option 1

Correct Answer

Explanation →

Q78:

28 May Shift 1

Micro > Production & Costs

Medium

What does the rectangle OVBq₀ depicts in the given figure? <img src="https://balti.afterboards.in/Ob3rMiI54qCpKWc" width="300px"/>

Average variable cost

Average cost

Total variable cost

Total cost

Correct Answer

Option 3

Correct Answer

Explanation →

Q79:

28 May Shift 1

Micro > Production & Costs

Medium

Which of the following statements are correctly explaining the relationship between the marginal revenue (MR) and price elasticity of demand? (A). Price elasticity is less than 1 when MR is negative. (B). Price elasticity is more than 1 when MR is negative. (C). Price elasticity is more than 1 when MR is positive. (D). Price elasticity is less than 1 when MR is positive. Choose the correct answer from the options given below: 1. (A) and (D) only 2. (A) and (B) only 3. (B) and (D) only 4. (A) and (C) only

(A) and (D) only

(A) and (B) only

(B) and (D) only

(A) and (C) only

Correct Answer

Option 4

Correct Answer

Explanation →

Q80:

28 May Shift 1

Micro > Production & Costs

Medium

Arrange the following statements considering the shape of long run marginal costs (LRMC). (A) As output increases, LRAC initially falls (MC < AC). (B) For the first unit of output, both LRMC and LRAC are the same. (C) After a certain point, LRAC rises (MC > AC). (D) LRMC curve is therefore a 'U'-shaped curve. Choose the correct answer from the options given below: 1. (A), (B), (C), (D) 2. (B), (A), (C), (D) 3. (B), (A), (D), (C) 4. (C), (B), (D), (A)

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation →

Q81:

28 May Shift 1

Micro > Production & Costs

Medium

The short run supply curve is represented as? 1. The rising part of the marginal cost curve. 2. The rising part of the marginal cost curve from and above the minimum average variable cost curve. 3. The rising part of the marginal cost curve from and above the minimum average cost curve. 4. The marginal cost curve.

The rising part of the marginal cost curve.

The rising part of the marginal cost curve from and above the minimum average variable cost curve.

The rising part of the marginal cost curve from and above the minimum average cost curve.

The marginal cost curve.

Correct Answer

Option 2

Correct Answer

Explanation →

Q82:

28 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the given paragraph carefully and answer the following questions. Total Product, Average Product and Marginal Product The relationship between the variable input and output, keeping all other inputs constant, is often referred to as total product (TP) of the variable input. Average product (AP) is defined as the output per unit of variable input. Marginal product (MP) of an input is defined as the change in output per unit of change in the input when all other inputs are held constant. According to the law of variable proportions, the marginal product of an input initially rises and then, after a certain level of employment, it starts falling. As long as AP increases, it must be the case that MP is greater than AP. Otherwise, AP cannot rise. Similarly, when AP falls, MP has to be less than AP. It follows that MP curve cuts AP curve from above at its maximum.

The shape of the average product and marginal product curves are................... 1. Both Inverse 'U' Shaped 2. Both 'U' Shaped 3. AP 'U' Shaped and MP Inverse 'U' Shaped 4. MP 'U' Shaped and AP Inverse 'U' shaped

Both Inverse 'U' Shaped

Both 'U' Shaped

AP 'U' Shaped and MP Inverse 'U' Shaped

MP 'U' Shaped and AP Inverse 'U' shaped

Correct Answer

Option 1

Correct Answer

Explanation →

Q83:

28 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the given paragraph carefully and answer the following questions. Total Product, Average Product and Marginal Product The relationship between the variable input and output, keeping all other inputs constant, is often referred to as total product (TP) of the variable input. Average product (AP) is defined as the output per unit of variable input. Marginal product (MP) of an input is defined as the change in output per unit of change in the input when all other inputs are held constant. According to the law of variable proportions, the marginal product of an input initially rises and then, after a certain level of employment, it starts falling. As long as AP increases, it must be the case that MP is greater than AP. Otherwise, AP cannot rise. Similarly, when AP falls, MP has to be less than AP. It follows that MP curve cuts AP curve from above at its maximum.

The case where a marginal product is greater than the average product, where? 1. MP cut AP at Minimum 2. AP remains Constant 3. AP Decreases 4. AP Increases

MP cut AP at Minimum

AP remains Constant

AP Decreases

AP Increases

Correct Answer

Option 4

Correct Answer

Explanation →

Q84:

28 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the given paragraph carefully and answer the following questions. Total Product, Average Product and Marginal Product The relationship between the variable input and output, keeping all other inputs constant, is often referred to as total product (TP) of the variable input. Average product (AP) is defined as the output per unit of variable input. Marginal product (MP) of an input is defined as the change in output per unit of change in the input when all other inputs are held constant. According to the law of variable proportions, the marginal product of an input initially rises and then, after a certain level of employment, it starts falling. As long as AP increases, it must be the case that MP is greater than AP. Otherwise, AP cannot rise. Similarly, when AP falls, MP has to be less than AP. It follows that MP curve cuts AP curve from above at its maximum.

