Test: Production And Costs - 1 - UPSC MCQ

Production function is an expression of the technological relation between physical inputs and output of a good.
Symbolically: Ox = f i1, i2, i3…. in)
{Where: Ox = Output of commodity x; f = Functional relationship; i1, i2, …. in = Inputs needed for Ox}
Example of Production function:
Suppose a firm is manufacturing chairs with the help of two inputs, say labour (L) and capital (K). Then, production function can be written as: OChairs = f (L, K)
Production function defines the maximum chairs (OChairs ), which can be produced with the given capital and labour inputs. If production functions is expressed as: 250 = (7L, 2K). It means, 7 units of labour and 2 units of capital can produce maximum of 250 chairs.

When we employee more units of variable factor(labour) on fixed factor(land) then at the end of the point total production (tp) decrease because of more labour.

In the long run TPP changes with the change in all the factors  is the right option because total product can be change in long run production function. After change every situation because in long run production more time should be taken by performer.

In short run ..time period for production is very short ..so for increasing production only variable factor can increase instead of fixed factor. for example... a company make 40units of good x by using 3 units of labour and 5 units of capital ...if They wants to increase production from 40 to 45 so they will use 4units of labour and 5units of capital.

Total production product changes with the marginal utility of the product because TP increases at diminishing rate of MP and TP is maximum when MP=0

Marginal physical product (MPP) is the change in the level of output due to a change in the level of variable input; restated, the MPP is the change in TPP for each unit of change in quantity of variable input.
Total physical product (TPP) -- Quantity of output that is produced from a firm's fixed inputs and a specified level of variable inputs.
So, by adding all the MPP, TPP can be derived.
 

Total physical product (TPP) -- Quantity of output (Y) that is produced from a firm's fixed inputs and a specified level of variable inputs (X).
 
Marginal physical product (MPP) is the change in the level of output due to a change in the level of variable input; restated, the MPP is the change in TPP for each unit of change in quantity of variable input.
 
MPP = (TPP2 - TPP1)/(X2 - X1)

How is APP derived from TPP?
To understand how APP (Average Physical Product) is derived from TPP (Total Physical Product), we need to consider the relationship between the two concepts and the formula used to calculate APP.
1. Total Physical Product (TPP)
- TPP refers to the total output or quantity of goods or services produced by utilizing a specific amount of variable input (e.g., labor).
- It measures the total production achieved by varying the input of a single factor while keeping other factors constant.
2. Average Physical Product (APP)
- APP represents the average output produced per unit of variable input.
- It indicates the productivity of each unit of the variable factor.
Deriving APP from TPP
To calculate APP, we divide the TPP by the units of the variable factor used. The formula is as follows:
APP = TPP / Units of Variable Factor
- The TPP is divided by the units of the variable factor to determine how much output is produced on average per unit of the variable input.
- This calculation helps in analyzing the efficiency and productivity of the variable factor in the production process.
Therefore, the correct answer is D: Dividing TPP by units of the variable factor.

Both the Short-run average total cost curve (SRAC) and Long-run average cost curve (LRAC) curves are typically expressed as U-shaped.

It is due to Law of Variable Proportion.Due to LVP APP first increase then became constant and then decrease.So,APP Curve is Inverse U-Shaped.