Question

1) The relationship between inputs and outputs expressed mathematically are called production equations or total production equations? true or False

2) Capital and Labor are simultaneously complementary and substitutable inputs? true or False

3)Average Fixed Cost (AFC) is the total fixed cost divided by the quantity of inputs? true or False

4)Total Variable Cost (TVC) is the sum of all the costs that vary with outputs in the short run? true or False

5)Marginal cost is the slope of the total variable cost curve? true or False

6) Average Variable Cost (AVC) is equal to the total variable cost multiplied by the quantity of outputs? true or False

7)Average Total Cost (ATC) is equal to the total cost divided by the quantity of outputs? true or False

8)For a Perfectly Competitive Firm, Marginal Cost is equal to the current market price of its products? true or False

Answer 1

Ans) 1) Production function is the equation that expresses the relationship between inputs and outputs.

True.

2) Labour and capital are both complementary as well as substitute goods. On one hand, technology (like for eg- robots) replaces labour. On the other hand, more technology needs more labour (although skilled).

True.

3) AFC = FC ÷ Q. Here Q is quantity produced.

False.

4) Variable cost are the cost which depends upon the level of production. Eg- raw materials.

True.

5) Marginal cost curve is change in total cost divided by change in output. Or change in variable cost ÷ change in output.

False.

6) AVC = VC ÷ Q

False.

7) ATC = TC ÷Q

True.

8) For a Perfectly competitive firm, price is equal to marginal revenue. (P=MR).

False.