SSC CGL Exam > SSC CGL Notes > Tier 2 - Study Material, Online Tests, Previous Year > Short Answer Questions - Producer Behaviour and Supply
Short Answer Questions - Producer Behaviour and Supply
Short answer questions and Long answer questions
1. What is meant by production?
Ans :- Transformation of Input into Output.
2. What will be MP when TP is maximum?
Ans :- MP will be zero.
3. Define market period, Short run & Long run.
Ans :- Refer time period.
4. Explain the law of variable proportions with the help of a schedule and a diagram.
5. What are the reasons for
a) Increasing returns to a factor
b) Diminishing returns to a factor
c) Negative returns to a factor
6. Explain the difference between MPP & TPP.
Short answers and Long Answer questions:
- What is cost of production?
- Define cost function.
- What are money costs?
- Distinguish between explicit and implicit costs.
- How do you define an opportunity cost?
- What difference you find between fixed and variable costs?
- Why the fixed cost curve is a horizontal straight line to the X axis?
- Why variable costs are variable?
- What is average cost? How do you derive it?
- Explain AVC, AFC & ATC and explain the relationship between these costs.
- Explain the relationship TC, TFC & TVC.
- With a diagram describe the various phases of AC.
- Bring out the relationship between AC & MC
The document Short Answer Questions - Producer Behaviour and Supply is a part of the SSC CGL Course SSC CGL Tier 2 - Study Material, Online Tests, Previous Year.
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FAQs on Short Answer Questions - Producer Behaviour and Supply
| 1. What is producer behaviour and how does it relate to supply decisions? |  |
Ans. Producer behaviour refers to how producers make decisions about production quantity and pricing based on costs, market conditions, and profit maximization. It directly determines the supply of goods in an economy-producers increase output when prices rise and decrease it when costs increase, shaping overall market supply curves and equilibrium.
| 2. Why do producers respond differently to price changes in short run versus long run? | |
Ans. In the short run, producers face fixed costs and limited capacity, so supply responds slowly to price changes. In the long run, producers can adjust all factors of production, invest in new technology, and enter or exit markets freely, making supply far more responsive to price fluctuations and creating a more elastic supply curve.
| 3. How does the law of diminishing marginal returns affect a producer's output decisions? | |
Ans. The law of diminishing marginal returns states that as producers add more variable inputs while keeping fixed inputs constant, each additional unit contributes progressively less to total output. This principle forces producers to limit output expansion beyond optimal levels, directly influencing their profit-maximizing production quantity and cost structures.
| 4. What's the difference between movements along the supply curve and shifts in the supply curve? | |
Ans. A movement along the supply curve occurs when quantity supplied changes due to price changes alone. A supply curve shift happens when external factors like technology improvements, input costs, or producer expectations change-altering the entire relationship between price and quantity supplied at every price level.
| 5. How do production costs influence whether a producer will supply goods at different price levels? | |
Ans. Producers compare market price against their average total cost and marginal cost to decide supply quantity. When price exceeds average total cost, producers earn profits and expand supply. When price falls below minimum average variable cost, producers shut down temporarily, reducing or halting supply entirely regardless of market demand.
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