# Important MCQs of Production Function of Microeconomics class 11 CBSE

Looking for important MCQs of production function chapter with answers and explanation of microeconomics class 11 CBSE, ISC and State Board.

## Multiple Choice Question of Production Function chapter with answers of Microeconomics class 11 CBSE

Let’s Practice

Function showing relationship between input and output is known as _____________ .

a) Consumption Function
b) Investment Function
c) Production Function
d) Cost Function

Ans – c)

Explanation:-

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) AP and MP are always parallel to each other
c) Mp intersects AP at its maximum point
d) AP is always rising when MP is falling and vice-versa

Ans – a), c)

What is ‘production’ in economics

a) Creation/Addition to the value of output
b) Production of foodgrains
c) Creation of Services
d) Manufacturing of goods

Ans – a)

When PM 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

Ans – b)

When a total product falls, then _________ .

a) average product is equal to zero
b) marginal product is equal to zero
c) marginal product is negative
d) average product continues to rise

Ans – c)

Explanation:- When MP is negative, TP starts to diminish.

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 a variable factor is employed

Ans – d)

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)

Ans – b)

_______ is the extension of the “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

Ans – a)

Law of Variable Proportions is also known as:

a) Law of Returns to Scale
b) Returns of Variable Factor
c) Law of Returns to Factor
d) All of these

Ans – b), C)

Average Product (AP) is at its maximum when

a) MP > AP
b) MP < AP
c) MP = AP
d) MP becomes negative

Ans – c)

Explanation:- Relationship between AP and MP

i) AP increases as long as MP > AP
ii) AP decreases when MP < AP
iii) AP is maximum when AP = MP

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 + 2L

a) 0 units
b) 30 Units
c) 200 Units
d) 50 Units

Ans – b)

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

Ans – a)

In which time period, all factors of production become variable and
factors of production change with the change in level of production?

a) Long period
b) Market Period
c) Short Period
d) All of these

Ans – a)

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

a) Better utilization of fixed factor
b) Limitation of fixed factor
c) Increase in efficiency of the variable factor
d) Imperfect Substitutes

Ans – b), d)

In the first stage of the Law of Variable Proportions, the total product increases at an _________ .

a) decreasing rate
b) increasing rate
c) constant rate
d) Both a) and b)

Ans – b)

Explanation:- In the initial phase of production, all factors of production
are highly efficient and hence, TP increases at an increasing rate with
employment of each additional variable factor.

When the 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

Ans – c)

What happens to AP, when MP is more than AP?

a) AP rises
b) AP falls
c) AP remains constant
d) None of these

Ans – a)

Increasing returns in applicable because of ____________ .

a) increased efficiency of the variable factor
b) fuller utilisation of fixed factor
c) indivisibility of factors
d) Both a) and b)

Ans – d)

Explanation:- Attainment of increasing returns to factor depends upon how the fixed factors are utilised along with the variable factors of production.

What is the behaviour of TP, when MP becomes negative?

a) TP increases at an increasing rate
b) TP increases at a diminishing rate
c) TP is at its maximum point
d) TP decreases

Ans – d)

According to the Law of Variable Proportions, there are __________ phases.

a) 1
b) 3
c) 2
d) 4

Ans – b)

Law of variable proportion is valid when __________ .

a) at least one input is fixed and all other inputs are kept variable
b) all factors are kept constant
c) all inputs are varied in the same proportion
d) None of the above

Ans – a)

Explanation:- at least one input is fixed and all other inputs are kept
variable

The average product can not be negative because:

a) Total product can never be zero
b) Total product can never be negative
c) Neither a) nor b)
d) Both a) and b)

Ans – b)

The law of diminishing returns refers to an eventual fall in:

a) Productivity of factors of production
b) Total earnings of the firm
c) Marginal product of the variable factor
d) None of these

Ans – c)

The 2nd phase (diminishing returns to a factor) is exhibited by the following
total product sequence:

a) 50, 50, 50, 50
b) 50, 110, 180, 260
c) 50, 100, 150, 200
d) 50, 90, 120, 140

Ans – d)

Which of the following curve is not ‘U’ shaped?

a) AFC
b) AVC
c) MC
d) AC

Ans – a)

Explanation:- AFC curve is rectangular hyperbola shaped in nature as TFC
remains fixed for all levels of output including zero.

Which phase of Law of Variable Proportions has been ruled out on the
grounds of technical inefficiency:

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

Ans – c)

A rational producer always aims to operate in _ of Law of Variable
Proportions:

a) 1st Phase (Increasing returns of a factor)
b) 2nd Phase (Diminishing returns of a factor)
c) 3rd Phase (Negative returns of a factor)
d) Either 1st Phase or 2nd Phase

Ans – b)

Payment made to outsiders for their goods and services is called ___________ .

a) Opportunity cost
b) Real Cost
c) Explicit Cost
d) Implicity cost

Ans – c)

In general, most of the production functions measure:

a) Productivity of factors of production
b) Economics relation between the factors of production
c) Technical relation between inputs and output
d) None of these

Ans – c)

Product per unit of labor employed is termed as:

a) Average product
b) Marginal product
c) Total product
d) None of these

Ans – a)

When the average cost curve is rising, then marginal cost curve __________ .

a) must be decreasing
b) must be constant
c) must be rising
d) Any of these

Ans -c)

Explanation:- MC curve lies above the AC curve when AC is increasing thus,
marginal cost also increases with an increase in AC.

