CLASS 12TH WEST BENGAL BOARD/CBSE PRODUCTION FUNCTION CHAPTER QUESTION ANSWER (MCQ,SAQ AND LAQ)
Production FUNCTION
Syllabus of This Chapter
WEST BENGAL H.S.
WBCHSE CLASS 12TH
CLASS 12 MICRO ECONOMICS
Production function,
short period,
long period,
fixed factors,
variable factors,
concepts like total product,
average product,
marginal product and
their interrelationships- TP, MP & AP (VVI)
Law of variable proportion
KEY NOTES
PRODUCTION FUNCTION
The relationship between physical input and physical output of a firm is generally referred to as production function.
The general form of production function is, q = f ( x1, x2)
where, q = output, x1 = 1 input like labour, x2= another input like machinery.
2. Variable factors refer to those factors, which can be changed in the short run. They vary directly with the output. For example, Labour, raw material, etc.
3. Fixed factors refer to those factors which cannot be changed in the short run. They do not vary directly with the output. For example, Capital, land, plant and machinery, etc.
4. A short period refers to the period of time in which a firm cannot change some of its factors like plant, machineiy, building, etc. due to insufficiency of time but can change any variable factor like labour, raw material, etc. Thus, in short run, there will be some factors of production that are fixed, e.g., a farmer may have fixed amount of land.
5. A long period is a time period during which a firm can change all its factors of production including machines, building, organization, etc. In other words, it is a period of time during which supplies can adjust itself to change in demand.
Note: Mind, here the terms long period and short period are functional and do not refer to a calendar month or a year.
6. Short run production function can be defined, when application of one factor is varied while all the other factors are kept fixed (constant). The law that operates here, is known as “law of returns to a factor”.
In this factor ratio that is, land-labour ratio changes. For example, on 5 acres of land, 10 labour can be employed. So, initially factor ratio will be 5 : 1, when we employ another labour, the factor ratio changes to
5 :2. So, factor ratio changes during short period.
7. Long run production function can be defined as, when application of all the factors is varied (changed) in the same factor proportion, the law that operates in such a situation is known as law of returns to scale’.
Total Product, Average Product And Marginal Product
1. Total product or total return to an input: It refers to total volume of goods and services produced by a firm with the given input during a specified period of time.
In a short period of time if a firm wants to increase its total product then it can do so by increasing the variable factors of production only because fixed factors of production remain fixed and do-not fluctuate with the fluctuation in production. However, in the long period, increase in all the factors of production can increase level of output.
Note: But mind it, in short period, total product can be increased upto a particular point only because after that point TP starts decreasing.
2. Marginal Product or Marginal Return to an Input: It is an addition to the total product when an additional unit of a variable factor is employed.
3.Average product or Average return to an input: It is per unit total product of variable factors. It is calculated by dividing the total Product by the units of variable factor.
the Relationship between TP and MP can be summarised as:
1. MP increases when TP increases at an increasing rate.
2. MP starts declining when TP increases at a diminishing rate.
3. MP is zero when TP is maximum
4. MP is negative when TP decreases
the Relationship between AP and MP can be summarised as:
1. AP increases when MP>AP
2. AP is constant and at its maximum point when MP = AP
3. AP falls when MP<AP
4. MP becomes negative, and AP remains positive.
Law Of Variable Proportions
1. The law of variable proportion states that as we increase the quantity of only one input, keeping other inputs fixed, the total product increases at an increasing rate (convex shape) in the beginning, then increases at diminishing rate (concave shape) and after a level of output ultimately falls.
2. Assumptions of Law of Variable Proportions
(a) Only one input is variable, the other is held constant or fixed.
(b) It is possible to change the proportion in which the factor units are combined.
(c) It assumes a short run.
(d) The state of technology is given and remains unchanged.
(e) Price of factors of production do not change.
Law Of Diminishing Marginal Returns
1. The Law of diminishing marginal return states that when we applied more and more units of variable factor to a given quantity of fixed factor, total product increases at a diminishing rate and marginal product falls.
2. Law of diminishing marginal returns is a classical theory and classical economists treated it as a separate Law. But according to modern economists, this law indicates just one aspect (aspect of diminishing returns) of law of variable proportion.
DEFINITION BASED TOPICS
1. Production : Production is the process by which
inputs are transformed into ‘output’.
It is the process of creating goods and services with the help of factors
of production or inputs for satisfaction of human wants. In other words,
‘transformation of inputs into output’ whereby value is added, is broadly called production. Whatever is used in the production of a commodity is called input.
For Example, in the production of wheat, the use of land, seed, fertilizer water,pesticides, tractors, labour etc. are inputs and wheat is output.
