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CA CPT Basics of General Economics - Production Concepts Practice Questions

Basics of General Economics - Production Concepts

Exam Duration: 45 Mins Total Questions : 30

1 )

Production is a / an_______activity.

(a)
Charitable
(b)
Beneficial
(c)
Economic
(d)
Successful

2 )

Production does not consist of which of the following activities?

(a)
Changing the form of natural resources
(b)
Changing the place of the resources
(c)
Both of the above
(d)
None of the above

3 )

Production = Creation of Utility. This statement is

(a)
True
(b)
False
(c)
Partially True
(d)
None of the above

4 )

Production = Satisfaction of Utility. This statement is

(a)
True
(b)
False
(c)
Partially True
(d)
None of the above

5 )

Production of Cellphones by a Manufacturing Company is an example of Production Activity. This statement is

(a)
True
(b)
False
(c)
Partially True
(d)
None of the above

6 )

Production Activity involves creation of Utility. Such Utility can be created as

(a)
Form Utility
(b)
Place Utility
(c)
Time Utility
(d)
All of the above

7 )

_______Utility is created by making goods and services available at times when they are not normally available.

(a)
Form Utility
(b)
Place Utility
(c)
Time Utility
(d)
Personal Utility

8 )

Which of these is not a basic Factor of Production in Economics?

(a)
Land
(b)
Enterprise
(c)
Capital
(d)
Money

9 )

A 100% Consumption Economy

(a)
cannot have any Capital Formation
(b)
Will become static and cannot grow
(c)
Both (a) and (b)
(d)
Neither (a) nor (b)

10 )

Which of these play a role in mobilisation of savings in an economy?

(a)
Banks
(b)
Financial Institutions
(c)
Capital Market
(d)
All of the above

11 )

Entrepreneurship is a wider term than organization and management of a business. This statement is -

(a)
True
(b)
False
(c)
Partially True
(d)
None of the above

12 )

Which of the following constitute Innovation?

(a)
Introduction of a new or improved product
(b)
Utilisation of new or improved source of Raw Material
(c)
Introduction of new or improved production methods/machinery
(d)
All of the above

13 )

The difference between Fixed and Variable Factors of Production is relevant in

(a)
Medium-run
(b)
Short -run
(c)
Long-run
(d)
All of the above

14 )

In the short-run, the proportion between factors of production

(a)
Remains constant
(b)
Changes
(c)
Is zero
(d)
Is infinity

15 )

Law of Variable Proportions is applicable to

(a)
Medium-run
(b)
Short -run
(c)
Long-run
(d)
All of the above

16 )

In the long-run,__________factors of production changes.

(a)
Proportion between
(b)
Quantity of
(c)
Need for
(d)
None of the above

17 )

To economists, the main difference between the short run and the long run is that -

(a)
In the short run all inputs are fixed, while in the long run all inputs are variable
(b)
In the short run the Firm varies all of its inputs to find the least-cost combination of inputs
(c)
In the short run, at least one of the Firm's input levels is fixed
(d)
In the long run, the Firm is making a constrained decision about how to use existing Plant and equipment efficiently

18 )

The introduction of new product with added features in the market is known as

(a)
Process Innovation
(b)
Product Innovation
(c)
Plant Innovation
(d)
Production Function

19 )

________is the Total Product per unit of the Variable Factor.

(a)
Total Product
(b)
Average Product
(c)
Marginal Product
(d)
All of the above

20 )

labour Input	Marginal product	Total product	Average product
0	0	0	0
1			25
2		90
3		120
4		140
5			28
6			20

Output per worker is maximized at a Labour Input of:

(a)
2
(b)
4
(c)
6
(d)
8

21 )

What is the maximum point of TP?

(a)
When AP becomes zero
(b)
When MP becomes zero
(c)
At the intersecting point of AP & MP
(d)
None of these

22 )

The Average Product of Labour is maximized when Marginal Product of Labour

(a)
Equals the Average Product of Labour
(b)
Equals zero
(c)
Is maximized
(d)
None of the above

23 )

Marginal Product (MP) Curve cuts Average Product (AP) Curve -

(a)
From above
(b)
From below
(c)
MP does not cut AP at all
(d)
Nothing can be said

24 )

In agriculture, the land area is taken as constant, while number of workers can be increased. If we apply the Law of Variable Proportions in this situation, it means that the Variable Factor of Production is

(a)
Number of workers
(b)
Land
(c)
Both (a) and (b)
(d)
Neither (a) nor (b)

25 )

The Law of Variable Proportions is drawn under all of the assumptions mentioned below except the assumption that-

(a)
The Technology is changing
(b)
There must be some inputs whose quantity is kept fixed
(c)
We consider only physical inputs and not economically profitability in monetary terms
(d)
The technology is given and stable

26 )

The stage of Diminishing Returns applies from________to_________.

(a)
Origin to Point where AP is maximum
(b)
Point where AP is maximum to Point when TP is maximum
(c)
Point when TP declines and MP becomes negative.
(d)
All the above

27 )

Law of Diminishing Returns is not relevant when-

(a)
All labourers are equally efficient
(b)
The Time Period is short
(c)
All factory inputs are increased by the same proportion
(d)
Technology remains constant

28 )

In the initial stages, there will be increasing returns to scale, due to

(a)
Indivisibility of Factors
(b)
Specialisation in Factors
(c)
Both (a) and (b)
(d)
Neither (a) nor (b)

29 )

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

After the initial stages of increasing returns to scale, the Firm will experience -

(a)
Still Increasing Returns to Scale
(b)
Constant Returns to Scale
(c)
Diminishing Returns to Scale
(d)
None of the above

30 )

In electricity generation plants, when the plant grows too large risks of plant failure with regard to output increase disproportionately. Hence we are talking about which concept of returns to scale?