When AP is maximum, MP is equal to:

a) AP
b) TP
c) Zero
d) ONe

Ans – a)

Variable factors refer to those factors of production:

a) Which can be only changed in the long run
b) Which can be changed in the short run
c) Which can never be changed
d) Which vary directly with output

Ans – b), d)

As output increases, the average fixed cost curve ________ .

a) remains constant
b) starts falling
c) starts rising
d) None of these

Ans – b)

Explanation:- As output increases, AFC tends to fall continuously but it
never becomes zero as TFC is always positive.

Ans – Both AP and MP curves are generally:

a) U-shaped
b) Inversely U-shaped
c) Rising
d) Falling

Ans – b)

In describing a given production technology, the short run is best described
as lasting:

a) UP to six months from now
b) Up to five years from now
c) As long as all inputs are fixed
d) As long as at least one input is fixed

Ans – d)

The area under the MC curve is __________ .

a) total cost
b) total fixed cost
c) total variable cost
d) None of these

Ans – c)

Explanation:- TVC can be derived by adding each unit of MC, thus the
area under the MC curve is known as TVC.

_________ is the period of time in which all the factors of production
are variable.

a) Short-run
b) Long run
c) Medium-run
d) None of these

Ans – b)

The ‘Marginal Product’ of a variable input is best described as:

a) Product divided by the number of units of variable input
b) Additional output resulting from a unit increase in the variable input
c) Change in the total product when one more unit of a variable factor is employed
d) Additional output resulting from a unit increase in the units produced

Ans – b), C)

Average Revenue is equal to __________ .

a) Total Revenue/Quantity Sold
b) Average Revenue/2
c) Total Revenue/100
d) Average Quantity/Quantity sold * 2

Ans – a)

What is the maximum point of TP?

a) When AP becomes Zero
b) When MP becomes Zero
c) When MP cuts AP
d) None of these

Ans – b)

Average Product can have:

a) Positive values only
b) Negative values only
c) Both positive as well as negative values
d) Neither positive nor negative values

Ans – a)

When the firm is producing 3 tonnes of sugar, it receives total revenue
of ₹ 24. Raising production to 4 tonnes increases total revenue to ₹ 28.
Thus, marginal revenue is _______ .

a) ₹ 4
b) ₹ 8
c) ₹ 28
d) ₹ 52

Ans – a)

Which of the following is correct?

a) When MP is positive and falling, TP rises at a decreasing rate.
b) When MP is rising, TP rises at an increasing rate.
c) When MP is negative, TP rises
d) All of these

Ans – a), b)

At the point of Inflexion:

a) Total Product is maximum
b) Average Product is maximum
c) Marginal Product is maximum
d) Marginal Product is zero

Ans – c)

If AR is ₹40 per unit from the sale of 3 goods and it is ₹30 per unit
from the sale of 4 goods. Find the marginal revenue of the 4th unit of goods.

a) ₹ 10
b) ₹ 30
c) ₹ 40
d) ₹ 0

Ans – d)

When AP falls due to increase in quantity of variable input:

a) MP < AP
b) MP = AP
c) MP > AP
d) None of these

Ans – a)

The Law of __ deals with the input-output relationship, when the output
is increased by varying the quantity of one input.

a) Variable Proportions
b) Supply
c) Demand
d) Equi-marginal utility

Ans – a)

According to the Law of Variable Proportions, when we increase the quantity of
only one input keeping other inputs fixed, _ initially
increases at an increasing rate, then at a decreasing rate and finally
at a negative rate.

a) Total product
b) Average Product
c) Marginal Product
d) None of these

Ans – a)

Which of the following is not a phase in the Law of Variable Proportions?

a) Increasing returns to a factor
b) Constant returns to a factor
c) Diminishing returns of a factor
d) Negative returns to a factor

Ans – b)

The total output generated by the first four units of a variable input is 200
units, 350 units, 450 units, and 500 units. The marginal product
of the third unit of input is:

a) 50 units
b) 100 units
c) 150 units
d) 200 units

Ans – b)

If TP of employing one unit of a variable factor is 12 units and that of 2 units
of a variable factor is 16 units. The marginal product of 2 units of variable
factor is:

a) 3 units
b) 4 units
c) 8 units
d) 16 units

Ans – b)

When marginal product rises, total product: (Choose the correct alternative)

a) Falls
b) Rises
c) Can rise or can fall
d) Remains constant

Ans – b)

The average product curve in the input-output plane will be ________.
(Choose the correct alternative)

a) an ‘S-shaped curve
b) an inverse ‘S-shaped curve
c) a ‘U’ shaped curve
d) an inverse ‘U’ shaped curve

Ans – d) 