2. Firms - In economics, firms are organizations that produce goods and services
3. Cost of Production - In order to acquire inputs a firm has to pay for them.
This is called the cost of production.
4. Revenue - Once output
has been produced, the firm sell it in the market and
earns revenue.
5. Profit - The difference between the revenue
and cost is called the firm’s profit.
6. Production function: The relationship between physical input and physical output of a firm is generally referred to as production function.
The general form of production function is,
q = f ( x1 ,x2)
where, q = output, x1 = 1 input like labour, x2 = another input like machinery
7. Variable factors: It refer to those factors, which can be changed in the short run. They vary directly with the output. For example, Labour, raw material, etc.
8. Fixed factors: It refer to those factors which cannot be changed in the short run. They do not vary directly with the output. For example, Capital, land, plant and machinery, etc.
9. Short period: It refers to the period of time in which a firm cannot change some of its factors like plant, machinery, building, etc. due to insufficiency of time but can change any variable factor like labour, raw material, etc.
10. Long period: It refers to a time period during which a firm can change all its factors of production including machines, building, organization, etc.
11. Total product: It refers to total volume of goods and services produced by a firm with the given input during a specified period of time.
12. Average product: It is per unit product of variable factors. It is calculated by dividing the total Product by the units of variable factor.
Average Product=Total Product/Unit of Variable Factor
13. Marginal Product: It is an addition to the total product when an additional unit of a variable factor is employed.
MP=Change in output /Change in input =Δq/ΔL
14. Return to a factor: It states that change in the total output of a good when only the quantity of one input is increased, while that of other input is kept constant.
15. Law of variable proportion (Law of diminishing marginal product) : It states that as we increase the quantity of only one input, keeping other inputs fixed, the total product increases at an increasing rate in the beginning, then increases at diminishing rate and after a level of output ultimately falls.
16. Law of diminishing marginal return: It states that when we applied more and more units of variable factor to a given quantity of fixed factor, total product increases at a diminishing rate and marginal product falls.
Short Important Lines :
• For different combinations of inputs, the production function shows the maximum
quantity of output that can be produced.
• In the short run, some inputs cannot be varied. In the long run, all inputs can be varied.
• Total product is the relationship between a variable input and output when all other inputs are held constant.
• For any level of employment of an input, the sum of marginal products of every unit of that input up to that level gives the total product of that input at that employment level.
• Both the marginal product and the average product curves are inverse ‘U’-shaped.
The marginal product curve cuts the average product curve from above at the maximum point of average product curve.
• In order to produce output, the firm chooses least cost input combinations.
* Production is the process of converting inputs into output.
* A production function shows the technical relationship between inputs and output.
* Fixed factors are those whose quantity does not change with change in output.
* Variable factors are those whose quantity changes with change in output.
* TP is defined as the total output that is produced in a given time with given inputs and technology.
* AP is the output per unit of input.
*MP is the addition to TP by the employment of on additional unit of input.
* Relationship between TP and MP
(i) When MP increases, TP increases at an increasing rate.
(ii) When MP decreases but remains positive, TP increases at a diminishing
rate.
(iii) When MP is zero, TP is maximum.
(iv) When MP become negative, TP starts decreasing.
* Relationship between TP and MP:
(i) As long as MPP is greater than TPP, APP increases.
(ii) When MPP is equal to APP, APP is constant and maximum.
(iii) When MPP is less than APP. APP decreases.
* The law of variable proportion states that as the additional units of a variable factor are combined with a given level of fixed factors and technology, the MP of the varible factor first increases and then declines.
* There are three phases of the law of variable proportions:
(i) In phase I, increasing returns to a factor occur return MPP is increasing
and TPP increases at an increasing rate:
(ii) In phase II, diminishing returns to a factor occur, taken MPP is declining but remain positive and TPP increase at a diminishing rate.
In phase III, negative returns to a factor occur when MPP is negative and TPP starts fallowing.
MCQ ONLY RELATED TO PRODUCTION FUNCTION:
Question 1.
In production function, production is a function of:
(a) Price
(b) Factors of Production
(c) Total Expenditure
(d) None of these
Answer
Answer: (b) Factors of Production
Question 2.
The basic reason of operating the Law of Diminishing Returns is:
(a) Scarcity of Factors
(b) Imperfect Substitution between Factors
(c) Both (a) and (b)
(d) None of the above
Answer
Answer: (c) Both (a) and (b)
Question 3.
Which of the following explains the short-run production function ?
