Law of Returns to Factor and Returns to Scale Class 12 MCQs

Law of Returns to Factor and Returns to Scale Class 12 MCQs, covers certain important topics, which are covered under syllabus for ISCE Class 12 and are coming in Term I examination for the academic year 2022-23. Law of Returns to Factor and Returns to Scale Class 12 MCQs Test contains 62 questions. MCQ on Economics Class 12 ISC have been made for Class 12 students to help check the concept you have learnt from detailed classroom sessions and application of your knowledge.




Law of Returns to Factor and Returns to Scale Class 12 MCQs

1. A study in the relationship between inputs and output is known as
(a) Theory of Returns
(b) Theory of Scale
(c) Theory of Factors
(d) Theory of Production

Answer

Answer: (d) Theory of Production


 

2. A study of relationship between outputs and cost of production is known as
(a) Theory Of Costs
(b) Theory of Return
(c) Theory of Factors
(d) Theory of Scale

Answer

Answer: (a) Theory Of Costs


 

3. In economics, production refers to the act of making goods and services and thereby adding _________ to the object
(a) cost
(b) Usefulness
(c) Utility
(d) None of the Above

Answer

Answer: (c) Utility


 

4. In economics, Production means the creation of ____.
(a) Benefit
(b) Value
(c) Money
(d) Utility

Answer

Answer: (d) Utility





5. The act of making goods and services and adding utility to the object is called ___ in economics.
(a) Production
(b) Costing
(c) Selling
(d) Marketing

Answer

Answer:(a) Production


 

6. In Economics, Production includes
(a) Goods
(b) Services
(c) Both A and B
(d) None of these

Answer

Answer: (c) Both A and B


 

7. The ‘Theory of Production’ provides the base for the _____.
(a)Theory of Demand
(b) Theory of Costs
(c) Theory of Supply
(d) None of these

Answer

Answer: (b) Theory of Costs


 

8. Cost of Production depends upon
(a) The physical relationship between inputs and outputs
(b) Prices of the inputs
(c) Prices of the Outputs
(d) Both A and B

Answer

Answer: (d) Both A and B


 

9. Economics define production in a ___ sense.
(a) Narrow
(b) Wider
(c) Moderate
(d) None of these

Answer

Answer: (b) Wider


Law of Returns to Factor and Returns to Scale Class 12 MCQs




10. ____ is regarded as a part of production
(a) Transportation
(b) Trading
(c)  Packaging
(d) Both A and B

Answer

Answer: (d) Both A and B


 

Production Function

11.The relationship between inputs and outputs is known as
(a) Cost function
(b) input output function
(c) scale function
(d) production function

Answer

Answer: (d) production function


 

12.The production function shows the ______ number of inputs that are required to produce a certain level of output with the use of the best available techniques of production
(a) maximum
(b) minimum
(c) efficient
(d) None of the above

Answer

Answer: (b) minimum


 

13. Production Function is expressed with reference to a ________
(a) particular period of time
(b) physical relationship between inputs and outputs
(c) technological relationship
(d) All of the Above

Answer

Answer: (d) All of the Above


 

14. Production Function is a ______ Variable
(a) Dependent
(b) independent
(c) unaffected
(d) constant

Answer

Answer: (a) Dependent





15. ____ process involves the use of various inputs to produce output.
(a) Costing
(b) Production
(c) Construction
(d) All of these

Answer

Answer: (b) Production


 

Law of Returns to Factor and Returns to Scale Class 12 MCQs

Short Run and Long Run

16.________ refers to the period of time during which the number of fixed factors cannot be changed
(a) Production Run
(b) Short Run
(c) Long Run
(d) None of the Above

Answer

Answer: (b) Short Run


 

17. Long Run refers to the time period during whichall Factors of production are _______
(a) fixed
(b) Constant
(c) variable
(d) none of the above

Answer

Answer: (c) variable


 

18. In Production Function equation Qx = f(f1 + f2 + f3……,fn), Qx stands for
(a) Input
(b) Output
(c) Both A and B
(d) None of these

Answer

Answer: (b) Output


 

19. In Production Function equation Qx = f(f1 + f2 + f3……,fn), f1 stands for
(a) Input
(b) Output
(c) Both A and B
(d) None of these

Answer

Answer: (a) Input





20. In production function Qx is
(a) Independent Variable
(b) Dependent Variable
(c) Constant Variable
(d) All of these

Answer

Answer: (b) Dependent Variable


 