Keeping the capital as a fixed input, as 3, when the quantity of labor changes from 3 to 4, the total product with labor also rises from 40 to 50 units. What is the average product after the change? 1. 50 2. 13.33 3. 12.5 4. 40

50

13.33

12.5

40

Correct Answer

Option 3

Correct Answer

Explanation →

Q85:

28 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the given paragraph carefully and answer the following questions. Total Product, Average Product and Marginal Product The relationship between the variable input and output, keeping all other inputs constant, is often referred to as total product (TP) of the variable input. Average product (AP) is defined as the output per unit of variable input. Marginal product (MP) of an input is defined as the change in output per unit of change in the input when all other inputs are held constant. According to the law of variable proportions, the marginal product of an input initially rises and then, after a certain level of employment, it starts falling. As long as AP increases, it must be the case that MP is greater than AP. Otherwise, AP cannot rise. Similarly, when AP falls, MP has to be less than AP. It follows that MP curve cuts AP curve from above at its maximum.

A firm increased the capital by a unit, which led to a rise in total product from 10 units to 24 units. Further increase in capital in the same quantity leads to an increase in total product to 40 units. What is the difference in change in marginal product? 1. 14 2. 2 3. 30 4. 16

14

2

30

16

Correct Answer

Option 2

Correct Answer

Explanation →

Q86:

28 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Read the given paragraph carefully and answer the following questions. Total Product, Average Product and Marginal Product The relationship between the variable input and output, keeping all other inputs constant, is often referred to as total product (TP) of the variable input. Average product (AP) is defined as the output per unit of variable input. Marginal product (MP) of an input is defined as the change in output per unit of change in the input when all other inputs are held constant. According to the law of variable proportions, the marginal product of an input initially rises and then, after a certain level of employment, it starts falling. As long as AP increases, it must be the case that MP is greater than AP. Otherwise, AP cannot rise. Similarly, when AP falls, MP has to be less than AP. It follows that MP curve cuts AP curve from above at its maximum.

In the production of clothes, cotton is defined as................ 1. capital 2. Input. 3. Final Output. 4. Intermediate output

capital

Input.

Final Output.

Intermediate output

Correct Answer

Option 2

Correct Answer

Explanation →

Q87:

27 May Shift 2

Micro > Production & Costs

Easy

In the short run, the shape of marginal cost, average variable cost and short run average cost curves are:

Concave.

Downward sloping.

U- shaped.

Convex.

Correct Answer

Option 3

Correct Answer

Explanation →

Q88:

27 May Shift 2

Micro > Production & Costs

Easy

Calculate the short run average cost when total cost is 95 with 9 units of output.

9.55

11

10

10.55

Correct Answer

Option 4

Correct Answer

Explanation →

Q89:

27 May Shift 2

Micro > Production & Costs

Easy

Match List-I with List-II | List-I | List-II | |---|---| | (A) Short run Marginal Cost (SMC) | (I) ΔTC/Δq | | (B) Long run Average Cost (LRAC) | (II) TVC/q | | (C) Average Variable Cost (AVC) | (III) TC/q | | (D) Average Fixed cost (AFC) | (IV) TFC/q | Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (I), (B) - (III), (C) - (II), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 2

Correct Answer

Explanation →

Q90:

27 May Shift 2

Micro > Production & Costs

Easy

Which of the following are correct: (A) Average Product of labor = Total Product of labor / Labor. (B) Average cost = average variable cost + average fixed cost. (C) Marginal Product of labor = Total Product of labor/Labor. (D) Average fixed cost = Fixed cost / Output. 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 Answer

Option 1

Correct Answer

Explanation →

Q91:

27 May Shift 2

Micro > Production & Costs

Medium

At the minimum point of the long run average cost curve .......... is observed.

Decreasing Returns to Scale.

Constant Returns to Scale.

Law of Variable Proportions.

Increasing Returns to Scale.

Correct Answer

Option 2

Correct Answer

Explanation →

Q92:

27 May Shift 2

Micro > Production & Costs

Medium

In inverse 'U'-shaped average product curve; as long as the value of Marginal Product remains higher than the value of the average product, in this condition the average product continues to ..........

Fall.

Rise.

Constant.

Zero.

Correct Answer

Option 2

Correct Answer

Explanation →

Q93:

27 May Shift 2

Micro > Production & Costs

Medium

Average fixed cost curve is actually a ................... curve:

Rectangular Hyperbola Curve.

L shape Curve.

'U' Shaped Curve.

Downward Straight Line Curve.

Correct Answer

Option 1

Correct Answer

Explanation →

Q94:

27 May Shift 2

Micro > Production & Costs

Easy

The marginal product of an input initially rises and then after a certain level of employment, it starts falling, thus MP curve looks like an inverse 'U'- shaped curve. This condition is under ............

Decreasing Returns to Scale.

Law of Variable Proportions.

Increasing Returns to Scale.

Constant Returns to Scale.

Correct Answer

Option 2

Correct Answer

Explanation →

Q95:

26 May Shift 2

Micro > Production & Costs

Easy

Which of the following central problems deals with the choice of technique of production?

What to Produce?

How to produce?

For whom to produce?

Problem of full employment of resources.