(a) Law of Demand
(b) Law of Variable Proportion
(c) Returns to Scale
(d) Elasticity of Demand
Answer
Answer: (b) Law of Variable Proportion
Question 4.
Long-run production function is related to:
(a) Law of Demand
(b) Law of Increasing Returns
(c) Laws of Returns to Scale
(d) Elasticity of Demand
Answer
Answer: (c) Laws of Returns to Scale
Question 5.
In which stage of production a rational producer likes to operate in shot-run production ?
(a) First Stage
(b) Second Stage
(c) Third Stage
(d) None of these
Answer
Answer: (b) Second Stage
Question 6.
Law of variable proportion explains three stages of production. In the first stage of production:
(a) Both MP and AP rise
(b) MP rises
(c) AP Falls
(d) MP is zero
Answer
Answer: (a) Both MP and AP rise
Question 7.
At which time all the factors of production may be changed ?
(a) Short run
(b) Long run
(c) Very Long run
(d) All the three
Answer
Answer: (b) Long run
Question 8.
Production function is expressed as:
(a) Qx = Px
(b) Qx= f(A, B, C, D)
(c) Qx = Dx
(d) None of these
Answer
Answer: (b) Qx= f(A, B, C, D)
Question 9.
Which factors among following we find in short-run production process ?
(a) Fixed Factors
(b) Variable Factors
(c) Both (a) and (b)
(d) None of these
Answer
Answer: (c) Both (a) and (b)
Question 10.
The cycle which increases first and after being constant starts to reduce is called :
(a) APP
(b) MPP
(c) TPP
(d) All of these
Answer
Answer: (d) All of these
Question 11.
Which of the following is a saurce of production ?
(a) Land
(b) Labour
(c) Capital
(d) All of these
Answer
Answer: (d) All of these
Question 12.
Law of variable proportion is related to :
(a) Both short-run and long run
(b) Long-run
(c) Short-run
(d) Very Long-run
Answer
Answer: (c) Short-run
Question 13.
An active factor of production is:
(a) Capital
(b) Labour
(c) Land
(d) None of these
Answer
Answer: (b) Labour
Question 14.
If all the factors of production are increased by same proportion and as a result output increases by a
greater proportion than it is called :
(a) Constant returns to scale
(b) Decreasing returns to scale
(d) All of these
(d) None of these
Answer
Answer: (d) All of these
Question. In production function, production is a function of:
(a) Price
(b) Factors of Production
(c) Total Expenditure
(d) None of these
Answer
B
Question. Which of the following explains the short-run production function ?
(a) Law of Demand
(b) Law of Variable Proportion
(c) Returns to Scale
(d) Elasticity of Demand
Answer
B
Question. In which stage of production a rational producer likes to operate in shot-run production ?
(a) First Stage
(b) Second Stage
(c) Third Stage
(d) None of these
Answer
B
Question. At which time all the factors of production may be changed ?
(a) Short run
(b) Long run
(c) Very Long run
(d) All the three
Answer
B
Question. Which factors among following we find in short-run production process ?
(a) Fixed Factors
(b) Variable Factors
(c) Both (a) and (b)
(d) None of these
Answer
C
Question. Which of the following is a saurce of production ?
(a) Land
(b) Labour
(c) Capital
(d) All of these
Answer
D
Question. An active factor of production is:
(a) Capital
(b) Labour
(c) Land
(d) None of these
Answer
B
Question. Which of the following is included in money cost ?
(a) Normal Profit
(b) Explicit Cost
(c) Implicit Cost
(d) All of these
Answer
D
Question. With the increase in production the difference between total cost and total fixed cost:
(a) Remains Constant
(b) Increases
(c) Decreases
(d) Both Increases or Decreases
Answer
B
Question. What happens when production is shut down ?
(a) Fixed Cost Increases
(b) Variable Costs Decline
(c) Variable Costs become zero
(d) Fixed Costs become zero
Answer
C
MAHA SAQ SERIES:
Q1: Define production.
Answer: Addition to utility should be regarded as production which brings about an addition in the
value of goods.
Q2: Define Average Product.
Answer: Average product refers to output per unit of a variable input. Mathematically, it is Total
Product divided by the amount of variable factor.
Q3: Define production function.
Answer: Production function may be defined as the technological relationship between physical
inputs and the maximum producible output.
Q4: Write the equation for the production function.
Answer: Qx = f(L,K).
Q5: Define short period.
Answer: the Short period is the period of time in which a firm can change only some factors of
production (say labour)
Q6: Define long period.
Answer: the Long period is a time period during which firms can change any of the factors of
production.
Q7: Give two types of production function.
Answer:
(i) Combination of inputs in variable proportions.
