MCQExams
0:0:1
CBSE
JEE
NTSE
NEET
Practice
Homework
×
CBSE Questions for Class 11 Commerce Economics Production And Costs Quiz 3 - MCQExams.com
CBSE
Class 11 Commerce Economics
Production And Costs
Quiz 3
Under increasing returns the average cost curve is __________.
Report Question
0%
positively sloped from left to right
0%
negatively sloped from left to right
0%
parallel to the quantity -axis
0%
parallel to the price-axis
For profit maximization of a firm we must have
i. MC=MR
ii. Marginal Cost Curve cuts the average cost curve from below (From the center of AC)
Report Question
0%
Only (i) is true
0%
Only (ii) is true
0%
Both (i) and (ii) are wrong
0%
Both (i) and (ii) are true
What does the production function express?
Report Question
0%
Technological relationship between physical inputs and output
0%
Financial relationship between physical inputs and output
0%
Relationship between finance and technology
0%
Relationship between factors of production
As we increase the amount of input, What happens?
Report Question
0%
AP rises less than MP
0%
AP rises more than MP
0%
Both AP and MP remain the same
0%
None of these
Which of the following curves are inverse U shaped?
Report Question
0%
AP
0%
MP
0%
TP
0%
Both A and B
While drawing Total product curve, ______.
Report Question
0%
we measure product along the horizontal axis and units of factor 1 along the vertical axis
0%
we measure units of factor 1 along the horizontal axis and output along the vertical axis
0%
we measure units of factor 1 along the X axis and output along the Y axis
0%
both B and C
The shape of marginal product curve is inverse U shaped as per _____.
Report Question
0%
the law of marginal product
0%
the law of variable proportions
0%
the law of marginal utility
0%
Both A and B
Explanation
The shape of marginal product curve is inverse U shaped as per the law of variable proportions.
According to the law of variable proportions, the marginal product of an input increases initially. After a definite level (degree) of employment, it starts decreasing.
MP curve looks like a reverse U-shaped curve in the average and marginal product curves.
Which of the following is true?
Report Question
0%
As long as the AP increases, it must be the case that MP is greater than AP
0%
When AP falls, MP has to be less than AP
0%
MP curve cuts AP curve from above at its maximum
0%
All of these
The ________ curve is a positively sloped curve.
Report Question
0%
total product
0%
average product
0%
marginal product
0%
none of these
The total product curve in the input-output plane is a _________ sloped curve.
Report Question
0%
positively
0%
negatively
0%
it is a straight line
0%
none of these
The shape of marginal product curve is ______.
Report Question
0%
U shaped
0%
inverse U shaped
0%
V shaped
0%
inverse V shaped
Explanation
Mp
curve
or
marginal product curve
is downward sloping because as
production
increases mp
curve
goes on increasing but afterwards falls or becomes u-shaped.
For the first unit of the variable input, Which of the following is true?
Report Question
0%
MP and the AP are same
0%
MP is lower than AP
0%
MP is higher than AP
0%
None of these
The shape of AP curve has an ____.
Report Question
0%
Inverse U shaped
0%
Inverse V-shaped
0%
U shaped
0%
V-shaped
Explanation
The average product refers to the output per unit of a variable factor. It is also known as average returns. Initially there it too little of a variable input in comparison to the fixed input resulting in the underutilization of the fixed input. Thus as the quantity of variable input is initially increased, the fixed input is being better utilized, resulting in an increase in efficiency and thus the AP initially increases. However as more variable input is added beyond a point this leads to overcrowding and inefficiencies an thus it leads to falling productivity which leads to falling AP.
In the long run, _______.
Report Question
0%
all inputs are variable
0%
total cost and the total variable cost coincide
0%
Both A and B
0%
None of these
Explanation
The long run is a period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all costs, whereas in the
short run
firms are only able to influence prices through adjustments made to production levels. Hence, correct answer is option C.
Which of the following is true as the amount of input is increased?
Report Question
0%
MP rises
0%
AP rises, but less than MP
0%
As long as the value of MP remains higher than the value of the prevailing AP, the latter continues to rise
0%
All of these
Which of the following is not true?
Report Question
0%
As long as the AP increases, it must be the case that MP is greater than AP
0%
When AP falls, MP has to be less than AP
0%
MP curve cuts AP curve from above at its minimum
0%
None of these
LRAC is defined as ______.
Report Question
0%
long run cost per unit of output
0%
long run
profit per unit of output
0%
long run
revenue per unit of output
0%
none of these
Explanation
The long run cost describes the behavior of the average cost (per unit cost) in the long term. The LRAC is an envelop curve of all the short run cost curve, the short run curve at the minimum efficiency point represents optimal plant size. The long run average cost curve takes a U shape to illustrate how average cost initially decreases due to economies of scale while the firm experiences increasing returns to scale. Then it exhibits constant returns as the firm operates at its optimal size. Lastly if the firm tries to expand more than its optimal point, due to diseconomies of scale while the firm experiences decreasing returns to scale and average cost increases.
Which os the following is true?
Report Question
0%
MP curve is inverse U shaped
0%
AP curve is straight line
0%
TP curve is negatively sloped
0%
For the first unit of the variable input MP and the AP are not same
Explanation
MP curve or marginal product curve is downward sloping because as production increases MP curve goes on increasing but afterwards falls or becomes u-shaped.
