# MCQ Questions for Class 11 Economics Chapter 3 Production and Costs with Answers (2022)

Check the below NCERT MCQ Questions for Class 11 Economics Chapter 3 Production and Costs with Answers Pdf free download. MCQ Questions for Class 11 Economics with Answers were prepared based on the latest exam pattern. We have provided Production and Costs Class 11 Economics MCQs Questions with Answers to help students understand the concept very well.

## Production and Costs Class 11 MCQs Questions with Answers

Question 1.
In production function, production is a function of:
(a) Price
(b) Factors of Production
(c) Total Expenditure
(d) None of these

Question 2.
The basic reason of operating the Law of Diminishing Returns is:
(a) Scarcity of Factors
(b) Imperfect Substitution between Factors
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b)

Question 3.
Which of the following explains the short-run production function ?
(a) Law of Demand
(b) Law of Variable Proportion
(c) Returns to Scale
(d) Elasticity of Demand

Answer: (b) Law of Variable Proportion

Question 4.
Long-run production function is related to:
(a) Law of Demand
(b) Law of Increasing Returns
(c) Laws of Returns to Scale
(d) Elasticity of Demand

Answer: (c) Laws of Returns to Scale

Question 5.
In which stage of production a rational producer likes to operate in shot-run production ?
(a) First Stage
(b) Second Stage
(c) Third Stage
(d) None of these

Question 6.
Law of variable proportion explains three stages of production. In the first stage of production:
(a) Both MP and AP rise
(b) MP rises
(c) AP Falls
(d) MP is zero

Answer: (a) Both MP and AP rise

Question 7.
At which time all the factors of production may be changed ?
(a) Short run
(b) Long run
(c) Very Long run
(d) All the three

Question 8.
Production function is expressed as:
(a) Qx = Px
(b) Qx = f(A, B, C, D)
(c) Qx = Dx
(d) None of these

Answer: (b) Qx = f(A, B, C, D)

Question 9.
Which factors among following we find in short-run production process ?
(a) Fixed Factors
(b) Variable Factors
(c) Both (a) and (b)
(d) None of these

Answer: (c) Both (a) and (b)

Question 10.
The cycle which increases first and after being constant starts to reduce is called :
(a) APP
(b) MPP
(c) TPP
(d) All of these

Question 11.
Which of the following is a saurce of production ?
(a) Land
(b) Labour
(c) Capital
(d) All of these

Question 12.
Law of variable proportion is related to :
(a) Both short-run and long run
(b) Long-run
(c) Short-run
(d) Very Long-run

Question 13.
An active factor of production is:
(a) Capital
(b) Labour
(c) Land
(d) None of these

Question 14.
If all the factors of production are increased by same proportion and as a result output increases by a greater proportion than it is called :
(a) Constant returns to scale
(b) Decreasing returns to scale
(d) All of these
(d) None of these

Question 15.
Which of the following is included in money cost ?
(a) Normal Profit
(b) Explicit Cost
(c) Implicit Cost
(d) All of these

Question 16.
Which of the following is not fixed cost ?
(b) Interest
(c) Cost of Raw Material
(d) Rent of the Factory

Answer: (c) Cost of Raw Material

Question 17.
With the increase in production the difference between total cost and total fixed cost:
(a) Remains Constant
(b) Increases
(c) Decreases
(d) Both Increases or Decreases

(Video) CA Foundation Economics Module MCQ Chapter 3 Theory of Production and Cost (Part1)| CA Swapnil Kabra

Question 18.
Changes in production quantity affect:
(a) Both Fixed and Variable Cost
(b) Only Variable Cost
(c) Only Fixed Cost
(d) None of the above

Question 19.
What happens when production is shut down ?
(a) Fixed Cost Increases
(b) Variable Costs Decline
(c) Variable Costs become zero
(d) Fixed Costs become zero

Answer: (c) Variable Costs become zero

Question 20.
The alternative name of opportunity cost is:
(a) Economic Cost
(b) Equilibrium Price
(c) Marginal Cost
(d) Average Cost

Question 21.
When average cost is decreasing what status marginal cost has as compared to average cost ?
(a) MC > AC
(b) MC = AC
(c) MC ≤ AC
(d) MC ≠ AC

Question 22.
Which statement of the following is true ?
(a) AC=TFC – TVC
(b) AC = AFC + TVC
(c) AC=TFC + AVC
(d) AC = AFC + AVC

Answer: (d) AC = AFC + AVC

Question 23.
What is an opportunity cost ?
(a) The alternative foregon
(b) The opportunity lost
(c) Transfer earnings
(d) All of these

