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Direction: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Increasing returns to a factor is a short run phenomenon.
Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.
- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'B'. Can you explain this answer?
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Direction: In the following questions, a statement of Assertion (A) i...
The Law of Increasing Returns may be defined as such “As the proportion of one factor in a combination of factors is increased up to a point, the marginal product of the factor will increase. The phrase 'up to a point' may be carefully noted. The increasing return will be only up to a point.
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Direction: In the following questions, a statement of Assertion (A) i...
Assertion (A): Increasing returns to a factor is a short-run phenomenon.
Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.
The correct answer is option B: Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
Explanation:
To understand the relationship between increasing returns to a factor and the utilization of fixed and variable factors, let's first define these terms.
- Increasing returns to a factor: This concept refers to a situation where increasing the use of a particular input (factor of production) leads to a more than proportionate increase in output. In other words, it implies that the marginal product of the input increases as more of it is employed.
- Fixed factor: A fixed factor of production refers to an input that cannot be easily varied in the short run. For example, in the context of a factory, the size of the building and the machinery installed may be considered fixed factors.
- Variable factor: A variable factor of production is an input that can be easily adjusted in the short run to increase or decrease production. For example, labor can be considered a variable factor as it can be readily hired or laid off depending on the level of output required.
Now, let's analyze the Assertion (A) and Reason (R) given in the question.
Assertion (A): Increasing returns to a factor is a short-run phenomenon.
This assertion is true. Increasing returns to a factor typically occur in the early stages of production when additional units of a variable factor of production are added to a fixed factor. As more of the variable factor is employed, there is often an improvement in efficiency, specialization, and division of labor, leading to higher productivity and increasing returns.
Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.
This reason is also true. When the variable factor is increased, it allows for the better utilization of the fixed factor. As more units of the variable factor are employed, the fixed factor is fully utilized, which leads to economies of scale and increased output.
However, Reason (R) does not provide a correct explanation of Assertion (A). The reason simply states that greater application of the variable factor ensures the full utilization of the fixed factor but does not explain why increasing returns to a factor is a short-run phenomenon.
In conclusion, both Assertion (A) and Reason (R) are true, but Reason (R) does not explain Assertion (A) correctly. Therefore, the correct answer is option B.
Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.
The correct answer is option B: Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
Explanation:
To understand the relationship between increasing returns to a factor and the utilization of fixed and variable factors, let's first define these terms.
- Increasing returns to a factor: This concept refers to a situation where increasing the use of a particular input (factor of production) leads to a more than proportionate increase in output. In other words, it implies that the marginal product of the input increases as more of it is employed.
- Fixed factor: A fixed factor of production refers to an input that cannot be easily varied in the short run. For example, in the context of a factory, the size of the building and the machinery installed may be considered fixed factors.
- Variable factor: A variable factor of production is an input that can be easily adjusted in the short run to increase or decrease production. For example, labor can be considered a variable factor as it can be readily hired or laid off depending on the level of output required.
Now, let's analyze the Assertion (A) and Reason (R) given in the question.
Assertion (A): Increasing returns to a factor is a short-run phenomenon.
This assertion is true. Increasing returns to a factor typically occur in the early stages of production when additional units of a variable factor of production are added to a fixed factor. As more of the variable factor is employed, there is often an improvement in efficiency, specialization, and division of labor, leading to higher productivity and increasing returns.
Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.
This reason is also true. When the variable factor is increased, it allows for the better utilization of the fixed factor. As more units of the variable factor are employed, the fixed factor is fully utilized, which leads to economies of scale and increased output.
However, Reason (R) does not provide a correct explanation of Assertion (A). The reason simply states that greater application of the variable factor ensures the full utilization of the fixed factor but does not explain why increasing returns to a factor is a short-run phenomenon.
In conclusion, both Assertion (A) and Reason (R) are true, but Reason (R) does not explain Assertion (A) correctly. Therefore, the correct answer is option B.
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Direction: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Increasing returns to a factor is a short run phenomenon.Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'B'. Can you explain this answer?
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Direction: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Increasing returns to a factor is a short run phenomenon.Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Direction: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Increasing returns to a factor is a short run phenomenon.Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Increasing returns to a factor is a short run phenomenon.Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'B'. Can you explain this answer?.
Direction: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Increasing returns to a factor is a short run phenomenon.Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Direction: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Increasing returns to a factor is a short run phenomenon.Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Increasing returns to a factor is a short run phenomenon.Reason (R): Greater application of the variable factor ensures fully utilization of the fixed factor.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).c)Assertion (A) is true, but Reason (R) is false.d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'B'. Can you explain this answer?.
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