(ii) Combination of inputs in fixed proportions.
Q8: What is meant by fixed factors of production?
Answer: Fixed factors of production are the factors whose supply is fixed i.e., whose quantity cannot
be increased.
Q9: What is meant by variable factors of production?
Answer: Variable factors of production are the factors of production which can be changed e.g.,
labour.
Q10: In which period are some factors of production fixed and others variable?
Answer: Short period.
Q11: In which period are all the factors of production variable?
Answer: Long period.
Q12: What is the total product of an input?
Answer: the Total product of an input means the total output at a particular level of employment of an
input when the employment of all other inputs is unchanged.
Q13: What change will take place in the marginal product when total product increases at a
diminishing rate?
Answer: Marginal product will be decreasing.
Q14: What is the behaviour of total product in the first stage of the law of variable proportions?
Answer: Total product is convex.
Q15: What is the behaviour of total product in the second stage of the law of variable proportions?
Answer: Total product is concave.
Q16: What is the behaviour of total product in the third stage of the law of variable proportions?
Answer: Total product is downward sloping.
Q17: How is the total physical product derived from the marginal physical product schedule?
Answer: Total physical product is derived by summing up the marginal physical product. It means that
the total physical product is equal to the sum of the marginal physical product.
Q18: What will you say about the marginal physical product of a factor when the total physical
product is falling?
Answer: When the total physical product is falling, the marginal physical product would be negative.
Q19: What is the general shape of the MRP curve and APP curve?
Answer: Inverse ‘U’.
Q20: What causes the production to increase at a rapid rate in the initial stage when units of a
variable factor are increased?
Answer: As more units of a variable factor are added to a fixed factor, fixed factors are more
effectively utilized which causes the production to increase at a rapid rate in the initial stage.
Q21: What is the size of the total product when marginal product is zero?
Answer: The total product will be maximum at a point where marginal product is zero.
Q22: When is average product maximum?
Answer: Average product is maximum when marginal product is equal to average product.
Q23: What is MP when TP reaches its maximum
Answer: zero
Q24: What happens to the marginal product when total product increases at diminishing rate?
Answer: Marginal product starts falling.
Q25: What are the shape of the marginal product curve and the average product curve?
Answer: Both the marginal product and the average product curves are inverse ‘U’ shaped.
Q26: At which point does the marginal product curve cut the average product curve?
Answer: The marginal product curve cuts the average product curve from above at the maximum
point of the average product curve.
Q27: As the variable input labour is increased by one unit, total output falls, what would you say
about the marginal productivity of labour?
Answer: Marginal productivity of labour is negative.
Q28: When total product increases at an increasing rate, what happens to the marginal product?
Answer: Marginal product increases at a faster rate.
Q29: Give the meaning of “Returns to a factor”.
Answer: Returns to a factor means an increase in the output by increasing only one factor of
production.
Q30: Give the meaning of returns to scale.
Answer: Returns to scale means an increase in the output by increasing all the factors of production
in a fixed proportion.
Q31: Define the law of variable proportions.
Answer: According to the law of variable proportions, as increased quantities of one factor are
combined with other fixed factors, the marginal product of variable factor may rise initially but
declines eventually.
Q32: Which time period is considered in the law of variable proportions?
Answer: Short period.
Q33: Which of the stages of the law of variable proportions is relevant for a firm which aims at
maximum efficiency or profits?
Answer: the Second Stage.
Q34: In which stage of the law of variable proportions, total product, average product and marginal
product decline?
Answer: the Third stage.
Q35: What is the law of diminishing marginal product?
Answer: Law of diminishing marginal product states that keeping other inputs constant, an increase
in the variable input will cause the marginal product to decrease after a certain level.
Q36: When total product increases at a decreasing rate, what happens to the marginal product?
Answer: the Marginal product should be decreasing.
Q37: Define Law of Variable Proportions.
Answer: It states that only one input is increased other remaining unchanged.
SUITABLE MCQ SERIES :-
1. ______ refers to the transformation of inputs into output.
(a) Production
(b) Consumption
(c) Promotion
(d) None of These
2. ______ is an expression of the technological relation between physical inputs and output of a good.