Correct Answer

Option 2

Correct Answer

Explanation →

Q96:

26 May Shift 2

Micro > Production & Costs

Medium

Which of the following are correct about the short run cost concepts? (A) Both the average cost and average variable cost curves are U-shaped. (B) Average cost and average variable cost curves are parallel to each other. (C) Marginal cost is equal to both average cost and average variable costs at their respective minimum levels. (D) Average cost and average variable cost can never be equal to each other. Choose the correct answer from the options given below:

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

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

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

(A), (C) and (D) only

Correct Answer

Option 4

Correct Answer

Explanation →

Q97:

26 May Shift 2

Micro > Production & Costs

Easy

If the average fixed cost of production is the fixed cost per unit of output produced. Then it will _______.

Remains same at all levels of output.

Increases with increase in the level of output.

Decreases with increase in level of output.

First increases and then decreases as the output is increased.

Correct Answer

Option 3

Correct Answer

Explanation →

Q98:

26 May Shift 2

Micro > Production & Costs

Easy

A profit-maximizing firm will attain its equilibrium at that level of output where?

The excess of total revenue over total cost is maximum.

Where the excess of total cost over total revenue is maximum.

Where the excess of marginal revenue over marginal cost is maximum.

Where the excess of marginal cost over marginal revenue is maximum.

Correct Answer

Option 1

Correct Answer

Explanation →

Q99:

26 May Shift 2

Micro > Production & Costs

Medium

A firm is operating in a market where it can sell more only by lowering the price of the good. Arrange the changes in total revenue of this firm in a sequential order. (A) Total revenue falls. (B) Total revenue starts from origin. (C) Total revenue increases at a diminishing rate. (D) Total revenue reaches its maximum. Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q100:

26 May Shift 2

Micro > Production & Costs

Easy

According to the law of variable proportions. Which among the the following option is correct?

The marginal product of an input initially rises and then, it starts falling.

The marginal product of an input initially falls and then, it starts rising.

The marginal product of an input throughout falls.

The marginal product remains constant throughout.

Correct Answer

Option 1

Correct Answer

Explanation →

Q101:

22 May Shift 2

Micro > Production & Costs

Easy

Suppose that the unit tax imposed by the government is Rs 50. Then, if the firm produces and sells 100 units of the good, the total tax that the firm must pay to the government is ...................

Rs. 500.

Rs. 5000.

Rs. 50.

Rs. 100.

Correct Answer

Option 2

Correct Answer

Explanation →

Q102:

22 May Shift 2

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 Answer

Option 1

Correct Answer

Explanation →

Q103:

22 May Shift 2

Micro > Production & Costs

Medium

Match List-I with List-II | List-I | List-II | |---|---| | (A) Normal profit | (I) Minimum level of profit need by firm to be in business. | | (B) Shut down point | (II) Minimum level of LRAC curve | | (C) Break-even point | (III) Profit Over and above normal profit | | (D) Super-normal profit | (IV) The point on which firm earn only normal profit. | Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (I), (B) - (III), (C) - (II), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 3

Correct Answer

Explanation →

Q104:

22 May Shift 2

Micro > Production & Costs

Medium

When more and more workers are applied on the fixed land then the marginal productivity of additional worker will ............... to the total output.

Rise.

Become Horizontal.

Become Vertical.

Fall.

Correct Answer

Option 4

Correct Answer

Explanation →

Q105:

22 May Shift 2

Micro > Production & Costs

Medium

From the following statements about a firm's supply curve, select the correct statements: (A) Technological progress is expected to shift the supply curve of a firm to the right. (B) An increase in input prices is expected to shift the supply curve of a firm to the left. (C) A decrease in input prices is expected to shift the supply curve of a firm to the left. (D) The imposition of a unit tax shifts the supply curve of a firm to the left. Choose the correct answer from the options given below:

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

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

(A), (C) and (D) only

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q106:

22 May Shift 2

Micro > Production & Costs

Easy

Which function tells us the relation between inputs and output?

Consumption.

Production.

Demand.

Supply.

Correct Answer

Option 2

Correct Answer

Explanation →

Q107:

22 May Shift 2

Micro > Production & Costs

Medium

Match List-I with List-II | List-I | List-II | |---|---| | (A) TVC | (I) AVC × quantity | | (B) SAC | (II) AVC + AFC | | (C) TC | (III) TVC + TFC | | (D) LRMC | (IV) (TC at q₁ units) – (TC at q₁ – ₁ units) | Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (I), (B) - (III), (C) - (II), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 1

Correct Answer

Explanation →

Q108:

22 May Shift 2

Micro > Production & Costs

Medium

Marginal product (MP) and the average product (AP) curves are inverse 'U'-shaped. which of the following is correct for AP and MP.

Average product curve cuts the marginal product curve from above at the maximum point of marginal product curve.

Average product curve cuts the marginal product curve from above at the minimum point of marginal product curve.

Marginal product curve cuts the average product curve from above at the minimum point of average product curve

Marginal product curve cuts the average product curve from above at the maximum point of average product curve.

Correct Answer

Option 4

Correct Answer

Explanation →

Q109:

22 May Shift 2

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 Answer

Option 1

Correct Answer

Explanation →

Q110:

22 May Shift 2

Micro > Production & Costs

Easy

The total cost of a firm is Rs 80 for 3 units of output, Rs 95 for 4 units of output, and Rs. 115 for 5 units of output. What is the marginal cost for the 5th unit of output?

