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CBSE Questions for Class 11 Commerce Economics Production And Costs Quiz 5 - MCQExams.com
CBSE
Class 11 Commerce Economics
Production And Costs
Quiz 5
The production function is a relationship between a given combination of inputs and __________.
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another combination that yields the same output
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the highest resulting output
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the increase in output generated by one unit increase in one output
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all levels of output that can be generated by those inputs
In the short run which of these is noticed _______.
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all the costs are variable
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all the costs are fixed
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some costs are fixed and some are variable
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labour cost is fixed and material cost is variable
Explanation
solution:
Fixed costs are expenditures that do not change regardless of the level of production, at least not in the short term. Whether you produce a lot or a little, the fixed costs are the same. One example is the rent on a factory or a retail space.
Wages paid to the factory labour are costs that are directly proportional to the level of production. If zero output is being produced then these costs do not have to be incurred. These costs vary with the level of output produced. Therefore, they are classified as variable costs.
hence the correct option: A
In economics, in the long run all the costs __________.
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are fixed
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are variable
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except labour costs are variable
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are non controllable
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 B.
In _______ , the plant capacity can be varied.
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short run
0%
very short period
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long run
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None
Which of these is/are characteristic(s) of a isoquant?
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Convex to origin
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Never intersect each other
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Negative sloped
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All of the above
Explanation
Characteristics of Isoquants
The slope of an isoquant is convex in nature
and this follows directly from the the assumption of diminishing marginal rate of substitution. This implies that lesser is amount of the factor is used by the firm, the lesser willing it is to give up a unit of that factor to obtain an additional unit of the other factor. The opportunity cost of each extra unit is increasing.
Isoquants can never cross each other
as this will violate the fundamental rule that a higher isoquant yield higher utility. isoquants that cross each other imply that isoquants of different levels are capable of providing the same satisfaction at a point. This however is not possible.
The isoquant has a negative slope
in order to imply that resources are scarce and in order to employ more of a particular resource the employer must employ less of the other factor.
The slope of the total production curve measures ___________.
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average production
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marginal production
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maximum production
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optimal production
Explanation
The slope of the total production curve measures the marginal production. Total production is the submission of marginal production. The rate at which total production is increasing is determined with the help of marginal production.
Hence option B is correct.
If a firm trebles its inputs and the output increases by three and half times, then the production function exhibit ________.
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decreasing returns to scale
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constant returns to scale
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increasing returns to scale
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none
Demand function is homogeneous of ________ in prices and income.
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zero degree
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one degree
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two degree
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four degree
Explanation
The demand function is homogeneous with zero degrees
in prices and income.
It means the
consumer does not spend all their income.
It arises when they are choosing, among all the bundles which they can afford, the one that is best according to her preferences.
Hence a is the correct answer.
Which of these cost varies with the level of production?
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Total Fixed cost.
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Depreciation.
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Total variable cost.
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Average variable cost.
Explanation
solution:
variable cost is a corporate expense that changes in proportion to production output. Variable costs increase or decrease depending on a company's production volume; they rise as production increases and fall as production decreases.
hence the correct option:C
In the long run ___________.
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all inputs are fixed
0%
all inputs are variable
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some inputs are fixed and rest are variable
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a few are variable and rest are fixed
Explanation
In the long run all inputs are variable as there is enough time for all factors to adjust according to the requirements for achieving least cost output.
The total cost of production at various production level of a product is given below :
Production level
$$0$$
$$1$$
$$2$$
$$3$$
$$4$$
Total cost Rs.
$$40$$
$$45$$
$$50$$
$$55$$
$$60$$
From the above detail find the average cost of production of $$4$$ units.
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Rs.$$55$$
0%
Rs.$$40$$
0%
Rs.$$45$$
0%
Rs.$$15$$
In short run when the level of production increases, average fixed cost will____.
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remain same
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decrease
0%
increase
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all the three possible depending upon the merit of case
Explanation
The AFC curve is asymptotic to to both the x and y axis as the fixed cost can never be 0 since fixed cost is positive. It slopes downwards throughout its length from left to right showing continuous fall in average fixed cost with an increase in output.
An isoquant joins ____________.
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all combination of factor inputs within the budget constraint
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all combination of factor inputs which yield the same level of output
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all combination of goods which yield the same level of consumer satisfaction
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all combination of goods and services within same production possibility curve
Explanation
Each isoquant will plot different combinations of two inputs that can be employed to produce the same level of output. The isocost line will be a tangent to one of the isoquants, signifying the optimum level of output that can be produced with the given resources.