(a) Demand Function
(b) Cost Function
(c) Production Function
(d) None of These
3. Those factors which cannot be changed in the short run is known as:
(a) Fixed Factors
(b) Variable factors
(c) Semi-Variable Factors
(d) None of These
4. Total product is also known as:
(a) Total Physical Product
(b) Total Return
(c) Total Output
(d) All of These
5. Those factors which can be changed in the short run is known as:
(a) Fixed Factors
(b) Variable factors
(c) Semi-Variable Factors
(d) None of These
Answer 1. (a) Production
Answer 2. (c) Production Function
Answer 3. (a) Fixed Factors
Answer 4. (d) All of These
Answer 5. (b) Variable factors
Question 6-10
6. Marginal Product is also known as:
(a) Marginal Physical Product
(b) Average Return
(c) Total Output
(d) Total Return
7. Which of the following is not a phase in the law of Variable Proportions?
(a) Increasing returns to a factor
(b) Constant returns to a factor
(c) Diminishing Returns to a factor
(d) Negative Return to a factor
8. According to Law of Variable Proportions, there are____ phases:
(a) 1
(b) 2
(c) 4
(d) 3
9. According to Law of Variable Proportions, when we increase quantity of only one input keeping
other inputs fixed. ______ initially increases at an increasing rate, then at a decreasing rate and finally
at a negative rate:
(a) Marginal Product
(b) Average Return
(c) Total Product
(d) Total Return
10 ____ is the period of time in which all the factors of production are variable:
(a) Short-run
(b) Long-run
(c) Medium-run
(d) None of These
Answers (Question 6-10)
Answer 6. (a) Marginal Physical Product
Answer 7. (b) Constant returns to a factor
Answer 8. (d) 3
Answer 9. (c) Total Product
Answer 10. (b) Long-run
Question 11-15
11. ____ is the extension of ‘Law of Diminishing Returns’:
(a) Law of Supply
(b) Law of Variable Proportions
(c) Law of Equi-marginal utility
(d) Law of diminishing marginal utility
12. When AP is maximum, MP is equal to:
(a) AP
(b) TP
(c) Zero
(d) One
13. Law of Variable proportions is also known as:
(a) Law of Returns
(b) Returns to Variable Factors
(c) Law of Returns to Factors
(d) All of These
14. Marginal products refers to addition to total output when one more:
(a) Unit is produced
(b) Unit is sold
(c) Unit is Consumed
(d) Unit of variable factors is employed
15. Product per unit of labour employed is termed as:
(a) Average Product
(b) Marginal Product
(c) Total Product
(d) None of These
Answers (Question 11-15)
Answer 11. (b) Law of Variable Proportions
Answer 12. (a) AP
Answer 13. (d) All of These
Answer 14. (d) Unit of variable factors is employed
Answer 15. (a) Average Product
Question 16-20
16. Which of the following are the Assumptions of Law of Variable Proportions?
(a) It operates in the short run, as factors are classified as variable and fixed factors.
(b) The Law applies to all fixed factors including land.
(c) This Law applies to the field of Production only
(d) All of These
17. At the point of inflexion:
(a) Total product is maximum
(b) Average Product is Maximum
(c) Marginal Product is Maximum
(d) Marginal Product is zero
18. Which of the following is the reason for increasing return to a factor:
(a) Better utilization of fixed factor
(b) Optimum combination of factors
(c) Imperfect substitutes
(d) None of These
19. How will you calculate the Total product?
(a) ∑AP
(b) ∑TP
(c) ∑MP
(d) Any of these
20. Which of the given options shows the application of increasing returns?
(a) Specialization
(b) Efficiency of factors
(c) Indivisibility of factors
(d) All of these
Answers (Question 16-20)
Answer 16. (d) All of These
Answer 17. (c) Marginal Product is Maximum
Answer 18. (a) Better utilization of fixed factor
Answer 19. (c) ∑MP
Answer 20. (d) All of these
Q. Function showing relationship between input and output is known as _____________ .
a) Consumption Function
b) Investment Function
c) Production Function
d) Cost Function
Ans – c)
Explanation:-
Q. Which of the following statements accurately describe the relationship between AP and MP?
a) AP rises when MP is above it and falls when MP is below it
b) AP and MP are always parallel to each other
c) Mp intersects AP at its maximum point
d) AP is always rising when MP is falling and vice-versa
Ans – a), c)
What is ‘production’ in economics
a) Creation/Addition to the value of output
b) Production of foodgrains
c) Creation of Services
d) Manufacturing of goods
Ans – a)
When PM is Zero, what can you say about TP?
a) TP is increasing
b) TP is maximum
c) TP is falling
d) None of the above
Ans – b)
When a total product falls, then _________ .
a) average product is equal to zero
b) marginal product is equal to zero
c) marginal product is negative
d) average product continues to rise
Ans – c)
Explanation:- When MP is negative, TP starts to diminish.