Rs. 20.

Rs. 15.

Rs. 13.

Rs. 16.

Correct Answer

Option 1

Correct Answer

Explanation →

Q111:

22 May Shift 1

Micro > Production & Costs

Medium

When more workers are hired, the land begins to get 'crowded'. Each worker now has insufficient land to work efficiently. So the output added by each additional worker is now proportionally less as a result the marginal product begins to __________.

Constant.

Rise.

Fall.

Zero.

Correct Answer

Option 3

Correct Answer

Explanation →

Q112:

22 May Shift 1

Micro > Production & Costs

Easy

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

Indifference Curves.

Isocost curve.

Production Possibility Set.

Isoquant.

Correct Answer

Option 4

Correct Answer

Explanation →

Q113:

22 May Shift 1

Micro > Production & Costs

Easy

When labor changes from 3 to 4, the total product changes from 24 to 40, calculate the marginal product.

14.

10.

16.

12.

Correct Answer

Option 3

Correct Answer

Explanation →

Q114:

22 May Shift 1

Micro > Production & Costs

Medium

In the long run, average cost must be rising as the firm increases output as long as the.......... operates.

Increasing Returns to Scale.

Law of Variable Proportions.

Decreasing Returns to Scale.

Constant Returns to Scale.

Correct Answer

Option 3

Correct Answer

Explanation →

Q115:

22 May Shift 1

Micro > Production & Costs

Medium

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:

(A), (C) and (D) only

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q116:

22 May Shift 1

Micro > Production & Costs

Easy

The change in output per unit of change in the input when all other inputs are held constant, is termed as __________.

Total Product.

Marginal Product.

Average Product.

Marginal Utility.

Correct Answer

Option 2

Correct Answer

Explanation →

Q117:

22 May Shift 1

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 Answer

Option 3

Correct Answer

Explanation →

Q118:

22 May Shift 1

Micro > Production & Costs

Medium

A firm produce $q$ amount of output using $x₁$ amount of factor 1 and $x₂$ amount of factor 2. Match List-I with List-II | List-I | List-II | |--------|---------| | (A). Cobb-Douglas Production Function | (I). $f(tx_1, tx_2) > t \cdot f(x_1, x_2)$ | | (B). Constant returns to scale | (II). $f(tx_1, tx_2) < t \cdot f(x_1, x_2)$ | | (C). Increasing returns to scale | (III). $q = x_1^\alpha x_2^\beta$ | | (D). Decreasing returns to scale | (IV). $f(tx_1, tx_2) = t \cdot f(x_1, x_2)$ | Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (I), (B) - (III), (C) - (II), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 4

Correct Answer

Explanation →

Q119:

22 May Shift 1

Micro > Production & Costs

Medium

If there is a positive level of output at which a firm's profit is maximized in the short run, that condition must not hold at that output level:

Price = Short run Marginal Cost.

Short run Marginal Cost is non-decreasing.

Price = Short run Average Cost.

Price ≥ Average Variable Cost.

Correct Answer

Option 3

Correct Answer

Explanation →

Q120:

22 May Shift 1

Micro > Production & Costs

Medium

For the firm to continue to produce, in the long run, price must be greater than the average cost (p > AC) and in the short run, price must be greater than the ......

Average variable cost.

Average fixed cost.

Marginal cost.

Total cost.

Correct Answer

Option 1

Correct Answer

Explanation →

Q121:

21 May Shift 1

Micro > Production & Costs

Medium

Manoj is a seller in a market where more can be sold only by lowering the price of the goods. Which of the following will be true about his revenue. (A) Total revenue will increase at a constant rate. (B) Average revenue will be more than his marginal revenue at all the levels of output sold. (C) Marginal revenue curve will be downward sloping from left to the right. (D) Marginal revenue can be zero at some level of output sold. 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 Answer

Option 4

Correct Answer

Explanation →

Q122:

21 May Shift 1

Micro > Production & Costs

Medium

Which of the following is/are true about the short run costs? (A) Marginal cost is the slope of total variable cost. (B) Average fixed cost curve is a downward sloping rectangular hyperbola. (C) Average variable cost curve is a U shaped curve. (D) Average variable cost curve and average cost curve are parallel to each other. Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation →

Q123:

21 May Shift 1

Micro > Production & Costs

Medium

Which of the following is true about the law of variable proportions? (A) Total product eventually declines. (B) Average product is an inverse U shaped curve. (C) Marginal product becomes equal to Average product at its minimum. (D) Marginal product can never be negative. Choose the correct answer from the options given below:

(A) and (B) only

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

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

(A), (C) and (D) only

Correct Answer

Option 1

Correct Answer

Explanation →

Q124:

21 May Shift 1

Micro > Production & Costs

Medium

If the supply curve of a good cuts the price axis in its positive range and as we extend the straight line, it cuts the quantity-axis at its negative range, the elasticity of supply for the good will be:

Less than 1.

Equal to 1.

More than 1.

Not defined (infinity).

Correct Answer

Option 3

Correct Answer

Explanation →

Q125:

21 May Shift 1

Micro > Production & Costs

Easy

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

Increase the level of output.