Question 24.
The shape of average cost curve is :
(a) U-shaped
(b) Reactangular Hyperbola shaped
(c) Line parallel to x-axis
(d) None of these

Question 25.
The average fixed cost at 5 units of output is Rs. 20. Average variable cost at 5 units of output is Rs. 40. Average cost of producing 5 units is:
(a) Rs. 20
(b) Rs. 40
(c) Rs.56
(d) Rs.60

Question 26.
Which of the following is correct ?
(a) TVC = TC – TFC
(b) TC = TVC-TFC
(c) TFC = TVC + TC
(d) TC = TVC x TFC

Answer: (a) TVC = TC – TFC

Question 27.
Average variable costs can be defined as:
(a) TVC x Q
(b) TVC + Q
(c) TVC-Q
(d) TVC ÷ Q

Question 28.
With increase in output, the difference between total cost and total variable cost:
(a) Decreases
(b) Increases
(c) Remains Constant
(d) None of the above

Question 29.
Which factors are used in short-run production process ?
(a) Fixed Factors
(b) Variable Factors
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b)

Question 30.
Following figure shows:

(a) Total Fixed Cost
(b) Total Variable Cost
(c) Total Cost
(d) None of these

Question 31.
In which market MR may become zero or negative ?
(a) Monopoly
(b) Monopolistic Competition
(c) Both (a) and (b)
(d) Perfect Competition

Answer: (c) Both (a) and (b)

Question 32.
In which market AR = MR ?
(a) Monopoly
(b) Monopolistic Competition
(c) Both (a) and (b)
(d) Perfect Competition

Question 33.
In monopoly and monopolistic competition :
(a) AR = MR
(b) AR > MR
(c) AR < MR
(d) None of these

Question 34.
To which market, following figure belongs ?

(a) Perfect Competition
(b) Monopoly
(c) Monopolistic Competition
(d) None of the above

Question 35.
With which condition, firm will get maximum profit ?
(a) Where MR = MC
(b) Where MC cuts MR from below
(c) Both (a) and (b)
(d) None of the above

(Video) Economics-Production and cost question and answer session 1

Answer: (c) Both (a) and (b)

Question 36.
In perfect competition, which of the following remains constant ?
(a) AR
(b) MR
(c) Both AR and MR
(d) None of the both

Answer: (c) Both AR and MR

Question 37.
In perfect competition:
(a) AR = MR
(b) AR > MR
(c) MR < MC
(d) MR = MC = 0

Question 38.
When 5 units of a goods are sold, total revenue is Rs. 100. When 6 units are sold, marginal revenue is Rs. 8. At what price are 6 units sold ?
(a) Rs. 28 per unit
(b) Rs. 20 per unit
(c) Rs. 18 per unit
(d) Rs. 12 per unit

Answer: (c) Rs. 18 per unit

Question 39.
MR is shown as:
(a) $$\frac { ΔTR }{ ΔQ }$$
(b) $$\frac { TR }{ Q }$$
(c) $$\frac { ΔAR }{ Q }$$
(d) None of these

Answer: (a) $$\frac { ΔTR }{ ΔQ }$$

Question 40.
AR is shown as:
(a) $$\frac { TR }{ Q }$$
(b) $$\frac { ΔQ }{ P }$$
(c) $$\frac { ΔTR }{ ΔQ }$$
(d) None of these

Answer: (a) $$\frac { TR }{ Q }$$

Question 41.
In which market AR curve is parallel to X-axis ?
(a) Perfect Competition
(b) Monopoly
(c) Monopolistic Competition
(d) In all the above

Question 42.
Which of the following is a true statement ?
(a) AR indicates price
(b) AR Curve and Demand Curve are the same
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b)

Question 43.
The basic condition of firm’s equilibrium is:
(a) MC = MR
(b) MR = TR
(c) MR = AR
(d) AC = AR

Question 44.
In final equilibrium of firm:
(a) MC cuts MR from above
(b) MC cuts MR from below
(c) Both (a) and (b) are
(d) None of the above is true

Answer: (b) MC cuts MR from below

Question 45.
For every market, which condition has to be fulfilled for firm’s equilibrium ?
(a) AR = MC
(b) MR = MC
(c) MC should cut MR from below
(d) Both (b) and (c)

Answer: (d) Both (b) and (c)

Question 46.
Which is a method of producer’s equilibrium ?
(a) TR and TC Method
(b) MR and MC Method
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b)

Question 47.
For a firm’s equilibrium:
(a) MR = MC
(b) MR > MC
(c) MR < MC
(d) MR = MC = 0