Marginal Product refers to addition to total output when one more:
a) Unit is produced
b) Unit is sold
c) Unit is consumed
d) Unit of a variable factor is employed
Ans – d)
The period of time in which the plant capacity can be varied is known as:
a) Short-run
b) Long run
c) Both a) and b)
d) Neither a) nor b)
Ans – b)
_______ is the extension of the “Law of Diminishing Returns”.
a) Law of variable Proportions
b) Law of Demand
c) Law of Equi-marginal utility
d) Law of Diminishing Marginal Utility
Ans – a)
Law of Variable Proportions is also known as:
a) Law of Returns to Scale
b) Returns of Variable Factor
c) Law of Returns to Factor
d) All of these
Ans – b), C)
Average Product (AP) is at its maximum when
a) MP > AP
b) MP < AP
c) MP = AP
d) MP becomes negative
Ans – c)
Explanation:- Relationship between AP and MP
i) AP increases as long as MP > AP
ii) AP decreases when MP < AP
iii) AP is maximum when AP = MP
The maximum possible output for a firm with two units of labour (L) and ten
units of capital (k), if its production function is given as: 5L + 2L
a) 0 units
b) 30 Units
c) 200 Units
d) 50 Units
Ans – b)
Identify the phase in which TP increases at an increasing rate and MP
also increases.
a) Increasing returns to a factor
b) Diminishing returns to a factor
c) Negative returns to a factor
d) None of these
Ans – a)
In which time period, all factors of production become variable and
factors of production change with the change in level of production?
a) Long period
b) Market Period
c) Short Period
d) All of these
Ans – a)
Which of the following is not a reason for the operation of increasing returns
to a factor?
a) Better utilization of fixed factor
b) Limitation of fixed factor
c) Increase in efficiency of the variable factor
d) Imperfect Substitutes
Ans – b), d)
In the first stage of the Law of Variable Proportions, the total product increases at an _________ .
a) decreasing rate
b) increasing rate
c) constant rate
d) Both a) and b)
Ans – b)
Explanation:- In the initial phase of production, all factors of production
are highly efficient and hence, TP increases at an increasing rate with
employment of each additional variable factor.
When the average product increases, the marginal product is:
a) Less than average product
b) Equal to the average product
c) More the average product
d) None of these
Ans – c)
What happens to AP, when MP is more than AP?
a) AP rises
b) AP falls
c) AP remains constant
d) None of these
Ans – a)
Increasing returns in applicable because of ____________ .
a) increased efficiency of the variable factor
b) fuller utilisation of fixed factor
c) indivisibility of factors
d) Both a) and b)
Ans – d)
Explanation:- Attainment of increasing returns to factor depends upon how the fixed factors are
utilised along with the variable factors of production.
What is the behaviour of TP, when MP becomes negative?
a) TP increases at an increasing rate
b) TP increases at a diminishing rate
c) TP is at its maximum point
d) TP decreases
Ans – d)
According to the Law of Variable Proportions, there are __________ phases.
a) 1
b) 3
c) 2
d) 4
Ans – b)
Law of variable proportion is valid when __________ .
a) at least one input is fixed and all other inputs are kept variable
b) all factors are kept constant
c) all inputs are varied in the same proportion
d) None of the above
Ans – a)
Explanation:- at least one input is fixed and all other inputs are kept
variable
The average product can not be negative because:
a) Total product can never be zero
b) Total product can never be negative
c) Neither a) nor b)
d) Both a) and b)
Ans – b)
The law of diminishing returns refers to an eventual fall in:
a) Productivity of factors of production
b) Total earnings of the firm
c) Marginal product of the variable factor
d) None of these
Ans – c)
The 2nd phase (diminishing returns to a factor) is exhibited by the following
total product sequence:
a) 50, 50, 50, 50
b) 50, 110, 180, 260
c) 50, 100, 150, 200
d) 50, 90, 120, 140
Ans – d)
Which of the following curve is not ‘U’ shaped?
a) AFC
b) AVC
c) MC
d) AC
Ans – a)
Explanation:- AFC curve is rectangular hyperbola shaped in nature as TFC
remains fixed for all levels of output including zero.
Which phase of Law of Variable Proportions has been ruled out on the
grounds of technical inefficiency:
a) Increasing returns of a factor
b) Diminishing returns of a factor
c) Negative returns to a factor
d) None of these
Ans – c)
A rational producer always aims to operate in _ of Law of Variable
Proportions:
a) 1st Phase (Increasing returns of a factor)
b) 2nd Phase (Diminishing returns of a factor)
c) 3rd Phase (Negative returns of a factor)
d) Either 1st Phase or 2nd Phase
Ans – b)
Payment made to outsiders for their goods and services is called ___________ .
a) Opportunity cost
b) Real Cost
c) Explicit Cost
d) Implicity cost
Ans – c)
In general, most of the production functions measure:
a) Productivity of factors of production
b) Economics relation between the factors of production
c) Technical relation between inputs and output
d) None of these
Ans – c)
Product per unit of labor employed is termed as:
a) Average product
b) Marginal product
c) Total product
d) None of these
Ans – a)
When the average cost curve is rising, then marginal cost curve __________ .
a) must be decreasing
b) must be constant
c) must be rising
d) Any of these
Ans -c)
Explanation:- MC curve lies above the AC curve when AC is increasing thus,
marginal cost also increases with an increase in AC.