Decrease the level of output.

Should keep the output level constant.

Should reduce the price of the product.

Correct Answer

Option 1

Correct Answer

Explanation →

Q126:

21 May Shift 1

Micro > Production & Costs

Medium

If the marginal rate of transformation is constant throughout, the production Possibilities Frontier will be

Downward sloping and concave to the origin.

Downward sloping and convex to the origin.

Downward sloping and linear.

Upward sloping straight line.

Correct Answer

Option 3

Correct Answer

Explanation →

Q127:

16 May Shift 1

Micro > Production & Costs

Medium

If the total revenue curve of a firm is an upward sloping straight line, then which of the following is true for this firm?

Marginal revenue is falling.

Marginal revenue is increasing.

Marginal revenue is always equal to average revenue.

marginal revenue is greater than average revenue.

Correct Answer

Option 3

Correct Answer

Explanation →

Q128:

16 May Shift 1

Micro > Production & Costs

Easy

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:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (IV), (B) - (III), (C) - (II), (D) - (I)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (IV), (B) - (III), (C) - (I), (D) - (II)

Correct Answer

Option 4

Correct Answer

Explanation →

Q129:

16 May Shift 1

Micro > Production & Costs

Medium

Which of the following is not true?

The production function of a firm is a monetary relationship between inputs used and output produced by the firm.

The production function gives the maximum quantity of output that can be produced.

A production function deals only with the efficient use of inputs.

A production function is defined for a given technology.

Correct Answer

Option 1

Correct Answer

Explanation →

Q130:

16 May Shift 1

Micro > Production & Costs

Medium

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. (C) Technological progress shifts the supply curve of the firm to the right. (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:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation →

Q131:

16 May Shift 1

Micro > Production & Costs

Medium

For a hypothetical firm, the total cost of producing 5 units of a commodity is Rs. 310 and that of producing 8 units is Rs. 850. If the firm has to spend Rs. 50 even when there is no output, what will be the marginal cost of producing the 8th unit?

Rs. 50

Rs. 180

Rs. 270

Rs. 540

Correct Answer

Option 2

Correct Answer

Explanation →

Q132:

16 May Shift 1

Micro > Production & Costs

Medium

If the marginal cost(MC) of a perfectly competitive firm is as given below and the price of the product is Rs 15, find the profit-maximizing output of the firm. | output | 1 | 2 | 3 | 4 | 5 | 6 | |---|---|---|---|---|---|---| | MC | 18 | 15 | 10 | 12 | 15 | 24 |

2

3

5

6

Correct Answer

Option 3

Correct Answer

Explanation →

Q133:

15 May Shift 1

Micro > Production & Costs

Medium

Match List-I with List-II (TP : TOTAL PRODUCT; L: UNITS OF LABOUR) | List-I | List-II | |---|---| | (A) $TP/L$ | (I) Total Product is maximum | | (B) $\Delta TP/\Delta L$ | (II) Marginal product | | (C) $\sum MP$ | (III) Total product | | (D) $MP=0$ | (IV) Average Product | Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (IV), (B) - (III), (C) - (II), (D) - (I)

(A) - (IV), (B) - (II), (C) - (III), (D) - (I)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 3

Correct Answer

Explanation →

Q134:

15 May Shift 1

Micro > Production & Costs

Medium

Identify the correct sequence to establish the relation between marginal cost and average cost. (A) When Marginal cost falls, average cost also falls. (B) Marginal cost rises but average cost continues to fall. (C) Marginal cost is equal to average cost. (D) Marginal cost rises and average cost also rises. Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation →

Q135:

15 May Shift 1

Micro > Production & Costs

Medium

Identify the incorrect statement about the relation between Marginal Product(MP) and Average Product (AP).

As long as the AP increases, it must be the case that MP is greater than AP.

when AP falls, MP has to be less than AP.

MP curve cuts AP curve from above at its maximum.

AP can fall even when MP is rising.

Correct Answer

Option 4

Correct Answer

Explanation →

Q136:

15 May Shift 1

Micro > Production & Costs

Medium

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 (C) Marginal product increases (D) More and more units of variable factor are employed. Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation →

Q137:

15 May Shift 1

Micro > Production & Costs

Medium

Choose the correct options with reference to short-run average costs. (A) Average total cost = total cost / quantity of output (B) Average total cost = average variable cost + average fixed cost (C) Average variable cost = average total cost - average fixed cost (D) Average fixed cost = average variable cost - average cost 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 Answer

Option 2

Correct Answer

Explanation →

Q138:

15 May Shift 1

Micro > Production & Costs

Easy

In an economy producing only two goods X and Y, the opportunity cost of producing 5 units of good X is 3 units of good Y. The above statement implies that _____. (choose the correct option)

A combination of 5X and 3Y can be produced in the economy.

A combination of 3X and 5Y can be produced in the economy.

To produce 5 units of good X, production of good Y needs to be reduced by 3 units.

To produce 3 units of good X, production of good Y needs to be reduced by 5 units.

Correct Answer

Option 3

Correct Answer

Explanation →

Q139:

15 May Shift 1

Micro > Production & Costs

Medium

Choose the incorrect option from the following with reference to production in the short run.

The law of variable proportions is applicable.