Question 48.
On which assumption, the law of supply depends ?
(a) There should be no change in income levels of buyers and sellers in the market.
(b) Prices of factors of production remain stable
(c) Technological level remains constant
(d) All the above

Question 49.
If other things being same, what does the positive relationship between price and supply quantity signify ?
(a) Law of Demand
(b) Elasticity of Supply
(c) Law of Supply
(d) Supply Function

Question 50.
The reason of decrease in supply is:
(a) Increase in Production Cost
(b) Increase in Price of Substitutes
(c) Fall in number of Firms in the Industry
(d) All the above

Question 51.
The figure given below shows:

(a) Extension in Supply
(b) Contraction in Supply
(c) Elasticity of supply
(d) Elasticity of demand

Question 52.
The quantity of a goods which the seller is ready to sell in the market at fixed price and time is called ?
(a) Supply
(b) Demand
(c) Elasticity of supply
(d) Elasticity of Demand

(Video) Class 11 Economics Chapter 3 | Production And Cost - NCERT Solutions

Question 53.
Supply is associated with:
(a) A Time Period
(b) Price
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b)

Question 54.
Determinating factor of supply of goods is:
(a) Price of Goods
(b) Price of Related Goods
(c) Price of Factor of Production
(d) All the above

Question 55.
Which of the following statement is true ?
(a) Price and quantity have direct relationship
(b) Supply curve rises from left to right
(c) Supply is affected by many factors
(d) All the above

Question 56.
Which of the following function shows the laws of supply ?
(a) S = f(P)
(b) S = f(a/p)
(c) S = f(Q)
(d) None of the above

Question 57.
Following figure shows :

(a) Perfectly Elastic Supply
(b) Perfectly Inelastic Supply
(c) Elastic Supply
(d) Inelastic Supply

Question 58.
Which of the following is correct ?
(a) Perfectly Elastic Supply es = ∞
(b) High Elastic Supply es > 1
(c) Perfectly Inelastic Supply es = 0
(d) All the above

Question 59.
es = 0 means that elasticity of supply is:
(a) Perfectly Elastic Supply
(b) Perfectly Inelastic Supply
(c) Less Elastic Supply
(d) Unit Elastic Supply

Question 60.
If the price of goods rises by 60% but supply increases by only 5%, the supply of goods will be:
(a) Highly Elastic
(b) Elastic
(c) Inelastic
(d) Perfectly Inelastic

Question 61.
The elasticity of a straight line supply curve originating from the centre of origin is:
(a) Less than unity,
(b) greater than unity
(c) equal to unity
(d) equal to zero

Question 62.
When supply increases more with a result of small increase in price, the nature of supply will be :
(a) Elastic
(b) Inelastic
(c) Perfectly Elastic
(d) Perfectly Inelastic

Question 63.
When the proportionate change in the supply of goods is more than the proportionate change in its price, the elasticity of supply will be:
(a) Less than Unit
(b) Equal to Unit
(c) Greater than Unit
(d) Infinite

Question 64.
If the price of the goods rises by 60% and supply increases by only 5%, the supply of goods will be :
(a) Highly Elastic
(b) Elastic
(c) Inelastic
(d) Perfectly Inelastic

Question 65.
The measurement of the elasticity of supply is expressed as:
(a) $$\frac { ΔQ_s/Q_s }{ ΔP/P }$$
(b) $$\frac { Q_s }{ ΔP }$$.$$\frac { 1 }{ P }$$
(c) $$\frac { Q_s }{ Q_s }$$.ΔY
(d) $$\frac { ΔP }{ Q_s }$$.$$\frac { P }{ ΔQ_s }$$

Answer: (a) $$\frac { ΔQ_s/Q_s }{ ΔP/P }$$

Question 66.
There are factors of productions:
(a) Two
(b) Three
(c) Four
(d) Five

Question 67.
Fixed cost is also known as:
(a) Variable cost
(b) Actual cost
(c) Supplementary cost
(d) Short-term cost

Question 68.
Supply falls on the same price when:
(a) Where there is decrease in supply
(b) When there is contraction in supply
(c) When supply increases
(d) When there is expansion in supply.

Answer: (a) Where there is decrease in supply

Question 69.
Active factor of production:
(a) Capital
(b) Labour
(c) Land
(d) None of these.

Question 70.
In the short-run following factors are included in the process of production:
(a) Fixed factors
(b) Variable factors
(c) Both (a) and (b)
(d) None of these.

