# Theory of Production (IEcoS (Economic Services) Economics Paper-1): Questions 1 - 6 of 19

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## Question number: 1

» Theory of Production » Factors of Production and Production Function

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Appeared in Year: 2011

Essay Question▾

### Describe in Detail

Given that the average revenue curve is a rectangular hyperbola, what will be the shape of the marginal revenue curve?

### Explanation

• When the Average Revenue Curve is a Rectangular Hyperbola, it means the Total Revenue of the Monopolist will remain constant for whatever price he may fix. Mathematically, the area under a rectangular hyperbola remains the same.
• In the given diagram, the product of PQ and P1Q1 is thus the same. When total revenue is fixed, marginal revenue is z

… (33 more words) …

## Question number: 2

» Theory of Production » Laws of Return, Returns to Scale and Return to Factors of Production

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Appeared in Year: 2011

### Write in Short

Consider a linear demand function where q = quantity demanded, p. = price per unit and . Find out the average and the marginal revenue and draw the diagram.

## Question number: 3

» Theory of Production » Forms of Production Functions

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Appeared in Year: 2011

### Write in Short

Consider a Cobb Douglas production function where K and L are respectively the capital and labour to produce output y. show that if all the factors are paid according to their marginal products, the total product will be enhausted if

## Question number: 4

» Theory of Production » Equilibrium of the Firm and Industry

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Appeared in Year: 2011

Essay Question▾

### Describe in Detail

If and are the demand and supply functions respectively, calculate the equilibrium price and the quantity. Hence calculate both consumers and producer’s surplus under equilibrium.

### Explanation

• The equilibrium is established at the point where demand is equal to supply. Thus, equating the demand and supply equations given, we get:

• Putting this in any one of the equations give wi

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## Question number: 5

» Theory of Production » Duality and Cost Function, Measures of Productive Efficiency of Firms

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Appeared in Year: 2011

### Write in Short

Establish mathematically the relationship between average cost (AC) and marginal cost (MC).

## Question number: 6

» Theory of Production » Equilibrium of the Firm and Industry

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Appeared in Year: 2013

Essay Question▾

### Describe in Detail

Why does a perfectly competitive firm keep on producing in the short run when it is incurring losses?

### Explanation

• Explain also when the firm will shut down. Use suitable diagram.

• In a perfectly competitive market, a firm is a price taker, that is, it can sell any amount of output at the prevailing market price. The equilibrium conditions are that MC = MR = Price and slope of MC should be greater than slope of MR. But the level of profits depends on the A

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