The firm can change more than one factor in short run.

The firm experiences returns to a factor.

The law of diminishing marginal returns is applicable.

Correct Answer

Option 2

Correct Answer

Explanation →

Q140:

15 May Shift 1

Micro > Production & Costs

Medium

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.

$f(tx_1, tx_2) = tf(x_1, x_2)$ implies constant returns to scale.

$f(tx_1, tx_2) > tf(x_1, x_2)$ implies decreasing returns to scale.

$f(tx_1, tx_2) < tf(x_1, x_2)$ implies increasing returns to scale.

$f(tx_1, tx_2) = f(x_1, x_2)$ implies constant returns to scale.

Correct Answer

Option 1

Correct Answer

Explanation →

Q141:

14 May Shift 1

Micro > Production & Costs

Hard

Arrange the following in correct sequence to attain equilibrium under perfect competition. (A) LRMC start rising. (B) Both LRAC and LRMC fall. (C) Both LRAC and LRMC rises. (D) LRMC cuts LRAC from below.

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation →

Q142:

14 May Shift 1

Micro > Production & Costs

Medium

Match List-I with List-II | List–I | List–II | | ---------------------------------------------------------------------------------------------------- | --------------------------------- | | (A) A proportional increase in all inputs results in an increase in output by a smaller proportion | (I) Constant returns to scale | | (B) A proportional increase in all inputs results in an increase in output by a larger proportion | (II) Law of variable proportions | | (C) A proportional increase in all inputs results in an increase in output by the same proportion | (III) Decreasing Returns to Scale | | (D) Factor proportions change as long as one factor is held constant and the other factors increases | (IV) Increasing Returns to Scale | Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (I), (B) - (III), (C) - (II), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 4

Correct Answer

Explanation →

Q143:

14 May Shift 1

Micro > Production & Costs

Medium

Match List-I with List-II | List–I | List–II | | ----------------------- | -------------------------------------- | | (A) Total variable cost | (I) TR – (TVC + TFC) | | (B) Total Revenue | (II) TVCₙ – TVCₙ₋₁ | | (C) Profit | (III) Average variable cost × Quantity | | (D) Marginal cost | (IV) Price × Quantity | Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (I), (B) - (III), (C) - (II), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 4

Correct Answer

Explanation →

Q144:

14 May Shift 1

Micro > Production & Costs

Medium

Which of the following statements are true with regard to the production? (A) In the short run, at least one of the factors of production remains fixed. (B) In the long run, all factors of production can be varied. (C) A period can be defined as long run or short run simply by looking at whether all the inputs can be varied or not. (D) In the long run, factors of production can be classified into fixed and variable

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation →

Q145:

14 May Shift 1

Micro > Production & Costs

Medium

Comprehension: Shapes of the Long Run Cost Curves It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Long curve downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC curve cuts the LRAC curve from below at the minimum point of the LRAC.

As long as average cost is falling

Marginal cost > Average cost

Marginal cost < Average cost

Marginal cost = Average cost

Marginal cost = Total cost

Correct Answer

Option 2

Correct Answer

Explanation →

Q146:

14 May Shift 1

Micro > Production & Costs

Easy

Comprehension: Shapes of the Long Run Cost Curves It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Long curve downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC curve cuts the LRAC curve from below at the minimum point of the LRAC.

In the long run marginal cost curve shape is ..........

'V'-shaped curve

Horizontal curve

'U'-shaped curve

Downword Sloping curve

Correct Answer

Option 3

Correct Answer

Explanation →

Q147:

14 May Shift 1

Micro > Production & Costs

Medium

Comprehension: Shapes of the Long Run Cost Curves It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Long curve downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC curve cuts the LRAC curve from below at the minimum point of the LRAC.

When the average cost is rising, then.

Marginal cost = Total cost

Marginal cost = Average cost

Marginal cost < Average cost

Marginal cost > Average cost

Correct Answer

Option 4

Correct Answer

Explanation →

Q148:

14 May Shift 1

Micro > Production & Costs

Medium

Comprehension: Shapes of the Long Run Cost Curves It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Long curve downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC curve cuts the LRAC curve from below at the minimum point of the LRAC.

At the final level of production, a typical firm observed.

Increasing returns to scale

Constant returns to scale

Decreasing returns to scale

Total production

Correct Answer

Option 3

Correct Answer

Explanation →

Q149:

14 May Shift 1

Micro > Production & Costs

Medium

Comprehension: Shapes of the Long Run Cost Curves It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Long curve downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC curve cuts the LRAC curve from below at the minimum point of the LRAC.

LRMC cuts the LRAC curve from below at the point where.

LRMC is at minimum

LRAC is at minimum

LRAC is at maximum

LRMC is at maximum

Correct Answer

Option 2

Correct Answer

Explanation →

Q150:

13 May Shift 2

Micro > Production & Costs

Medium

According to the law of variable proportions, the marginal product of an input initially rises and then after a certain level of employment, it starts falling. The MP curve therefore looks like:

'U' Shaped

Convex to Origin.

'L' Shaped.

Inverse 'U' Shaped.