AP is the aggregate of marginal products, it also increases. However, it is less than MP. After a point, MP starts decreasing. As long as the value of MP is greater than the value of AP, AP continues to increase. Once MP decreases sufficiently, its value becomes less than AP. Thus, AP also starts decreasing. The AP curve is also reverse U-shaped.
Hence a is the correct answer.
_________ is the change in total cost per unit of change in output.
Report Question
0%
Long run Average Cost
0%
Long run marginal cost
0%
Long run total cost
0%
None of these
Explanation
The long run marginal cost is the cost of producing one additional output. Thus the change in the total cost due to the production of one more unit is the marginal cost of that unit.
According to the law of variable proportions _________.
Report Question
0%
the marginal product of an input initially rises and then after a certain level of employment, it starts falling
0%
the TP is a positively sloped curve
0%
the AP curve is inverse U shaped
0%
none of these
Explanation
Law of Variable Proportions
:The
law
states that keeping other factors constant, when you increase the
variable
factor, then the total product initially increases at an increases rate, then increases at a diminishing rate, and eventually starts declining.
TP curve shows _______.
Report Question
0%
total output of a firm
0%
all other inputs are held constant, it shows the different output levels obtainable from different amounts of a factor
0%
both A and B
0%
none of these
Explanation
The TP (total product) curve represents the total amount of output (end result) that an enterprise can manufacture within a provided amount of labour. As and when the number of labour changes, the total output changes.
In this case, all other inputs are held constant, it shows the different output levels obtainable from different amounts of a factor.
Hence b is the correct answer.
Study of how the producer chooses what to produce for the market when he knows the costs and prices is called the study of ________.
Report Question
0%
consumption
0%
production
0%
distribution
0%
none of these
LRAC =
Report Question
0%
TC / q
0%
TO / q
0%
TR / q
0%
None of these
Explanation
$$LRAC$$ = $$\dfrac{LRTC}{Qty}$$
The average cost is given by total cost divided by the total quantity produced.
long
-
run average cost
(
LRAC
)
curve
shows the firm's lowest
cost
per unit at each level of output, assuming that all factors of production are variable.
In the long run, all inputs are _____.
Report Question
0%
fixed
0%
variable
0%
semi-variable
0%
both A and B
Explanation
In the long run, firms have the opportunity to expand production by purchasing more machinery, factories etc. These are factors that may be considered fixed in the short run due to the time period that it takes to obtain finances or build the machinery or construct infrastructure.
However, in the long run these factors are taken care of and thus they can be considered variable factors as there are no limitations.
In what order does a typical firm experience returns to scale?
Report Question
0%
IRS, DRS, CRS
0%
IRS, CRS, DRS
0%
CRS, DRS, IRS
0%
CRS, IRS, DRS
Explanation
The long run average cost curve takes a U shape to illustrate how average cost initially decreases due to economies of scale while the firm experiences increasing returns to scale. Then it exhibits constant returns as the firm operates at its optimal size. Lastly if the firm tries to expand more than its optimal point, d
ue to diseconomies of scale while the firm experiences decreasing returns to scale and average cost increases.
The reason of U shape of LRAC curve is ____.
Report Question
0%
because it moves as LRMC
0%
because LRMC is also U shaped
0%
a typical firm IRS is observed at the initial level of production. This is then followed by the CRS and then by the DRS
0%
both A and B
Explanation
The long run average cost curve takes a U shape to illustrate how average cost initially decreases due to economies of scale while the firm experiences increasing returns to scale. Then it exhibits constant returns as the firm operates at its optimal size. Lastly if the firm tries to expand more than its optimal point, d
ue to diseconomies of scale while the firm experiences decreasing returns to scale and average cost increases.
LRAC curve's upward rising part corresponds to_____.
Report Question
0%
IRS
0%
DRS
0%
CRS
0%
none of the above
Explanation
If the firm tries to expand more than its optimal point, the firm experiences decreasing returns to scale and average cost increases. During this the firm's LRAC will slope upwards. The main reason for increasing average costs is that the firm is experiencing diseconomies of scale, which include chaotic mismanagement and miscommunication due to the firm growing beyond optimality.
At the minimum point of the LRAC curve, ______ is observed.
Report Question
0%
IRS
0%
CRS
0%
DRS
0%
None of these
Explanation
The flat portion of the long run average cost curve shows how it exhibits constant returns as the firm operates at its optimal size.
LRAC curve is ____.
Report Question
0%
U shaped
0%
V shaped
0%
inverse U shaped
0%
inverse V shaped
Explanation
The nature of the short period Average Cost Curve is 'U' shaped. To begin with, the Average Costs are high at low levels of output because both the Average Fixed Costs and Average Variable Costs are more.
Nature 'U' shaped short-run Average Cost curve can be attributed to the law of variable proportions.
LRAC curve's downward sloping part corresponds to _____.
Report Question
0%
IRS
0%
DRS
0%
CRS
0%
none of these
Explanation
The long run average cost curve takes a U shape to illustrate how average cost initially decreases due to economies of scale while the firm experiences increasing returns to scale.
0:0:1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
0
Answered
0
Not Answered
0
Not Visited
Correct : 0
Incorrect : 0
Report Question
×
What's an issue?
Question is wrong
Answer is wrong
Other Reason
Want to elaborate a bit more? (optional)
Practice Class 11 Commerce Economics Quiz Questions and Answers
<
>
Support mcqexams.com by disabling your adblocker.
×
Please disable the adBlock and continue.
Thank you.
Reload page
