Explain the concept of a production function.
Answer :
The production function of a firm depicts the relationship between the inputs used in the production process and the final output. It specifies how many units of different inputs are needed in order to produce the maximum possible output. Production function is written as:
Q_{x} = f (L, K)
Where
Q_{x} represents units of output x produced.
L represents units of labour employed.
K represents units of capital employed.
The above equation explains that Q_{x,} units of output x are produced by employing L and K units of labour and capital respectively and by a given technology. As the given level of technology appreciates, the output will increase with the same level of capital and labour units.
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What is the total product of an input?
Answer :
Total product is defined as the sum total of output produced by a firm by employing a particular input. It is also known as the Total Physical Product and is represented as
Where, Ã¢Ë†‘ represents summation of all outputs and Q_{x} represents units of output x produced by an input.
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What is the average product of an input?
Answer :
What is the marginal product of an input?
Answer :
Explain the relationship between the marginal products and the total product of an input.
Answer :
Explain the concepts of the short run and the long run.
Answer :
What is the law of diminishing marginal product?
Answer :
What is the law of variable proportions?
Answer :
When does a production function satisfy constant returns to scale?
Answer :
When does a production function satisfy increasing returns to scale?
Answer :
When does a production function satisfy decreasing returns to scale?
Answer :
Briefly explain the concept of the cost function.
Answer :
What are the total fixed cost, total variable cost and total cost of a firm? How are they related?
Answer :
What are the average fixed cost, average variable cost and average cost of a firm? How are they related?
Answer :
Can there be some fixed cost in the long run? If not, why?
Answer :
What does the average fixed cost curve look like? Why does it look so?
Answer :
What do the short run marginal cost, average variable cost and short run average cost curves look like?
Answer :
Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?
Answer :
At which point does the SMC curve intersect SAC curve? Give reason in support of your answer.
Answer :
Why is the short run marginal cost curve 'U'-shaped?
Answer :
What do the long run marginal cost and the average cost curves look like?
Answer :
The following table gives the total product schedule of labour. Find the corresponding average product and marginal product schedules of labour.
L |
TP_{L} |
0 |
0 |
1 |
15 |
2 |
35 |
3 |
50 |
4 |
40 |
5 |
48 |
Answer :
The following table gives the average product schedule of labour. Find the total product and marginal product schedules. It is given that the total product is zero at zero level of labour employment.
L |
AP_{L} |
1 |
2 |
2 |
3 |
3 |
4 |
4 |
4.25 |
5 |
4 |
6 |
3.5 |
Answer :
The following table gives the marginal product schedule of labour. It is also given that total product of labour is zero at zero level of employment. Calculate the total and average product schedules of labour.
L |
MP_{L} |
1 |
3 |
2 |
5 |
3 |
7 |
4 |
5 |
5 |
3 |
6 |
1 |
Answer :
The following table shows the total cost schedule of a firm. What is the total fixed cost schedule of this firm?
Calculate the TVC, AFC, AVC, SAC and SMC schedules of the firm.
L |
TP_{L} |
0 |
10 |
1 |
30 |
2 |
45 |
3 |
55 |
4 |
70 |
5 |
90 |
6 |
120 |
Answer :
The following table gives the total cost schedule of a firm. It is also given that the average fixed cost at four units of output is Rs 5/-. Find the TVC, TFC, AVC, AFC, SAC and SMC schedules of the firm for the corresponding values of output.
L |
TP_{L} |
1 |
50 |
2 |
65 |
3 |
75 |
4 |
95 |
5 |
130 |
6 |
185 |
Answer :
A firm's SMC schedule is shown in the following table. The total fixed cost of the firm is Rs 100/-. Find the TVC, TC, AVC and SAC schedules of the firm.
L |
TP_{L} |
0 |
- |
1 |
500 |
2 |
300 |
3 |
200 |
4 |
300 |
5 |
500 |
6 |
800 |
Answer :
Let the production function of a firm be .
Find out the maximum possible output that the firm can produce with 100 units of L and 100 units of K.
Answer :
Let the production function of a firm be Q = 2L^{2} K^{2}.
Find out the maximum possible output that the firm can produce with 5 units ofL and 2 units of K. What is the maximum possible output that the firm can produce with zero unit of L and 10 units of K?
Answer :
Find out the maximum possible output for a firm with zero unit of L and 10 units of K when its production function is Q = 5L = 2K.
Answer :
Introductory Microeconomics - Economics : CBSE NCERT Exercise Solutions for Class 12th for Production and Costs will be available online in PDF book form soon. The solutions are absolutely Free. Soon you will be able to download the solutions.