Correct Answer

Option 4

Correct Answer

Explanation →

Q151:

13 May Shift 2

Micro > Production & Costs

Medium

In given production function $q = f(x_1, x_2)$ what is depicted by $f(tx_1, tx_2) < tf(x_1, x_2)$.

Constant returns to scale.

Increasing returns to scale.

Decreasing returns to scale

Marginal returns to scale.

Correct Answer

Option 3

Correct Answer

Explanation →

Q152:

13 May Shift 2

Micro > Production & Costs

Easy

Set of all possible combinations of the two inputs that yield the same maximum possible level of output is known as.........

Indifference Curve.

Production Possibility Curve.

Isoquant.

Budget Line.

Correct Answer

Option 3

Correct Answer

Explanation →

Q153:

13 May Shift 2

Micro > Production & Costs

Medium

The tendency where marginal productivity first increases then starts falling is known as ______

Law of variable proportions.

Marginal rate of substitution.

Increasing cost.

Marginal productivity.

Correct Answer

Option 1

Correct Answer

Explanation →

Q154:

13 May Shift 2

Micro > Production & Costs

Easy

Change in total cost per unit of change in output is defined as:

Short run marginal cost.

Average fixed cost.

Short run average cost.

Average variable cost.

Correct Answer

Option 1

Correct Answer

Explanation →

Q155:

13 May Shift 2

Micro > Production & Costs

Medium

In the short run, which of the following condition is mandatory for a firm for its profit maximization at q₀?

Price must be greater than the average cost

The price must be greater than the marginal cost.

Marginal cost must be deceasing at q₀.

Price must be greater than the average variable cost

Correct Answer

Option 4

Correct Answer

Explanation →

Q156:

13 May Shift 2

Micro > Production & Costs

Easy

Comprehension: Increasing return to scale (IRS) implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. In other words, to increase output by a certain proportion, inputs need to be increased by less than that proportion. With the input prices given, cost also increases by a lesser proportion. For example, suppose we want to double the output. To do that, inputs need to be increased, but less than double. The cost that the firm incurs to hire those inputs therefore also need to be increased by less than double. What is happening to the average cost here? It must be the case that as long as IRS operates, average cost falls as the firm increases output. Decreasing return to scale (DRS) implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. As a result, cost also increases by more than that proportion. So, as long as DRS operates, the average cost must be rising as the firm increases output. Constant return to scale (CRS) implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Accordingly, the LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed.

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

Increasing return to sacle.

Decreasing return to scale.

Constant return to scale.

Diminishing marginal productivity.

Correct Answer

Option 3

Correct Answer

Explanation →

Q157:

13 May Shift 2

Micro > Production & Costs

Easy

Comprehension: Increasing return to scale (IRS) implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. In other words, to increase output by a certain proportion, inputs need to be increased by less than that proportion. With the input prices given, cost also increases by a lesser proportion. For example, suppose we want to double the output. To do that, inputs need to be increased, but less than double. The cost that the firm incurs to hire those inputs therefore also need to be increased by less than double. What is happening to the average cost here? It must be the case that as long as IRS operates, average cost falls as the firm increases output. Decreasing return to scale (DRS) implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. As a result, cost also increases by more than that proportion. So, as long as DRS operates, the average cost must be rising as the firm increases output. Constant return to scale (CRS) implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Accordingly, the LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed.

When we have proportionately more output than input this economic concept is known as .........

Constant return to scale

Decreasing return to scale

Marginal rate of substitution.

Increasing return to scale

Correct Answer

Option 4

Correct Answer

Explanation →

Q158:

13 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Increasing return to scale (IRS) implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. In other words, to increase output by a certain proportion, inputs need to be increased by less than that proportion. With the input prices given, cost also increases by a lesser proportion. For example, suppose we want to double the output. To do that, inputs need to be increased, but less than double. The cost that the firm incurs to hire those inputs therefore also need to be increased by less than double. What is happening to the average cost here? It must be the case that as long as IRS operates, average cost falls as the firm increases output. Decreasing return to scale (DRS) implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. As a result, cost also increases by more than that proportion. So, as long as DRS operates, the average cost must be rising as the firm increases output. Constant return to scale (CRS) implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Accordingly, the LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed.

In which condition, the average cost of a firm declines when output increases?

Marginal produvtivity.

Constant return to scale.

Decresing return to scale

Increasing return to scale.

Correct Answer

Option 4

Correct Answer

Explanation →

Q159:

13 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Increasing return to scale (IRS) implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. In other words, to increase output by a certain proportion, inputs need to be increased by less than that proportion. With the input prices given, cost also increases by a lesser proportion. For example, suppose we want to double the output. To do that, inputs need to be increased, but less than double. The cost that the firm incurs to hire those inputs therefore also need to be increased by less than double. What is happening to the average cost here? It must be the case that as long as IRS operates, average cost falls as the firm increases output. Decreasing return to scale (DRS) implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. As a result, cost also increases by more than that proportion. So, as long as DRS operates, the average cost must be rising as the firm increases output. Constant return to scale (CRS) implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Accordingly, the LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed.

In a long run average cost curve which point is said to be the constant return to scale?

Upward Slope

Minimum Point.

Mid-point in upward slope.

Downward Slope.