21. In production function f1 + f2 + f3……,fn are
(a) Independent Variable
(b) Dependent Variable
(c) Constant Variable
(d) None of these

Answer

Answer: (a) Independent Variable


 

22. If we assume there are only two inputs, namely labour (L) and Capital (K) , then the production function will be
(a) Q= f(L,L)
(b) Q= f(L,K)
(c) Q= f(K,K)
(d) None of these

Answer

Answer: (b) Qx = f(L,K)


 

Law of Returns to Factor and Returns to Scale Class 12 MCQs

Types of Production Function is CANCELLED FROM ISC SYLLABUS

Total Average and Marginal Physical Product

23. Total Product is also known as
(a) Total Factor
(b) Total Returns
(c) Marginal Return
(d) None of the Above

Answer

Answer: (b) Total Returns


 

24.AP refers to the ________ of a variable factor
(a) total output
(b) output per unit
(c) change in TP
(d) None of the Above

Answer

Answer: (b) output per unit





25.________ is the change in TP resulting from the use of one additional variable factor.
(a) MP
(b) TP
(c) AP
(d) MVC

Answer

Answer: (a) MP


 

26.The formula to calculate Average Product is:
(a) AP = TP/L
(b) AP = L/TP
(c) AP = MP/L
(d) None of these

Answer

Answer: (a) AP = TP/L


 

27. If TP is 360 and workers employed for production are 3. Calculate AP.
(a) 100
(b) 120
(c) 140
(d) 160

Answer

Answer: (b) 120


 

28.The formula to calculate Marginal Product is:
a)  MP = TP/L
(b) MP = ΔAP/L
(c) MP = ΔTP/L
(d) MP = AP/L

Answer

Answer: (c) MP = ΔTP/L


 

29. The formula to calculate Total Product is:
(a) TP = AP × L
(b) TP = ∑MP
(c) Both A and B
(d) None of these

Answer

Answer: (c) Both A and B





30. If 2 workers produce 300 pens and 3 workers produce 450 pens, the marginal product of the third worker is:
(a) 100
(b) 150
(c) 200
(d) 250

Answer

Answer: (b) 150


 

31. If AP of 5 workers is 130, then what will be the TP
(a) 500
(b) 550
(c) 600
(d) 650

Answer

Answer: (d) 650


 

Law of Returns to Factor and Returns to Scale Class 12 MCQs

Relationship between TP, MP and AP

32. When MP > AP
(a) AP is falling
(b) AP is constant
(c) AP is max
(d) None of the above

Answer

Answer: (c) AP is max


 

33. MP can be
(a) Positive
(b) Zero
(c) Negative
(d) All of the Above

Answer

Answer: (d) All of the Above


 

34. When MP curve intersects AP curve, AP is
(a) maximum
(b) least
(c) going to start increasing
(d) none of the above

Answer

Answer: (a) maximum





35. When the MP curve lies below the AP curve, AP
(a) Increases
(b) reaches 0
(c) declines
(d) None of the above

Answer

Answer: (c) declines


 

36. When TP Increases at a _______ rate, MP declines
(a) Increasing
(b) constant
(c) decreasing
(d) none of the above

Answer

Answer: (c) decreasing


 

37. When TP starts to decline, MP becomes
(a) positive
(b) 0
(c) max
(d) Negative

Answer

Answer:(d) Negative


 

Returns to Factor

38. Returns to a factor means change in the physical quantity of a good when the quantity of one factor is increased while that of the other factors ______
(a) increases
(b) Decreases
(c) remains constant
(d) becomes negative

Answer

Answer: (c) remains constant


 

39. ______ returns to factor refers to a situation in which additional units of a variable factor at the same amount of output
(a) Marginal
(b) Diminishing
(c) Constant
(d) None of the above

Answer

Answer: (c) Constant





40. When Marginal product of a factor falls as more and more of it is used, it’s known as
(a) Constant Returns to Factor
(b) Diminishing Returns to Factor
(c) Increasing returns to factor
(d) None of the above

Answer

Answer: (b) Diminishing Returns to Factor


 

41. In Increasing returns to factor TP and MP
(a )rise
(b) fall
(c) are constant
(d) none of the above

Answer

Answer: (a) rise


 

Law of Returns to Factor and Returns to Scale Class 12 MCQs

Law of Variable Proportions

42. The Law of Variable Proportions is an extension of
(a) Law of Demand
(b) Law of Supply
(c) Law of Diminishing Marginal Utility
(d) Law of Diminishing Returns

