Production Function (Microeconomics, Class 11)

1. Which of the following statements accurately describe the relationship between AP and 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.

2. When MP is zero, what can you say about TP?

• (a) TP is increasing
• (b) TP is maximum
• (c) TP is falling
• (d) None of the above

3. Marginal Product refers to addition to total output when one more:

• (a) Unit is produced
• (b) Unit is sold
• (c) Unit is consumed
• (d) Unit of variable factor is employed

4. The period of time in which the plant capacity can be varied is known as:

• (a) Short run
• (b) Long run
• (c) Both (a) and (b)
• (d) Neither (a) nor (b)

5. _____________ 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

6. 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

7. The maximum possible output for a firm with two units of labour (L) and ten units of capital (K), if its production function is given as: 5L + 2K

• (a) 0 units
• (b) 30 units
• (c) 200 units
• (d) 50 units

8. Identify the phase in which TP increases at an increasing rate and MP also increases.

• (a) Increasing returns to a factor
• (b) Diminishing returns to a factor
• (c) Negative returns to a factor
• (d) None of these

9. Which of the following is not a reason for operation of increasing returns to a factor?

• (a) Better utilisation of fixed factor
• (b) Limitation of fixed factor
• (c) Increase in efficiency of variable factor
• (d) Indivisibility of fixed factor

10. When average product increases, the marginal product is:

• (a) Less than average product
• (b) Equal to the average product
• (c) More the average product
• (d) None of these