Chapter 4 ECONOMICS : Production Analysis — Online MCQ Test
ECONOMICS · CLASS 11 INTER I YEAR · Andhra State Board
Practice Chapter 4 ECONOMICS : Production Analysis with a free chapter-wise online MCQ test.
This chapter covers: This chapter details production functions law of variable proportions laws of returns to scale economies and diseconomies of scale..
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Chapter 4 ECONOMICS : Production Analysis — Important Questions & Answers
What is the primary objective of a firm in production analysis?
- A. Maximization of profit
- B. Maximization of welfare
- C. Minimization of output
- D. Maximization of taxes
Answer: A. Maximization of profit
In production theory, a firm's primary goal is to maximize profit by optimizing the use of inputs to produce output.
In production theory, a firm's primary goal is to maximize profit by optimizing the use of inputs to produce output.
Which of the following is considered a 'fixed factor' in the short run?
- A. Raw materials
- B. Daily wages
- C. Factory building
- D. Electricity consumption
Answer: C. Factory building
Fixed factors like land and buildings cannot be changed in the short run, whereas variable factors like labor and materials can be adjusted.
Fixed factors like land and buildings cannot be changed in the short run, whereas variable factors like labor and materials can be adjusted.
When Marginal Product (MP) is zero, Total Product (TP) is:
- A. Minimum
- B. Decreasing
- C. Maximum
- D. Constant
Answer: C. Maximum
Total product reaches its maximum point when the additional output (marginal product) added by the last unit of input is zero.
Total product reaches its maximum point when the additional output (marginal product) added by the last unit of input is zero.
If increasing all inputs by 20% results in an output increase of 30%, the firm is experiencing:
- A. Increasing returns to scale
- B. Constant returns to scale
- C. Decreasing returns to scale
- D. Negative returns to scale
Answer: A. Increasing returns to scale
Since the percentage increase in output (30%) is greater than the percentage increase in inputs (20%), it is classified as increasing returns to scale.
Since the percentage increase in output (30%) is greater than the percentage increase in inputs (20%), it is classified as increasing returns to scale.
In the Cobb-Douglas production function Q = A K^a L^b, constant returns to scale exist if:
- A. a + b > 1
- B. a + b < 1
- C. a + b = 1
- D. a + b = 0
Answer: C. a + b = 1
In Cobb-Douglas production, the sum of the exponents (a + b) determines the returns to scale. If the sum equals one, returns to scale are constant.
In Cobb-Douglas production, the sum of the exponents (a + b) determines the returns to scale. If the sum equals one, returns to scale are constant.