Answer

Answer: (d) Law of Diminishing Returns


 

43. The law of variable proportions states that as more and more units of a variable factor are applied to a given quantity of fixed factor, total product may increase at an increasing rate initially but eventually it will _____
(a)become negative
(b)increase at a diminishing rate
(c) Increase at an increasing rate
(d) none of the above

Answer

Answer: (b) increase at a diminishing rate


 

44. Which of the following are assumptions of the Law of Variable Proportions?
(a) The state of technology is unchanged
(b) All variable factors are homogeneous
(c) some inputs are fixed while others are varied
(d)all of the above

Answer

Answer: (d) all of the above


 

45. Increase in MP will pull up
(a) TP
(b) AP
(c)both the options
(d) none of the above

Answer

Answer:(c) both the options





46. All 3 curves TP, MP and AP are ______ sloped initially and ______ sloped subsequently
(a)positive, negative
(b) negative, positive
(c) positive, positive
(d) negative, negative

Answer

Answer: (a) positive, negative


 

The Three Stages of Production

47. The point on the Total Product curve where level of MP is Maximum is called as
(a) Point of Satiety
(b) Point of Satisfaction
(c) Point of Returns
(d) Point of Inflexion

Answer

Answer: (d) Point of Inflexion


 

48. In the stage of increasing return, the curve starts at origin and ends when
(a)AP is maximum
(b) MP is Maximum
(c) TP is maximum
(d) all are at their max

Answer

Answer: (a) AP is maximum


 

49. During thestage of increasing returns ______ is positive throughout
(a) MP
(b) TP
(c) AP
(d)All of the above

Answer

Answer: (d) All of the above





50. In Stage 2, the total product ________ rate
(a) Increases at an increasing
(b) decreases at a decreasing rate
(c) Increases at a constant rate
(d)increases at a decreasing rate

Answer

Answer: (d) increases at a decreasing rate


 

Law of Returns to Factor and Returns to Scale Class 12 MCQs

51. The second stage of Diminishing Returns ends when
(a) AP is least
(b) MP is negative
(c)MP is 0
(d) AP is 0

Answer

Answer: (c) MP is 0


 

52. In the third stage of negative returns, MP is
(a) Constant
(b) 0
(c)negative
(d) positive

Answer

Answer: (c) negative


 

 

53.Identify this Curve

(a) MP
(b)TP
(c) AP
(d) Returns to scale curve

Answer

Answer: (b) TP


 

54.What stage is found between points A and L3


(a) Stage 1
(b) Stage 2
(c) Stage 3
(d) Stage of negative Returns

Answer

Answer: (b) Stage 2





Explanation of the Law of Variable Proportions

55. Which of the following are causes of increasing returns
(a) Fuller Utilisation of Fixed factors
(b) Increase in efficiency
(c) Both a and b
(d) none of the above

Answer

Answer: (c) Both a and b


 

56.As the number of variable factors increases in stage 1, efficiency of variable factor is increased due to
(a) overcrowding
(b) management problems
(c)specialization
(d) none of the above

Answer

Answer: (c) specialization


 

57. Diminishing Returns to Factor are found due to
(a) overcrowding
(b) management problems
(c) Disruption of Optimum Proportion
(d) none off the above

Answer

Answer: (c) Disruption of Optimum Proportion


 

58. Factors of production are ______ of each other
(a) perfect substitutes
(b) compliments
(c)imperfect substitutes
(d) none of the above

Answer

Answer: (c) imperfect substitutes


 

59. Overcrowding leads to ______ returns to factor
(a) constant
(b) Diminishing
(c) negative
(d) Positive

Answer

Answer: (c) negative





60.Management problem arises due to
(a) shortage of variable factor
(b) excess of variable factor
(c) increase in efficiency
(d) None of the above

Answer

Answer: (b) excess of variable factor


 

STAGES OF OPERATION, DECISION TO PRODUCE AND RETURNS TO SCALE IS CANCELLED

61.  When all inputs are changed in the same proportion, this is called change in _____ of production
(a) factor
(b) quantity
(c) scale
(d) none of the above

Answer

Answer: (c) scale


 

62.change in output in the _____ is associated with change in scale of production
(a) short- run
(b) long-run
(c) both a and b
(d) none of the above

Answer

Answer: (b) long-run





Economics Class 12 ISC MCQs – Term 1

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