Correct Answer

Option 2

Correct Answer

Explanation →

Q160:

13 May Shift 2

Micro > Production & Costs

Medium

Comprehension: Increasing return to scale (IRS) implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. In other words, to increase output by a certain proportion, inputs need to be increased by less than that proportion. With the input prices given, cost also increases by a lesser proportion. For example, suppose we want to double the output. To do that, inputs need to be increased, but less than double. The cost that the firm incurs to hire those inputs therefore also need to be increased by less than double. What is happening to the average cost here? It must be the case that as long as IRS operates, average cost falls as the firm increases output. Decreasing return to scale (DRS) implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. As a result, cost also increases by more than that proportion. So, as long as DRS operates, the average cost must be rising as the firm increases output. Constant return to scale (CRS) implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. It is argued that in a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS. Accordingly, the LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed.

To increase the output by a certain proportion, if inputs need to be increased by more than that proportion, that condition lies in which of the following?

Increasing return to scale.

Decreasing return to scale.

Constant return to scale.

Proportinate return.

Correct Answer

Option 2

Correct Answer

Explanation →

Q161:

13 May Shift 1

Micro > Production & Costs

Medium

Match List-I with List-II | List-I | List-II | | --- | --- | | (A) Relationship between the variable input and output. | (I) Average Product | | (B) Output per unit of variable input. | (II) Marginal Product | | (C) Change in output per unit of change in the input | (III) Law of variable proportions | | (D) The marginal product of a factor input initially rises with its employment level | (IV) Total Product | Choose the correct answer from the options given below:

(A) - (IV), (B) - (I), (C) - (II), (D) - (III)

(A) - (I), (B) - (II), (C) - (II), (D) - (IV)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (II), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer

Option 1

Correct Answer

Explanation →

Q162:

13 May Shift 1

Micro > Production & Costs

Easy

How does technological progress affect the firms' supply curve?

Shift to the right.

Shift to the left.

Remain at same place.

Shift in vertical shape.

Correct Answer

Option 1

Correct Answer

Explanation →

Q163:

13 May Shift 1

Micro > Production & Costs

Easy

In the long run __________.

At least one of the factor varied.

All factors of production can be varied.

Factor remains fixed.

Only one factor can vary.

Correct Answer

Option 2

Correct Answer

Explanation →

Q164:

13 May Shift 1

Micro > Production & Costs

Medium

The collection of all possible combinations of the goods and services that can be produced from a given amount of resources and a given stock of technological knowledge is called?

Production Possibility Frontier

Isoquant Curve

Production Possibility Set

Isocost Line

Correct Answer

Option 3

Correct Answer

Explanation →

Q165:

13 May Shift 1

Micro > Production & Costs

Easy

Marginal cost curve intersects average cost curve at ..........

At maximum point of average cost curve.

At minimum point from of average cost curve.

Do not intersect.

Intersect at mid point at rising average cost curve.

Correct Answer

Option 2

Correct Answer

Explanation →

Q166:

13 May Shift 1

Micro > Production & Costs

Easy

The point on the supply curve at which a firm earns only normal profit is called ...........

Break-even point.

Average Profit.

Long Run Average Cost.

Fixed Cost.

Correct Answer

Option 1

Correct Answer

Explanation →

Q167:

13 May Shift 1

Micro > Production & Costs

Easy

________ of an input is defined as the change in output per unit of change in the input when all other inputs are remain constant.

Marginal Product.

Average Product.

Total Product.

Returns to Scale.

Correct Answer

Option 1

Correct Answer

Explanation →

Q168:

13 May Shift 1

Micro > Production & Costs

Medium

Shape of Average Fixed Cost Curve is:

Constant

'U' Shaped.

Rectangular Hyperbola

Reverse Hyperbola

Correct Answer

Option 3

Correct Answer

Explanation →

Q169:

13 May Shift 1

Micro > Production & Costs

Medium

Consider the production function $q = f(x_1, x_2)$ where the firm produces q amout of output $x_1$ amount of factor 1 and $x_2$ amount of factor 2. The firm decides to increase the employment level of both the factors t (t > 1). Identify the equation for decreasing returns to scale from the following.

$q = f(x_1, x_2)$

$f (tx_1, tx_2) = tf (x_1, x_2)$

$f (tx_1, tx_2) < tf (x_1, x_2)$

$f (tx_1, tx_2) > tf x_1, x_2)$

Correct Answer

Option 3

Correct Answer

Explanation →

Q170:

13 May Shift 1

Micro > Production & Costs

Easy

The change in total cost per unit of change in output is known as by which name

Average Cost

Variable Cost

Fixed Cost

Short Run Marginal Cost

Correct Answer

Option 4

Correct Answer

Explanation →

Q171:

13 May Shift 1

Micro > Production & Costs

Medium

Which of the following conditions must hold for a firm to maximise its profit. (A) Price= Short run marginal Cost (B) Short Run marginal cost curve is non-decreasing (C) Price ≤ Marginal Cost (D) Price ≥ Average variable cost Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation →

Q172:

13 May Shift 1

Micro > Production & Costs

Easy

The difference between the revenue and cost is known as________

Cost of Production

Input cost

Marginal Cost

Profit

Correct Answer

Option 4

Correct Answer

Explanation →