When AP is maximum, MP is equal to:
a) AP
b) TP
c) Zero
d) ONe
Ans – a)
Variable factors refer to those factors of production:
a) Which can be only changed in the long run
b) Which can be changed in the short run
c) Which can never be changed
d) Which vary directly with output
Ans – b), d)
As output increases, the average fixed cost curve ________ .
a) remains constant
b) starts falling
c) starts rising
d) None of these
Ans – b)
Explanation:- As output increases, AFC tends to fall continuously but it
never becomes zero as TFC is always positive.
Ans – Both AP and MP curves are generally:
a) U-shaped
b) Inversely U-shaped
c) Rising
d) Falling
Ans – b)
In describing a given production technology, the short run is best described
as lasting:
a) UP to six months from now
b) Up to five years from now
c) As long as all inputs are fixed
d) As long as at least one input is fixed
Ans – d)
The area under the MC curve is __________ .
a) total cost
b) total fixed cost
c) total variable cost
d) None of these
Ans – c)
Explanation:- TVC can be derived by adding each unit of MC, thus the
area under the MC curve is known as TVC.
_________ is the period of time in which all the factors of production
are variable.
a) Short-run
b) Long run
c) Medium-run
d) None of these
Ans – b)
The ‘Marginal Product’ of a variable input is best described as:
a) Product divided by the number of units of variable input
b) Additional output resulting from a unit increase in the variable input
c) Change in the total product when one more unit of a variable factor is employed
d) Additional output resulting from a unit increase in the units produced
Ans – b), C)
Average Revenue is equal to __________ .
a) Total Revenue/Quantity Sold
b) Average Revenue/2
c) Total Revenue/100
d) Average Quantity/Quantity sold * 2
Ans – a)
What is the maximum point of TP?
a) When AP becomes Zero
b) When MP becomes Zero
c) When MP cuts AP
d) None of these
Ans – b)
Average Product can have:
a) Positive values only
b) Negative values only
c) Both positive as well as negative values
d) Neither positive nor negative values
Ans – a)
When the firm is producing 3 tonnes of sugar, it receives total revenue
of ₹ 24. Raising production to 4 tonnes increases total revenue to ₹ 28.
Thus, marginal revenue is _______ .
a) ₹ 4
b) ₹ 8
c) ₹ 28
d) ₹ 52
Ans – a)
Which of the following is correct?
a) When MP is positive and falling, TP rises at a decreasing rate.
b) When MP is rising, TP rises at an increasing rate.
c) When MP is negative, TP rises
d) All of these
Ans – a), b)
At the point of Inflexion:
a) Total Product is maximum
b) Average Product is maximum
c) Marginal Product is maximum
d) Marginal Product is zero
Ans – c)
If AR is ₹40 per unit from the sale of 3 goods and it is ₹30 per unit
from the sale of 4 goods. Find the marginal revenue of the 4th unit of goods.
a) ₹ 10
b) ₹ 30
c) ₹ 40
d) ₹ 0
Ans – d)
When AP falls due to increase in quantity of variable input:
a) MP < AP
b) MP = AP
c) MP > AP
d) None of these
Ans – a)
The Law of __ deals with the input-output relationship, when the output
is increased by varying the quantity of one input.
a) Variable Proportions
b) Supply
c) Demand
d) Equi-marginal utility
Ans – a)
According to the Law of Variable Proportions, when we increase the quantity of
only one input keeping other inputs fixed, _ initially
increases at an increasing rate, then at a decreasing rate and finally
at a negative rate.
a) Total product
b) Average Product
c) Marginal Product
d) None of these
Ans – a)
Which of the following is not a phase in the Law of Variable Proportions?
a) Increasing returns to a factor
b) Constant returns to a factor
c) Diminishing returns of a factor
d) Negative returns to a factor
Ans – b)
The total output generated by the first four units of a variable input is 200
units, 350 units, 450 units, and 500 units. The marginal product
of the third unit of input is:
a) 50 units
b) 100 units
c) 150 units
d) 200 units
Ans – b)
If TP of employing one unit of a variable factor is 12 units and that of 2 units
of a variable factor is 16 units. The marginal product of 2 units of variable
factor is:
a) 3 units
b) 4 units
c) 8 units
d) 16 units
Ans – b)
When marginal product rises, total product: (Choose the correct alternative)
a) Falls
b) Rises
c) Can rise or can fall
d) Remains constant
Ans – b)
The average product curve in the input-output plane will be ________.
