CBSE Questions for Class 11 Commerce Economics Production And Costs Quiz 11 - MCQExams.com

If Stage I = Increasing Returns, Stage II = Diminishing Returns, and Stage III = Negative Marginal Returns, answer the questions:
A Rational Producer will not operate in -
  • Stages I and II
  • Stages II and III
  • Stages III and I
  • All of the above
Which of the following stages of production is known as the stage of Negative Returns?
  • When AP is Negative
  • When MP is decreasing
  • When MP is Negative
  • Both (a) and (b)
In which of the following situations, the Law of Variable Proportions will not apply?
  • Long-Run
  • Same level of technology
  • Change in proportions in which Factors are used
  • Short-Run
In case of law of variable proportions, diminishing returns occur.
  • When units of a variable input are added to a fixed input and total product falls
  • When units of a variable input are added to a fixed input and marginal product falls
  • When the size of the plant is increased in the long run.
  • When the quantity of the fixed input is increased and returns to the variable input falls.
In the stage of Increasing Returns, Marginal Product (MP)-
  • Remains constant
  • Increases
  • Decreases
  • First increases, reaches a maximum and then decreases
The Law of Negative Marginal Returns operates because the Variable Factor is  ________ in relation to the Fixed Factor of Production.
  • Optimal
  • Adequate
  • Excessive
  • Irrelevant
If Stage I = Increasing Returns, Stage II = Diminishing Returns, and Stage III = Negative Marginal Returns, answer the questions:
Stages I and III are called -
  • Economic Absurdity
  • Economic Stability
  • Economic Equilibrium
  • All of the above
With the same amount of resources, a farmer can feed the following combinations of goats and horses:
GoatsHorses
Option I16844
Option II15050
Give the option available with him, what is the opportunity cost to the farmer of feeding one horse?
  • $$1$$ goat
  • $$3$$ horses
  • $$3$$ goats
  • $$18$$ goats
Use the following information to answer the question:
Hours Labour
Total of outputMarginal Product
$$0$$--
$$1$$$$100$$$$100$$
$$2$$-$$80$$
$$3$$$$240$$-
What is the total ouput when $$2$$ hours of labour are employed?
  • 80
  • 100
  • 180
  • 200
Diseconomies of Scale refer to -
  • Forces which reduce the Average Cost of producing a product as the Firm expands the Size of its Plant
  • Forces which reduce the Marginal Cost of producing a product as the Firm expands the Size of its Plant
  • Forces which increase the Average Cost of producing a product as the Firm expands the Size of its Plant
  • Forces which increase the Marginal Cost of producing a product as the Firm expands the Size of its Plant
In a small scale rubber plant, factors of production like labour, material and capital are increased by 10% and output increases. It implies that the Firm is experiencing  ________.
  • Constant Returns to Scale
  • Decreasing Returns to Scale
  • Increasing Returns to Scale
  • Increasing as well as decreasing
Marginal cost is defined as:
  • The change in total cost due to a one-unit charge in output
  • Total cost divided by output
  • The change in output due to a one-unit change in an input
  • Total product divided by the quantity of input
Change in Scale means that all Factors of Production are increased or decreased -
  • In different proportions
  • In the same proportion
  • To infinity
  • None of the above
Law of Returns to Scale indicates the responsiveness of total product when all inputs ________________.
  • Remain same
  • Are changed drastically
  • Are changed marginally
  • Are changed proportionately
If all inputs are trebled and the resultant output is doubled, this is a case of____________.
  • Constant returns to scale
  • Increasing returns to scale
  • Diminishing returns to scale
  • Negative returns to scale
When there is an increase in all factors of production together in the same ratio,  ____________- (a) increases at first, (b) becomes constant thereafter, and (c) starts decreasing beyond a certain level.
  • Total Product
  • Average Product
  • Marginal Product
  • All of the above
Inspite of the Economic Reforms already carried out in India, there is a further need for
  • Amendment of Labour Laws, to bring them in line with other countries
  • Extension of reforms to the States
  • Strengthening of the legal procedure and system
  • All of the above
What is a production function?
  • Technical relationship between physical inputs and physical output
  • Relationship between fixed factors of production and variable factors of production
  • Relationship between a factor of production and the utility created by it
  • Relationship between quantity of output produced and time taken to produce the output
AC is greater than MC, so long as AC is falling.
  • True
  • False
Bozzo's burgers are a small restaurant and a price taker. The table below provides the data of Bozzo's output and costs in Rupees.
QTY.0102030405060
T.C1002103004005407901060
TFC
TVC
AVC
ATC
MC           
If burgers sell for Rs. 14 each, what is Bozo's profit maximizing level of output:
  • 10 burgers
  • 40 burgers
  • 50 burgers
  • 60 burgers
If the average cost is falling, then:
  • Marginal cost is rising
  • Marginal cost is falling
  • Marginal cost is equal to average cost
  • It is impossible to tell if marginal cost is rising or falling
If the LAC curve falls as output expands, this is due to ______________________.
  • Law of Diminishing Returns
  • Economies of Scale
  • Law of Variable Proportions
  • Diseconomies of Scale
Marginal Cost is independent of Fixed Cost. This Statement is- 
  • True
  • False
  • Partially True
  • Nothing can be said
 ________ Costs are important in short term decision making of the Firm, to determine the output at which profits can be maximized.
  • Fixed
  • Sunk
  • Opportunity
  • Marginal
The LAC curve __________.
  • falls when the LMC curve falls
  • rises when LMC curve rises
  • goes through the lowest point of LMC Curve
  • falls when LMC $$<$$ LAC and rises when LMC $$>$$ LAC
______ is an implicit cost of production.
  • Wages of the labour
  • Charges for electricity
  • Interest on owned money capital
  • Payment for raw material
Which of the following statement is true? 
  • Marginal Cost is a sub-set of Incremental Cost
  • Incremental Cost is sub-set of Marginal Cost
  • Marginal Cost is a sub-set of Sunk cost
  • Sunk Cost is a Sub-set of Incremental Cost
All of the following are U-Shaped Curved except the-
  • AVC Curve
  • AFC Curve
  • AC Curve
  • MC Curve
One moves successively from point A to points B,C,D,E and F and opportunity cost of guns-
  • Increases as more of guns are produced
  • Decreases as more to guns are produced.
  • Remains constant as more of guns are produced.
  • Nothing can be said
If the LAC curve falls as output expands, this fall is due to _________________.
  • Economies of scale
  • Law of diminishing returns
  • Diseconomies of scale
  • Any of the above
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