Tag: total product, average product and marginal product

Quizzes (0) Questions (53)

Questions Related to total product, average product and marginal product

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

If Stage I = Increasing Returns, Stage II = Diminishing Returns, and Stage III = Negative Marginal Returns, answer the questions:
A Rational Producer will not operate in Stage I due to the reason that -

  1. There is more scope for making the best use of the Fixed Factor

  2. Total Output still shows an increasing trend

  3. Optimal Combination of Fixed and Variable Factors is not yet achieved

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In Stage I, the fixed factor is underutilized, and increasing the variable factor improves efficiency, meaning the producer has not yet reached the optimal combination.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

In which stage of production would a rational entrepreneur like to operate?

  1. Stage 1 where MP is maximum

  2. Stage 2 where both MP and AP are decreasing, but both are positive

  3. Stage 3 where MP is negative

  4. Either Stage 2 or 3
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A rational producer operates in Stage 2 because this is where the marginal product is positive but declining, allowing for efficient allocation of resources.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

A Rational Producer intends to work in-

  1. Stage of Constant Returns

  2. Stage of Increasing Returns

  3. Stage of Diminishing Returns

  4. Stage of Negative Returns
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A rational producer avoids Stage 1 (underutilization) and Stage 3 (negative marginal returns), choosing to operate in Stage 2, which is the stage of diminishing returns.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

You are given the following data:

Factor Output
0 0
1 15
2 35
3 60
4 92
5 140

The above data is an example of:

  1. Decreasing returns to scale.

  2. Constant returns to scale.

  3. Increasing returns to scale.

  4. Positive fixed costs.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Calculating marginal product: 15, 20, 25, 32, 48. Since the marginal product is increasing, this indicates increasing returns to scale.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

If a change in scale inputs leads to a proportional change in the output, it is a case of-

  1. Increasing Returns to Scale

  2. Constant Returns to Scale

  3. Diminishing Returns to Scale

  4. Variable Returns to Scale
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Constant returns to scale occur when a proportional increase in all inputs leads to an exactly proportional increase in output.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

If as a result of a 50% increase in all inputs, the output rises by 75%, this is a case of:

  1. Increasing Returns to a Factor

  2. Increasing Returns to Scale

  3. Constant Returns to a Factor

  4. Constant Returns to Scale
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

If output increases by 75% while inputs only increase by 50%, the output growth is greater than the input growth, which defines increasing returns to scale.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

In the very beginning of production generally, the Increasing Returns to scale is found because-

  1. Input is increased

  2. Plant and Machinery will be new

  3. Production Problems are less

  4. Economies of Scale
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Increasing returns to scale in the early stages of production are primarily driven by economies of scale, such as specialization and better utilization of indivisible factors.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

A rational producer will always operate in which stage of law of variable proportion?

  1. increasing returns.

  2. diminishing returns.

  3. constant returns.

  4. negative returns.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A rational producer operates in the second stage of the law of variable proportions. In the first stage, marginal product is rising, and in the third stage, marginal product is negative, making both inefficient for production.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

Second stage of law of variable proportion ends where __________.

  1. MP is zero

  2. AP is maximum

  3. MP is falling

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The second stage of the law of variable proportions begins where average product is maximum and ends where marginal product is zero. Beyond this point, total product begins to decline.

Multiple choice economics production and costs return to scale and cobb douglas function total product, average product and marginal product laws of returns - returns to a factor and returns to scale

Returns to scale means ________________.

  1. the behaviour of production or return when all the production factors are increased or decreased simultaneously in the same ration

  2. the behaviour of production where one or two factors of production are fixed while the others are variable

  3. the marginal returns goes on increasing as more labour is invested in industry.

  4. the behaviour of production, when changes are made in factor proportions, keeping on or some factors fixed
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In the long run all factors are varied, the proportion of inputs while kept same is scaled up or down in order to produce at the minimum efficiency scale (long run minimum average cost) . Thus as the entire scale of production is changing, this phenomenon is know as returns to scale.