(Choose the correct alternative)
a) an ‘S-shaped curve
b) an inverse ‘S-shaped curve
c) a ‘U’ shaped curve
d) an inverse ‘U’ shaped curve
Ans – d)
Question . Explain the relationship between the marginal products and the total product of an input.
Or [AI 05, 07; CBSE 05, 06, 07] Explain the law of variable proportion with the help of total product and marginal product curves.
or, Explain the likely behaviour of Total Product and Marginal Product when for increasing production only one input is increased while all other inputs are kept constant.State the different phases of changes in Total Product and Marginal Product in the Law of Variable Proportions. Also show the same in a single diagram.
Answer: According to the Law of Variable Proportion when only one input is increased while all other inputs are kept constant, Marginal Product and Total Product behave in the following manner:
1. When Marginal product rises (till Point P1), Total product increases at an increasing rate (convex shape) (till point P).
2. When Marginal product falls and remains positive (Till point B1), total product increases at a diminishing rate (concave shape) (till point A),
3. When Marginal Product is zero (at point B1), Total Product is at its maximum and constant (At point B),
4. When Marginal product becomes negative (after point B1), total product falls (after point B)
Q. What is the law of diminishing marginal product?
Answer: The Law of diminishing marginal product states that when we applied more and more units of variable factor to a given quantity of fixed factor, total product increases at a diminishing rate and marginal product falls.
Question . What is the law of variable proportions?
Or
Define the law of variable proportion.
Answer: The law of variable proportion states that as we increase the quantity of only one input, keeping other inputs fixed, the total product increases at an increasing rate in the beginning, then increases at decreasing rate and after a level the output ultimately falls.
Question . The following table gives the total product schedule of labour. Find the corresponding average product and marginal product schedules of labour.
Answer:
Q. The following table gives the average product schedule of labour. Find the total product and marginal product schedules. It is given that the total product is zero at zero level of labour employment.
Answer:
Question . The following table gives the marginal product schedule of labour. It is also given that total product of labour is zero at zero level of employment. Calculate the total and average product schedules of labour
Answer:
Very Short Answer Type Questions
Question 1. Give the meaning of production function.
Define production function.
Answer: The relationship between physical input and physical output of a firm is generally referred to as production function.
Question 2. In which run some factors of production are fixed and others are variable?
Answer: Short run.
Question 3. What change will take place in marginal product when total product increases at a diminishing rate?
Answer: Marginal product will decline but remains positive.
Question 4. In which phase of Law of Variable Proportions a rational firm aims to operate?
Answer: Diminishing returns to a factor (Phase 2).
Question 5. What is meant by diminishing returns to a factor?
Answer: Diminishing returns to a factor refer to a phase when total product increases at a decreasing rate and marginal product falls, but remains positive with the increase in variable factor.
Question 6. What is the general shape of the AP and MP curves?
Answer: AP and MP curves are inversely U-shaped.
Question 7. How does fall in marginal production affect total output?
Answer: Fall in marginal product affects the total output in the following two manners:
1. When marginal product falls, but remains positive, total product increases at a diminishing rate.
2. When marginal product falls and become zero, total product falls in its absolute terms.
Question 8. Why MP curve cuts AP curve at its maximum point?
Answer: It happens because when AP rises, MP is more than AP. When AP falls, MP is less than AP. So, it is only when AP is constant and at its maximum point that MP is equal to AP. Therefore, MP curve cuts AP curve at its maximum point.
Question 9. Can AP rise when MP starts declining?
Answer: Yes, AP can rise when MP starts declining. It can happen as long as falling MP is more than AP. However, when MP becomes equal to AP, further decline in MP will also reduce AP.
Question 10. What is the shape of AP and MP?
Answer: Inverse U-Shaped.
Question 11. Give meaning of “Return to a Factor”.
Answer: Return to a factor states that change in the physical output of a good when only the quantity of one input is increased, while that of other input is kept constant.
Q.11 Differentiate between Short Period and Long Period.
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This resource on Class 12th West Bengal Board/CBSE Production Function Chapter Question Answers is incredibly helpful. It covers a variety of question types, making it a valuable study aid for students.
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