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MCQs - Production Function Notes | Study Crash Course of Micro Economics -Class 12 - Commerce

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Q.1 In case of the short-run production function the factor-ratio remains

(a) Constant

(b) Variable
(c) Either constant or variable
(d) Neither
Ans: B

Which of the following represent ‘Per Labour Unit of output?

(a) TPP
(b) Physical product
(c) MPP

(d) APP

Ans: D

If for a producer the stage of negative returns to a given variable factor is prevailing then TPP will be 

(a) Increasing at an increasing rate
(b) Increasing at a diminishing rate.

(c) It will  be constant.
(d) It will be falling.

Ans: B

Point of inflexion refers to that point on Total Physical Product curve from where onwards the _______ of Total Physical Product changes:

(a) Curvature
(b) Design

(c) Pattern

(d) None of the above.
Ans: A

Q.5 Production function is an expression of _______ relationship between inputs and output.

(a) Financial

(b) Technical

(c) Social

(d) None of these
Ans: B

Q.6 Which of the following will be treated as labour in economics ? Give a reason for each.

(a) Preparation of food by a housewife

(b) Singing for one’s own pleasure.

(c) Driving his master’s car by a driver.

(d) Playing cricket by Mahendra Singh Dhoni

Ans: C

Q.7  A production function states that there exists a technical relationship between:

(a) Input prices and output prices
(b) Input prices and quantity of output

(c) The quantity of inputs and the quantity of output

(d) The quantity of inputs & input prices

Ans: C

When average product decreases, the marginal product is always:

(a) Greater than average product

(b) Less than average product

(c) Increasing decreasing
(d) none

Ans: A

Accounting to the law of returns to factor, third stage of production begins when:

(a) TPP starts falling

(b) MPP starts falling 

(c) APP starts falling
(d) MPP becomes equal to APP

Ans: A

Q.10 Which of the following statements accurately describe the relationship between AP & MP

(a) AP rises when MP is above it and falls when MP is below it.

(b) MP intersects AP at its minimum point.

(c) AP and MP are always parallel to each other.

(d) AP is always rising when MP is falling and vice-versa.

Ans: A

______ is the extension of “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

(b) Returns to Variable Factor

(c) Law of Returns to factor
(d) All of these

Ans: D

According to Law of Variable Proportions, there are _____ phases.

(a) 1

(b) 3

(c) 2

(d) 4
Ans: B

Average product cannot 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

In describing a given production technology, the short run is best described as lasting:

(a) Up to six months from now

(b) Upto five years from now

(c) As long as all inputs are fixed

(d) As long as at least one input is fixed
Ans: D

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

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 and falling, TP falls.

(d) All of these
Ans: D

Q.20 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

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 returns to a factor
Ans: B

When Average product of variable input is increasing:

(a) Total product may increase at an increasing rate.

(b) Total product may increase at a diminishing rate.

(c) Both (a) and (b)

(d) Neither (a) nor (b)

Ans: C

Q.23 All the goods produced by a firm at a particular period of time are known as .......... 

(a) Total product

(b) Marginal Product

(c) Average Product
(d) Any of these

Ans: A

With an increase in variable factors, whatever increase in production per unit of factor of production is known as ..................

(a) Total product

(b) Marginal Product

(c) Average Product

(d) Any of these
Ans: C

Average Productivity curve (AP) is of which of following nature ?

(a) Inverted U-shape

(b) Inverted V-shape
(c) U-shape
(d) V-shape
Ans: A

Which of following is a production function ?

(a) Qx = Dx 

(b) Qx = f (A, B, C, ....)

(c) Qx = Px

(d) None of these
Ans: B

What is modern name of Law of Returns to Factors ?

(a) Law of Equal Proportions

(b) Law of Diminishing Proportions

(c) Law of Increasing Proportions

(d) Law of Variable Proportions
Ans: D

Q.28 The law of variable proportions applies when

(a) all the inputs are fixed

(b) all the inputs are variable

(c) all the factor proportions are fixed

(d) at least one input is fixed &  inputs are variable

Ans: D

In the process of production, fixed factors and variable factors are combined in a particular ratio, which gives equilibrium output. This ratio is referred to as (Choose the correct alternative)

(a) Factor Output Ratio
(b) Capital Output Ratio

(c) Ideal Factor Ratio

(d) None of these
Ans: A

Which amongst the following is a cause of diminishing returns to a factor 

(a) Fully utilisation of fixed factor
(b) Better coordination between factors

(c) Fixity of the factor

(d) None of the above
Ans: C

Short run production function is related to:

(a) the law of variable proportions
(b) returns to scale

(c) both (a) and (b)
(d) none of these
Ans: A

Which of the following equations is correct ?

(a) MP = TPn - TPn-2
(b) AP = TP x L

(c) TP = AP / L

(d) MP = deltaTP / delta L
Ans: D

Point of inflexion refers to that point from where:

(a) Slope of TP changes

(b) TP stops increasing at an increasing rate

(c) Slope of AP changes
(d) both (a) and (b)

Ans: D

Law of Variable Proportion explains three stages of production, at the end of second stage

(a) AP rises and MP falls
(b) TP rises and MP is zero

(c) TP maximum and MP is zero
(d) None
Ans: C

- You can cover the concepts of Class 12 Micro Economics by going through the course: Crash Course of Micro Economics -Class 12 

- You can attempt reason based & extra questions of Production Function here. 

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