Worksheet: Production and Costs - 2 | Economics Class 11 - Commerce PDF Download

Fill in the Blanks

Q1: Cost function studies the functional relationship between __________ and cost of production.

Q2: Money expenditure incurred by a firm in the production of a commodity is called the _________.

Q3: In economics, the total cost of production is the sum of ________ costs.

Q4: In the short period, costs are categorized into _______ cost and _______ cost.

Q5: Fixed costs are incurred on ________ factor of production.

Q6: Total fixed cost (TFC) is maximum loss a producer can suffer and is also known as _________.

Q7: Marginal cost (MC) is the additional cost incurred for the production of an additional _______.

Q8: The relationship between marginal cost (MC) and average cost (AC) is a(n) _______ relationship.

Q9: AFC is calculated as Total Fixed Cost (TFC) divided by ________.

Q10: Implicit costs are calculated by determining the value of _______ in terms of their market price.

Assertion and Reason Based

Q1: Assertion: Fixed costs are the costs that change with changes in the level of output.
Reason: Fixed costs include expenses like raw materials and labor.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) Assertion is true, but the reason is false.
(d) Both assertion and reason are false.

Q2: Assertion: The Total Cost (TC) curve starts from the point as intercept on the Y-axis.
Reason: Total Fixed Cost (TFC) is zero at zero level of output.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) Assertion is true, but the reason is false.
(d) Both assertion and reason are false.

Q3: Assertion: Marginal cost (MC) is not affected by fixed cost.
Reason: Fixed cost remains constant for all levels of output.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) Assertion is true, but the reason is false.
(d) Both assertion and reason are false.

Q4: Assertion: Average Fixed Cost (AFC) goes on decreasing with an increase in output.
Reason: As output increases, the constant fixed cost gets distributed to a larger number of units.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) Assertion is true, but the reason is false.
(d) Both assertion and reason are false.

Q5: Assertion: Marginal Cost (MC) cuts Average Cost (AC) at its minimum point.
Reason: MC and AC have an inverse relationship.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) Assertion is true, but the reason is false.
(d) Both assertion and reason are false.

Very Short Answer Type Questions

Q1: Define cost of production.

Q2: Explain the concept of implicit costs.

Q3: Differentiate between fixed costs and variable costs.

Q4: What is the behavior of Total Fixed Cost (TFC) in the short run?

Q5: Describe the shape of the Total Fixed Cost (TFC) curve.

Q6: What is the formula for calculating Total Cost (TC)?

Q7: What is the relationship between Total Cost (TC) and Total Variable Cost (TVC)?

Q8: What does Marginal Cost (MC) represent?

Q9: Explain why Marginal Cost (MC) is U-shaped.

Q10: How is the relationship between Marginal Cost (MC) and Average Cost (AC) described?

Short Answer Type Questions

Q1: Explain the difference between explicit (accounting) cost and implicit (non-accounting) cost.

Q2: Discuss the relationship between Total Fixed Cost (TFC) and Total Cost (TC) at zero levels of output.

Q3: Describe the behavior of Total Variable Cost (TVC) in relation to Total Cost (TC).

Q4: Explain the relationship between Marginal Cost (MC) and Average Cost (AC) in terms of their behavior.

Q5: Discuss the concept of Average Fixed Cost (AFC) and why it goes on decreasing with an increase in output.

Q6: Compare the minimum points of Average Cost (AC) and Average Variable Cost (AVC) curves.

Q7: Why is the gap between Average Cost (AC) and Average Variable Cost (AVC) reduced with an increase in output?

Q8: Provide reasons for the U-shaped behavior of cost curves like AC, AVC, and MC.

Long Answer Type Questions

Q1: Explain the fundamental concept of cost of production and its significance in pricing decisions.

Q2: Discuss the relationship between Total Cost (TC), Total Fixed Cost (TFC), and Total Variable Cost (TVC) with examples.

Q3: Analyze the behavior of Marginal Cost (MC) in the short run and its implications for production decisions.

Q4: Describe the characteristics and implications of the U-shaped cost curves like Average Cost (AC), Average Variable Cost (AVC), and Marginal Cost (MC) in the cost of production.