Chapter-Production and Costs

Important MCQ Questions on CUET Economics Chapter-Production and Costs with Detailed explanation

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MCQ Questions for CUET Economics Chapter-Production and Costs Set-1

Macroeconomic Economics - MCQ on Production and Costs

Class XII

Q.01. In the short run, firms in perfect competition will keep on producing, if

a) the price equals average variable cost.

b) the price equals variable cost.

c) the price equals average fixed cost.

d) the price equals fixed costs.

Answer:

a)

Explanation: In the short run, firms in perfect competition firms will keep on producing, if the price covers average variable cost.

Q.02. In the long run firms

a) have different products

b) firms are allocatively inefficient.

c) firms are productively efficient.

d) firms cannot exit the market

Answer:

c)

Explanation: In the long run firms are productively efficient.

Q.03. In the long run, in perfect competition

a) Price = average cost = marginal cost.

b) Price = average cost = total cost.

c) Price = marginal revenue = total cost.

d) Total revenue = total variable cost.

Answer:

a)

Explanation: In the long run in perfect competition.

Price = average cost= marginal cost

Q.04. For a perfectly competitive firm

a) price equals marginal revenue.

b) price is greater than marginal revenue.

c) price equals total revenue.

d) Price equals average revenue

Answer:

a)

Explanation: For a perfectly competitive firm, price equals marginal revenue.

Q.05. A reduction in the costs of production will

a) lead to a movement along the supply curve.

b) shift the demand curve.

c) shift the supply curve.

d) lead to an extension of supply.

Answer:

c)

Explanation: A change in cost conditions will affect the supply curve.

Macroeconomic Economics - MCQ on Production and Costs

Class XII

Q.1.What is the generally accepted goal of firms producing for the market?

I. Capital Expansion

II. Profit maximization

III. Trading of goods and services

IV. Cost Cutting

Answer:

II.Profit maximization

Explanation: It is the core and accepted goal of firm

Q.2.Amount used to produce output by using input under given state of technology

I. Consumption

II. Production

III. Utilization

IV. Combination

Answer:

II. Production

Explanation: Production function means the technological relationship between physical input and maximum output

Q.3.Combination of various factors factors of production which gives

I. Proper combination of factor

II. Optimal combination of factor

III. Total Combination of factor

IV. Optimum combination of factor

Answer:

IV. Optimal combination of factor

Explanation: When the factors of production is combined in such a way that it gives maximum output is called optimum combination of factors.

Q.4.In which period are some factors of production fixed and others variable

I. Long period

II. Short Period

III. Very Short period

IV. Very long period

Answer:

II.Short period

Explanation: When some of the factor of production is fixed hence only production can be changed up to some extent

Q.5 In which period are all the factor of production variable

I. Long period

II. Short Period

III. Very Short period

IV. Very long period

Answer:

I. Long period

Explanation:Long period is the time period in which firms can increase or decrease any of the factors of production

Q.6 Total output at a particular level of employment is called

I. Average product

II. Total product

III. Marginal product

IV. Physical product

Answer:

II.Total product

Explanation:The total output at a particular level of employment of a input when inputs of all other are unchanged.

Q.7.What is average product?

I. Total product per unit of employment of variable input

II. Total product per unit of employment of total product

III. Total product per unit of employment of fixed product

IV. Total product per unit of employment of marginal product

Answer:

I. Total product per unit of employment of variable input

Explanation:The average product is product /employment

Q.8.When total physical product is falling then marginal physical product will be

I. Positive

II. Negative

III. Decline

IV. Expand

Answer:

Negative

Explanation:The relation between total physical product and marginal physical product is directly related

Q.9.What is the general shape of MPP curve

I. U shape

II. Inverse U shape

III. V shape

IV. Inverse V shape

Answer:

II. Inverse U shape

Explanation:The shape is inversely when an additional product is added

Q.10.Law of variable proportion is based of

I. Output is increased by varying quantity of variable factor

II. Output is increased by varying quantity of fixed factor

III. Output is increased by a fixed quantity of variable factor

IV. Output is increased by a fixed quantity of fixed factor

Answer:

I.Output is increased by varying quantity of variable factor

Explanation: When the quantity varies then the output also varies so this is a thumb rule of variable proportion

MCQ Questions for CUET Economics Chapter-Production and Costs Set-2

Q.11.What is MP when TP reaches its maximum

I. One

II. Zero

III. Declines

IV. Minimum

Answer:

II. Zero

Explanation: When TP reaches its maximum the marginal product is Zero

Q.12.Which is the stage of the Law of variable proportion is relevant for a firm which aims at maximum efficiency

I. First Stage

II. Second Stage

III. Third Stage

IV. Last Stage

Answer:

II. Second Stage

Explanation: Maximum efficiency can be achieved at secondphase

Q.13.What happens to the marginal product when total product increases at a diminishing rate?

