When average cost falls, marginal cost:
- AFalls.
- BRises.
- ✓May fall or may rise.
- DNeither falls nor rises.
Answer: C.
View full solution →Question types
Production and cost question types
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645
Questions
7
Question groups
5
Question types
01
M.C.Q (1 Marks)
133 Q→02True/False
50 Q→03Fill In The Blanks[1 Marks ]
10 Q→041 Marks Question
125 Q→053 Marks Question
138 Q→064 Marks Question
110 Q→076 Marks Question
79 Q→Sample Questions
Production and cost questions
One sample from each question group in this chapter. Select any group above to see the full set with answer keys.
When marginal product rises, total product:
- AFalls.
- ✓Rises.
- CCan rise or can fall.
- DRemains constant.
Answer: B.
View full solution →Average fixed cost curve $......... ($Choose the correct alternative$)$
- AIs a straight line parallel to $X-$axis.
- BIs straight line parallel to $Y-$axis.
- ✓Falls, as more units are produced.
- DRises, as more units are produced.
Answer: C.
View full solution →In the given figure, the movement on the production possibility curve from point A to point B shows $........ ($Choose the correct alternative$)$
- AGrowth of all the resources in the economy.
- BUnderutilisation of resources.
- ✓Production of more units of Good $X$ and less units of Good $Y.$
- DProduction of more units of Good $Y$ and less units of Good $X.$
Answer: C.
View full solution →The average product curve in the input-output plane, will be $.........($Choose the correct alternative$)$
- AAn $‘S’$ shaped curve.
- BAn inverse ‘S’ shaped curve.
- CA $‘U’$ shaped curve.
- ✓An inverse $‘U’$ shaped curve.
Answer: D.
View full solution →Giving reasons, state whether the following Its are true or false.
Total Cost rises only when marginal cost rises.
Total Cost rises only when marginal cost rises.
“Returns to a variable factor operates in the long period." True or False? Give reason in support of your answer.
State giving reasons, whether the following statements are true or false:
When there are diminishing returns to a factor, Total Product always decreases?
When there are diminishing returns to a factor, Total Product always decreases?
State giving reasons, whether the following statements are true or false:
Average Cost falls only when Marginal Cost falls.
Average Cost falls only when Marginal Cost falls.
Giving reasons, state whether the following Its are true or false.
The difference between average total cost and average variable cost is constant.
The difference between average total cost and average variable cost is constant.
_________ refers to change in total cost due to additional unit of a commodity is produced.
As output increases, AC and AVC tends to be closer but the difference between AC and AVC can never be ________.
_________ is the actual money expenditure on input.
TP increases at ______ then, MP decreases.
When total product increases at ________, marginal product decreases but remains positive.
What happens to the difference between Total Cost and Total Variable Cost as output is increased?
Define variable cost.
What happens to the difference between Average Total cost and Average Variable cost as production is increased?
Giving reason comment on the shape of Production Possibilities Curve based on the following schedule:
|
Good X (Units)
|
Good Y (Units)
|
|
0
|
16
|
|
1
|
12
|
|
2
|
8
|
|
3
|
4
|
|
4
|
0
|
What is the relation between Average Variable Cost and Average Total Cost, if Total Fixed Cost is zero?
Give the meaning and characteristics of production possibility frontier.
Giving reason comment on the shape of Production Possibilities Curve based on the following table:
|
Good X (Units)
|
Good Y (Units)
|
|
0
|
10
|
|
1
|
9
|
|
2
|
7
|
|
3
|
4
|
|
4
|
0
|
Why is Production Possibilities Curve concave? Explain.
What is likely to be the impact of "Make in India" appeal to the foreign investors by the Prime Minister of India, on the production possibilities frontier of India? Explain.
What is likely to be the impact of efforts towards reducing unemployment on the production potential of the economy?Explain.
What is the behaviour of (a) Average Fixed Cost and (b) Average Variable Cost as more and more units of a good are produced?
Give the behaviour of marginal product and total product as more and more units of only one input are employed while keeping other inputs as constant.
Define fixed cost. Give an example. Explain with reason the behaviour of Average Fixed Cost as output is increased.
Giving reasons, explain the ‘Law of Variable Proportions’.
Define marginal product. State the behaviour of marginal product when only one input is increased and other inputs are held constant.
Complete the following table:
| Output (units) | Average Fixed Cost ₹ | Average Variable Cost ₹ | Marginal Cost ₹ | Total Cost ₹ |
| 1 | 120 | 40 | .... | .... |
| 2 | 60 | 56 | .... | 232 |
| 3 | .... | 54 | .... | .... |
| 4 | 30 | .... | 54 | .... |
| 5 | .... | .... | .... | .... |
What are the different phases in the Law of Variable Proportions in terms of marginal product? Give reason behind each phase. Use diagram.
Complete the following table:
| Output (units) | Total Cost ₹ | Average Variable Cost ₹ | Marginal Cost ₹ | Average Fixed Cost ₹ |
| 0 | 30 | |||
| 1 | .... | .... | 25 | 30 |
| 2 | 78 | .... | .... | .... |
| 3 | .... | 23 | .... | 10 |
| 4 | .... | .... | 23 | .... |
| 5 | 150 | .... | .... | 6 |
Complete the following table:
| Output (units) | Average Fixed Cost ₹ | Marginal Cost ₹ | Average Variable Cost ₹ | Average Cost ₹ |
| 1 | 60 | 20 | .... | .... |
| 2 | .... | .... | 19 | .... |
| 3 | 20 | .... | 18 | .... |
| 4 | .... | 18 | .... | .... |
| 5 | 12 | .... | .... | 31 |
Giving reasons, state whether the following statements are true or false:
- Average product will increase only when marginal product increases.
- With increase in level of output, average fixed cost goes on falling till it reaches zero.
- Under diminishing returns to a factor, total product continues to increase till marginal product reaches zero.
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