(Video) CA Foundation Economics ch-3 MCQ'S [ THEORY OF PRODUCTION AND COST] FULLY IN [TAMIL /ENGLISH]

Answer: (c) Both (a) and (b)

Fill in the blanks:

1. Short-term production function is known as ……………

2. Returns to scale is related to ……………

3. Cost incurred in per unit production is ……………

4. Increase in income from a unit of production is called ……………

5. A producer is in the state of equilibrium when he earns ……………

6. Law of supply shows …………… relation between price and supply.

7. The elasticity of supply for milk and related good is ……………

State true or false:

1. Rent theory of Ricardo is based on the law of Diminishing returns.

2. Law of decreasing returns to scale arises due to Non-divisibility.

3. Fixed cost is also known as supplementary cost.

4. In case of perfect competition, a firm attains maximum satisfaction when MC curve cut MR curve.

5. There is inverse relation between price and supply.

6. The supply of perishable goods is inelastic.

7. There are four laws of production.

Match the following:

 ‘A” ‘B’ 1. Causes for the operation of the law of diminishing returns (a) Firms’s equilibrium 2. Long term process (b) Imperfect substitute of factors of production 3. Marginal Revenue = Average Revenue. (c) Returns to scale 4. Elasticity of supply (d) es = 1. 5. Elastic supply (e) Proportionate change in supply proportionate change in price.

 ‘A” ‘B’ 1. Causes for the operation of the law of diminishing returns (b) Imperfect substitute of factors of production 2. Long term process (c) Returns to scale 3. Marginal Revenue = Average Revenue. (a) Firms’s equilibrium 4. Elasticity of supply (e) Proportionate change in supply proportionate change in price. 5. Elastic supply (d) es = 1.

We hope the given NCERT MCQ Questions for Class 11 Economics Chapter 3 Production and Costs with Answers Pdf free download will help you. If you have any queries regarding CBSE Class 11 Economics Production and Costs MCQs Multiple Choice Questions with Answers, drop a comment below and we will get back to you soon.

## FAQs

### What is production function Mcq with answers? ›

Production function means:

A) Physical relationship between inputs used and output. B) Technical relationship between inputs used and output. C) Financial relationship between inputs and output. D) Both Physical and technical relationship between inputs used and outputd. Answer is D)

### Which of the following is production in economics Mcq? ›

Tilling a soil is an economic activity because for cultivation, tilling of soil is necessary and cultivation of crops will result in increase in production of crops in an economy and hence, it is considered as production in economics.

### When TP is falling then MP is Mcq? ›

When TP falls : The AP of labour is zero. The MP of labour is zero. The AP of labour is negative.

### What is marginal revenue Mcq? ›

Explanation: Marginal revenue is the extra revenue generated when a perfectly competitive firm sells one more unit of output. The marginal revenue received by a firm is the change in total revenue divided by the change in quantity.

### What is active factor? ›

The factors of production include land, labour, capital and entrepreneurship. Other factors like land, capital are passive and but labor is an active factor. Land and labour are two essential factors of production. Since the real work of production is done by labour it is considered as the active factor of production.

### What are capital goods Mcq? ›

Which of the following is not true about final goods ?
...
Q.What are Capital goods?
A.goods used for consumption in the production process
B.goods such as tools, machinery, etc which are used to create final consumer goods
C.goods and services that are consumed fully when purchased by the consumers
D.none of the above
1 more row

### Is at the heart of production function Mcq? ›

______ is at the heart of production function.

Conversion sub system is the most important and essential part of the production system. Hence, we can say Conversion sub system is at the heart of production function.

### When TP is falling then MP is? ›

MP is that rate. At the point where TP is at its maximum, MP = 0, the point at which it crosses the x- axis. After this point, MP is actually negative, meaning that TP is falling.

### When the total product is maximum ___? ›

When marginal product of a factor is zero then total product will be maximum.

### When total product is maximum? ›

a) Total product is maximum when marginal product is zero.

### When TP is maximum then MP? ›

In case MP is zero, TP reaches its maximum.

### When MR is zero What is TR? ›

When MR is zero, then TR is maximum. Marginal revenue is the rate of Total revenue. Beyond the point when MR=0, the TR starts falling as MR becomes negative beyond this point.

### What is price line in curve Mcq? ›

Price line is the same as both firm's demand curve and firm's AR curve under the perfect competition. In perfectly competitive market any quantity can be demanded at the given price level.