If the average variable cost of production is Rs. 37 per unit and total annual fixed cost Rs. 36,What will be the break even point, given the selling price is Rs. 43 per unit?
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4000
0%
5000
0%
6000
0%
5400
Which of these is not a factor of the cost function of a product?
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Market price of the product
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Size of the plant
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Output level
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Prices of inputs
Explanation
The market price of a product is not included in the computation of its cost.
In the long run price is governed by _________.
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cost of production
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demand supply forces
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marginal utility
0%
none
When factor inputs are complementary to each other, the MRTS will be ______.
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zero
0%
constant
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increasing
0%
decreasing
In the long run which of these is noticed?
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All the costs are variable
0%
All the cots are fixed
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Some cost are fixed and some are variable
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Labour cost is fixed and material cost is variable
Which of the following is not a main approaches to Pricing of commodities?
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Classical economics
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Australian approach
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Marshall approach
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Neo classical economist
When average cost is above the average variable cost, which of these situations are possible?
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Average variable cost must be rising.
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Average fixed cost must be rising
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Average fixed cost must be falling rapidly
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Total cost must remain same
Explanation
solution:
When marginal cost is greater than average variable or average total cost, AVC or ATC must be increasing. Therefore, the only possible point at which marginal cost equals average variable or average total cost is the minimum point.
hence the correct option:A
Slope of an isoquant curve is always
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Zero
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One
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Negative
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Positive
Explanation
Isoquant curve is the graphical representation of the production function. Since the same level of productivity must be maintained throughout the production function, when one factor is increasing its utility the other factor must decrease in utility.
The isoquant gets flattered from left to right.
Hence the slope of an isoquant curve is always negative.
Choose the odd one
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Direct wages
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Power and fue
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Depreciation
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Cost of raw material
____ refers to that period in which supply of a commodity can be increased or decreased depending upon changed condition of demand.
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Very short period
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Short period
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Long period
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Very long period
The functional relationship between input and output is known as _________.
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production function
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input function
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demand function
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supply function
Explanation
Production function refers to the functional relationship between the quantity of a good produced (output) and factors of production (inputs). Production function reflects how much output we can expect if we have so much of labour and so much of capital as well as of labour etc. In other words, we can say that production function is an indicator of the physical relationship between the inputs and output of a firm. Hence, correct answer is option A.
Which of the following is the best definition of the 'production function'?
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The relationship between market price and quantity supplied.
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The relationship between the firm's total revenue and the cost of production.
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The relationship between the quantities of inputs to produce a given level of output.
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The relationship between the quantity of inputs and the firm's marginal cost of production.
Explanation
The best definition of the "production function is" The relationship between the quantities of inputs needed to produce a given level of output".
What is production function?
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Relationship between quantity of output produced and time taken to produce the output.
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Relationship between a factor of production and the utility created by it.
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Relationship between fixed factors of production and variable factors of production.
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Technical relationship between physical inputs and physical outputs.
Explanation
The arguments of the production functions are the proportions of various factor inputs that need to be employed to produce a specific output. The most common form of the production function is the Cobb-Douglas production function.
Under the law of diminishing marginal return deployment of addition unit of factor input will lead to _____________.
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a decline in marginal physical product
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a decline in total product
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a decline in average revenue
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decline in average cost of production
In the short run with the increase in output ____________.
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The fixed cost also increases
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Total variable cost increase in totality but total fixed cost remain same
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Total variable cost falls along with fixed cost
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Average variable cost falls
Explanation
Total variable cost increase with the increase in output where fixed cost remain same or constant where output increases or decreases.
When production or sales increase, variable costs increase; when production or sales decrease, variable costs decrease.Hence b is the correct answer.
..
In a circular flow, business sector is responsible for ___________.
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consumption
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production
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innovation
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regulation
In economics, ________ is a period where some factor inputs are fixed, while the others are variable.
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long run
0%
short run
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very long period
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none of the above
Explanation
The short run, as economists use the phrase, is characterized by at least one fixed factor of production so the proportion of inputs can be changed, the law of variable proportion will only operate in the short run. It is in the
long run all factors are variable as producers have enough time to organize all factor inputs in the appropriate proportions to achieve the minimum efficient scale.
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