I. Marginal product starts increasing

II. Marginal product start declining

III. Marginal product remains constant

IV. None

Answer:

II. Marginal product start declining

Explanation:When total product increases at diminishing rate then marginal product starts falling

Q.14.What time period is considered in the law of returns to scale

I. Short period

II. Long period

III. Very short period

IV. Very long period

Answer:

II. Long period

Explanation: The law of returns to scale is for long period

Q.15.In the long run there will be only variable costs and no fixed cost. Do you agree?

I. Yes

II. No

III. May be

IV. Not sure

Answer:

I.Yes

Explanation: Because in the long run there will be only be variable cost

Q.16.What is the basic reason of decreasing returns to scale?

I. Problem in economy

II. Problem in the production

III. Problem in the number of people employed

IV. Diseconomies of management

Answer:

IV.. Diseconomies of management

Explanation:The diseconomies effect the returns to scale in a negative manner

Q.17.Cost refers to

I. Expenses spent for consumption

II. Expenses assigned for intermediate goods

III. Miscellaneous expenses

IV. Expenses assigned for the production

Answer:

IV.Expenses assigned for the production

Explanation:The expenses assigned for the production of a commodity is called Costs

Q.18.Choose money cost

I. Loan from bank

II. Receiving donation

III. Subsidy

IV. Rent

Answer:

IV.Rent

Explanation: Payments in relation to rent, insurance ,taxes ,interest on loan are examples of money cost

Q.19.What is explicit costs

I. The cost which is owned by the entrepreneur

II. The cost occurred for the disposal of waste in production

III. The cost which is paid for stationary

IV. The cost which are paid to outside factors of production

Answer:

IV.The cost which are paid to outside factors of production

Explanation:Any cost which are not implicit and paid to outsourced agencies are called explicit costs

Q.20.Real cost is in the term of

I. Money or finance

II. Pain and discomfort

III. Paid to factors

IV. Paid to employees

Answer:

II. Pain and discomfort

Explanation:Real cost refers to in terms of pain ,discomfort involved in the production of factors

Q.21..Fixed cost does not change

I. With change in input

II. Change in output

III. Change in demand

IV. Change in supply

Answer:

II. Change in output

Explanation:Fixed cost remain fix in any situation and it does not change with change in output

Q.22.Marginal cost

I. When production is carried only for sufficiency

II. Cost for least products

III. When additional unit of commodity is produced

IV. None

Answer:

III.When additional unit of commodity is produced

Explanation:Marginal cost may be defined as addition to the total cost when an addition unit of a commodity is produced .Marginal cost = Change in total cost/change in units produced

Q.23.Total receipts of the firm receives from the sale of products

I. Cost

II. Revenue

III. Production

IV. Consumption

Answer:

II.Revenue

Explanation: Revenue may be defined as the total receipts of the firm that a firm receives from the sale of the products

Q.24.When will TR starts declining

I. MR is more than zero

II. MR is less than zero

III. MR is continuously increasing

IV. MR is constant

Answer:

II.MR is less than zero

Explanation:TR starts declining when MR is less than zero negative

Q.25.What is general profit maximizing condition of a firm

I. MR>MC

II. MC<MR

III. MR= MC

IV. None

Answer:

III. MR=MC

Explanation:The profit can be maximized only when the cost is equal to the profit

Q.26.Supply refers to

I. Purchase a commodity

II. Pay a particular price

III. Offer a commodity for sale

IV. All

Answer:

III.Offer a commodity for sale

Explanation: Supply of a commodity refers to the amount of a commodity that the producers are willing to offer for sale at different prices during a period of time

Q.27.Supply is

I. Directly related to price

II. Inversely related to price

III. Indirectly related to price

IV. Not related to price

Answer:

I.Directly related to price

Explanation: Law of supply states that quantity offered for sale will increase as the price of the good rises and decrease as the price falls

Q.28.What effect does a cost saving technical progress have on supply curve

I. Supply curve will shift to left

II. Supply curve will shift to right

III. Supply curve will go upward

IV. Supply curve will be parallel to x-axis

Answer:

II. Supply curve will shift to right

Explanation: A cost saving technical progress will move the supply curve to right

Q.29.What is the price elasticity of the supply curve passing through the origin ?

I. 1

II. 0

III. more than 1

IV. less than 0

Answer:

I. 1

Explanation: Price elasticity through the origin is always 1