### In which market is AR Mr Mcq? ›

(d) None of these. Question 41. (d) Only perfect competition. Answer: (d) Only perfect competition.
...
Market Equilibrium Class 12 MCQs Questions with Answers.
'A''B'
4. Equilibrium of firm(d) AR = MR
5. Milk(e) Zero profit.
3 more rows
17 Dec 2020

### Is capital an active factor? ›

It is a passive factor. It needs help of Labour, Capital, Entrepreneur, etc. Like labor and entrepreneur, it doesn't work on its own initiative. So it is a passive factor.

### What is the free gift of nature? ›

Among the 4 factors of production, land is a free gift of nature to human beings, its quantity supplied is unlimited and fixed.

### What type of capital is cash in hand? ›

Cash, cash equivalents, inventory and accounts receivable are examples of working capital.

### Is furniture a capital goods? ›

Capital goods are mostly fixed assets that are purchased by the producer in order to produce consumer goods. Examples: Buildings, equipment, machinery, furniture, and more.

### Which is a flow concept Mcq? ›

Solution: Supply of a commodity is a flow concept.

### What are 10 examples of capital goods? ›

11 Examples of Capital Goods
• Vehicles. Vehicles owned by a business are a capital good. ...
• Production Technology. ...
• Computing Technology. ...
• Electronics. ...
• Software. ...
• Power Technology. ...
• Infrastructure. ...
• Facilities.
29 Jul 2017

### When TP is maximum the slope of TP curve is? ›

So, at maximum total product, the slope is equal to zero.

### What is the 5 m of management? ›

Production management's responsibilities are summarized by the “five M's”: men, machines, methods, materials, and money.

### Which is variable factor of production Mcq? ›

Labour is the factor of production is most likely to be variable in the short run. Variable labour costs are any labour costs that go up or down with production levels.

### Why is tp maximum When MP is zero? ›

When MP=0, there is no change (or addition) in TP. Implying that TP should be maximum when MP=0.

### What is total cost curve? ›

The total cost (TC) curve is found by adding total fixed and total variable costs. Its position reflects the amount of fixed costs, and its gradient reflects variable costs.

### What is the shape of MP curve? ›

Mp curve or marginal product curve is downward sloping because as production increases mp curve goes on increasing but afterwards falls or becomes u-shaped.

### Which of following is a production function? ›

The best definition of the "production function is" The relationship between the quantities of inputs needed to produce a given level of output".

### What are the factors of production Mcq? ›

According to economic theory, there are four main factors of production - land, labour, capital, and entrepreneurship.

### What are the assumptions of production function Mcq? ›

The following are the assumptions of production function :

There should be no change in the level of technical knowledge. The costs of means of production should remain the same. Production function is related to a definite time period.

### What is the short run? ›

What Is the Short Run? The short run is a concept that states that, within a certain period in the future, at least one input is fixed while others are variable. In economics, it expresses the idea that an economy behaves differently depending on the length of time it has to react to certain stimuli.

### What is total product? ›

In simple terms, we can define Total Product as the total volume or amount of final output produced by a firm using given inputs in a given period of time.

### When TP is falling then MP is? ›

MP is that rate. At the point where TP is at its maximum, MP = 0, the point at which it crosses the x- axis. After this point, MP is actually negative, meaning that TP is falling.

### What are capital goods Mcq? ›

Which of the following is not true about final goods ?
...
Q.What are Capital goods?
A.goods used for consumption in the production process
B.goods such as tools, machinery, etc which are used to create final consumer goods
C.goods and services that are consumed fully when purchased by the consumers
D.none of the above
1 more row

### Which is the most important factor of production Mcq? ›

The correct answer is Working capital. Factors of Production are the resources used by people to produce goods and services.

### Who is primary factor of production process Mcq? ›

The factors of production are land, labor, capital, and entrepreneurship.

### What is feature of land? ›

Land Features means roads, jurisdictional boundaries and other features created by human activity.¶ (8) "Natural Geographic Features" means streams, ridge lines and other features naturally occurring.¶

### What is main aim of production? ›

Basic aim of production was to produce goods and services that we want. Four requirements for production of goods and services were:1. Land and other natural resources like water forests minerals Labour i.e. people who would do the work.

### Which control is most important in report Mcq? ›

Explanation: Text box control is most important in report.

### What is Isoquant curve Mcq? ›

The isoquant curve is a sloping line on a graph that shows all of the various combinations of the two inputs that result in the same amount of output.

### Is at the heart of production function Mcq? ›

______ is at the heart of production function.

Conversion sub system is the most important and essential part of the production system. Hence, we can say Conversion sub system is at the heart of production function.

### When TP is maximum the slope of TP curve is? ›

So, at maximum total product, the slope is equal to zero.

## Videos

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