UGC NET - Law of variable proportions and returns to scale One Line Questions & Answers

1. The Law of Variable Proportions is a short-run concept because: — Some factors are fixed

2. In Stage II of the Law of Variable Proportions, the marginal product is positive but decreasing, leading to: — An increase in total product at a decreasing rate

3. The concept of 'Diseconomies of Scale' occurs when: — Average cost increases as output increases

4. The shape of the Total Product curve in Stage II of the Law of Variable Proportions is: — Concave to the origin

5. A firm faces Diseconomies of Scale when its long-run average cost: — Increases as output increases

6. If all factors of production are increased by 10% and the output increases by more than 10%, this indicates: — Increasing Returns to Scale

7. When a firm is experiencing diminishing returns to a variable factor, it means that: — Each additional unit of the variable factor adds less to total output

8. Which of the following is NOT a reason for increasing returns to scale? — Management bottlenecks

9. If Average Product is rising, Marginal Product must be: — Rising and greater than Average Product

10. In the context of Returns to Scale, if average product is falling, then marginal product must be: — Falling and below average product

11. The Total Product Curve in Stage I of the Law of Variable Proportions: — Increases at an increasing rate

12. The Law of Variable Proportions assumes that all units of the variable factor are: — Homogeneous

13. A firm experiences Increasing Returns to Scale when its production function is: — Homogeneous of degree greater than 1

14. Constant Returns to Scale is associated with a production function that is: — Homogeneous of degree equal to 1

15. Diminishing Returns to Scale occurs when the production function is: — Homogeneous of degree less than 1

16. Diminishing Returns to Scale can arise from: — Management difficulties and coordination problems

17. If the marginal product is negative, the total product will: — Decrease

18. When a firm is operating under conditions of Increasing Returns to Scale, its average cost tends to: — Decrease

19. During Stage II of the Law of Variable Proportions, the total product: — Increases at a diminishing rate

20. When the marginal product of a factor is zero, the total product is: — Maximum

21. When a 10% increase in all inputs leads to a 10% increase in output, it signifies: — Constant Returns to Scale

22. If a 10% increase in all inputs results in an output increase of less than 10%, this is known as: — Diminishing Returns to Scale

23. In the Law of Variable Proportions, which factor is kept constant? — Land

24. Which of the following is an example of a variable factor in the short run? — Labor

25. The 'Law of Diminishing Marginal Returns' is a key component of which law? — Law of Variable Proportions

26. The Law of Variable Proportions is also known as: — Law of Diminishing Returns

27. Under Constant Returns to Scale, doubling all inputs will result in: — Exactly double the output

28. The Law of Variable Proportions describes the impact of changing one input on output while holding other inputs constant. This is fundamentally a _____ run concept. — Short

29. The Average Product Curve is at its maximum when: — Marginal Product = Average Product

30. The 'envelope curve' in the long run represents the: — Lower boundary of all short-run average cost curves

31. Returns to Scale is a concept related to the long-run production scenario where: — All factors of production are varied

32. Returns to Scale is a long-run concept because: — All factors are variable

33. The initial stages of production often exhibit Increasing Returns to Scale due to: — Specialization and division of labor

34. In Stage III of the Law of Variable Proportions, the marginal product is: — Zero or negative

35. Which of the following is an example of a fixed factor in the short run? — Factory building

36. If Average Product is falling, Marginal Product must be: — Falling and less than Average Product

37. Returns to Scale examines the impact of changing all inputs proportionally. This is fundamentally a _____ run concept. — Long

38. The Law of Variable Proportions applies in the: — Short run

39. Returns to Scale is a concept applicable to the: — Long run, when all factors are variable

40. The 'Law of Variable Proportions' is relevant for analyzing production decisions in the: — Short run, where at least one input is fixed

41. The 'Returns to Scale' concept is relevant for analyzing production decisions in the: — Long run, where firms can adjust all inputs

42. Which stage of the Law of Variable Proportions is characterized by increasing marginal product? — Stage I: Increasing Returns

43. Which stage of the Law of Variable Proportions is considered the 'economically rational' stage for a producer? — Stage II: Diminishing Returns

44. Which of the following is a cause of Diseconomies of Scale? — Bureaucracy and red tape

45. Which of the following is a key assumption of the Law of Variable Proportions? — The state of technology remains unchanged

46. The point where marginal product equals average product in the Law of Variable Proportions is: — The end of Stage II

47. The point where the Marginal Product Curve intersects the Average Product Curve from above signifies: — The maximum point of the Average Product Curve

48. The relationship between the Law of Variable Proportions and Returns to Scale is that: — Law of Variable Proportions is a short-run version of Returns to Scale

49. Which curve starts from the origin, rises, reaches a maximum, and then falls in the context of the Law of Variable Proportions? — Marginal Product Curve

50. The Law of Variable Proportions ultimately leads to diminishing marginal returns due to: — The fixed nature of at least one factor

Law of variable proportions and returns to scale - One Line Questions