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B Com Exam  >  B Com Tests  >  Test: Production Analysis - 2 - B Com MCQ

Test: Production Analysis - 2 - B Com MCQ


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10 Questions MCQ Test - Test: Production Analysis - 2

Test: Production Analysis - 2 for B Com 2024 is part of B Com preparation. The Test: Production Analysis - 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Production Analysis - 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Production Analysis - 2 below.
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Test: Production Analysis - 2 - Question 1
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What does the law of returns to scale explain?

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The law of returns to scale explains the relationship between input and output in production. It deals with how changes in the amounts of inputs affect the behavior of output in a production process. It categorizes this relationship into three types: increasing returns to scale, constant returns to scale, and diminishing returns to scale.
Test: Production Analysis - 2 - Question 2
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When an organization experiences increasing returns to scale, what happens to the average cost per unit produced?

Detailed Solution for Test: Production Analysis - 2 - Question 2
When an organization experiences increasing returns to scale, the average cost per unit produced decreases. This is because as the scale of production increases, the organization enjoys economies of scale, which lead to cost efficiencies and lower average costs per unit.
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Test: Production Analysis - 2 - Question 3
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What type of economies are associated with the reduction of the physical quantity of inputs, such as raw materials and labor?

Detailed Solution for Test: Production Analysis - 2 - Question 3
Technical economies are associated with the reduction of the physical quantity of inputs, such as raw materials and labor. These economies result from the efficient use of machinery and specialized techniques of production, leading to lower production costs.
Test: Production Analysis - 2 - Question 4
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Which type of cost does not directly relate to the level of production or output?
Detailed Solution for Test: Production Analysis - 2 - Question 4
Fixed costs do not directly relate to the level of production or output. They remain relatively constant regardless of the production volume. Examples of fixed costs include rent, depreciation, and administration costs.
Test: Production Analysis - 2 - Question 5
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In break-even analysis, what is the point at which neither profit nor loss is made?
Detailed Solution for Test: Production Analysis - 2 - Question 5
In break-even analysis, the point at which neither profit nor loss is made is called the "break-even point." It represents the level of sales volume or production at which total costs equal total revenue.
Test: Production Analysis - 2 - Question 6
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What type of economies are shared by multiple firms or industries when the scale of production in any industry increases?
Detailed Solution for Test: Production Analysis - 2 - Question 6
External economies are shared by multiple firms or industries when the scale of production in any industry increases. These benefits include cost reductions, increased information sharing, and other advantages that result from industry expansion.
Test: Production Analysis - 2 - Question 7
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Which type of economies occur to a large firm when it purchases raw materials in bulk quantity at lower prices?
Detailed Solution for Test: Production Analysis - 2 - Question 7
Pecuniary economies occur to a large firm when it purchases raw materials in bulk quantity at lower prices. This is a monetary gain for the firm, resulting from cost savings in procurement.
Test: Production Analysis - 2 - Question 8
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What happens to average cost of production when a firm increases its scale of production and enjoys technical economies?
Detailed Solution for Test: Production Analysis - 2 - Question 8
When a firm increases its scale of production and enjoys technical economies, the average cost of production decreases. Technical economies, such as the efficient use of machinery, lead to cost savings and lower average production costs.
Test: Production Analysis - 2 - Question 9
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What is the primary purpose of a break-even chart?
Detailed Solution for Test: Production Analysis - 2 - Question 9
The primary purpose of a break-even chart is to determine the break-even point. It helps businesses analyze at what level of sales or production they neither make a profit nor incur a loss.
Test: Production Analysis - 2 - Question 10
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Which type of costs vary directly with the level of output and include inputs like raw materials and direct labor?
Detailed Solution for Test: Production Analysis - 2 - Question 10
Variable costs vary directly with the level of output and include inputs like raw materials and direct labor. These costs increase as production volume increases and decrease as production volume decreases.
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