Production Function Class 11 Important Questions

Production function is a small chapter yet very important. One question of 3/4 marks comes for sure. Here are the Production Function Class 11 Important Questions.

1 Mark Questions

1. What is a production function?

Ans: A production function shows the relationship between inputs (factors of production) and output.

2. What are the two types of factors of production?

Ans: Fixed factors and variable factors.

3. Give two examples of fixed factors.

Ans: Land and machinery.

4. Give two examples of variable factors.

Ans: Labor and raw materials.

5. What is meant by the short run in production?

Ans: The short run is a period in which at least one factor of production remains fixed.

6. What is meant by the long run in production?

Ans: The long run is a period in which all factors of production are variable.

7. What is the law of variable proportions?

Ans: It states that when more units of a variable factor are added to a fixed factor, the output increases at first but eventually starts diminishing.

8. What happens to total product (TP) when marginal product (MP) is negative?

Ans: TP starts declining.

9. What is total product (TP)?

Ans: TP is the total quantity of output produced by all inputs used in production.

10. What is marginal product (MP)?

Ans: MP is the additional output produced by employing one more unit of a variable factor.

11. What is average product (AP)?

Ans: AP is the output per unit of a variable factor, calculated as AP = TP / units of variable factor.

12. When is average product (AP) maximum?

Ans: When marginal product (MP) equals average product (MP = AP).

13. What happens to marginal product (MP) in the stage of increasing returns?

Ans: MP increases.

14. What happens to marginal product (MP) in the stage of diminishing returns?

Ans: MP decreases but remains positive.

15. What happens to marginal product (MP) in the stage of negative returns?

Ans: MP becomes negative.

16. What is meant by returns to a factor?

Ans: It refers to the change in output when a variable factor is increased while keeping other factors fixed.

17. What is the law of diminishing returns?

Ans: It states that as more units of a variable factor are added to a fixed factor, the marginal product starts declining after a point.

18. In which stage does a rational producer operate?

Ans: In Stage II, where total product is increasing at a diminishing rate.

19. What is meant by increasing returns to a factor?

Ans: When additional units of a variable factor lead to a more than proportionate increase in output.

20. What is meant by diminishing returns to a factor?

Ans: When additional units of a variable factor lead to a less than proportionate increase in output.

3/4 Marks Questions

1. What is meant by variable factor and fixed factor? Give two examples of each.

A variable factor is an input that can be changed in the short run to adjust the level of output. Examples include labor and raw materials.

A fixed factor is an input that remains constant in the short run regardless of the level of production. Examples include land and machinery.

2. Define the following terms:

i) Total Product (TP):
Total Product refers to the total quantity of output produced by a given amount of inputs during a specific period.

ii) Average Product (AP):
Average Product is the output per unit of a variable factor, calculated as: AP=TotalProduct(TP)QuantityofVariableFactorAP = \frac{Total Product (TP)}{Quantity of Variable Factor}

iii) Marginal Product (MP):
Marginal Product is the additional output produced when one more unit of a variable factor is added, keeping other factors constant. It is calculated as: MP=TPn−TPn−1MP = TP_n – TP_{n-1}

where TP_n is the total product with ‘n’ units of input.

3. What is meant by returns to a factor? State the law of diminishing returns to a factor.

Returns to a factor refers to the change in output when the quantity of a single variable factor is increased while keeping other factors fixed.

Law of Diminishing Returns to a Factor: This law states that as more units of a variable factor are added to a fixed factor, the marginal product initially increases but eventually starts to decline. This occurs due to overutilization of the fixed factor, leading to inefficiencies in production.

4. Explain the relationship between marginal product and average product.

The relationship between marginal product (MP) and average product (AP) can be explained as follows:

• When MP is greater than AP, the AP rises.
• When MP is equal to AP, AP is at its maximum.
• When MP is less than AP, the AP falls.

Graphically, the MP curve cuts the AP curve at its highest point. This relationship helps determine the optimal use of inputs in production.

5. What is meant by returns to a factor? What leads to increasing returns to a factor? Explain.

Returns to a factor refers to the change in output when a single variable factor is increased while keeping other factors fixed.

Causes of Increasing Returns to a Factor:
Increasing returns to a factor occur in the initial stages of production due to:

1. Better utilization of fixed factors – Fixed resources like machines and land are used more efficiently.
2. Specialization and division of labor – More workers lead to specialization, increasing efficiency.
3. Improved coordination – Additional inputs help improve the production process.

This phase of increasing returns continues until the optimal use of fixed factors is reached.

6. What is meant by diminishing returns to a factor? Why does it occur?

Diminishing returns to a factor refers to the situation where, after a certain point, adding more units of a variable factor to a fixed factor leads to a declining marginal product.

It occurs due to the following reasons:

1. Overutilization of fixed factors – Too many workers or inputs lead to inefficiencies.
2. Limited substitution of factors – The fixed factor cannot be increased, limiting efficiency.
3. Declining coordination – As more workers are added, managing them becomes difficult, reducing productivity.

7. In which phase will a rational producer operate in the short run?

A rational producer will operate in Stage II of production (the phase of diminishing returns), where:

• Total Product (TP) is increasing at a decreasing rate
• Marginal Product (MP) is positive but declining
• Average Product (AP) is also decreasing

This is because, in Stage I, resources are underutilized, and in Stage III, marginal product becomes negative, leading to inefficiencies.

8. What does the law of variable proportions show? State the behavior of total product according to this law.

The Law of Variable Proportions states that when more units of a variable factor (e.g., labor) are added to a fixed factor (e.g., land), total output initially increases at an increasing rate, then at a decreasing rate, and finally starts declining.

Behavior of Total Product (TP):

1. Stage I: TP increases at an increasing rate due to better utilization of fixed factors.
2. Stage II: TP increases at a diminishing rate as efficiency starts declining.
3. Stage III: TP declines, meaning additional input leads to lower output.

9. What does the law of variable proportions show? State the behavior of marginal product according to this law.

The Law of Variable Proportions explains how output changes when a variable factor is increased while keeping other factors fixed.

Behavior of Marginal Product (MP):

1. Stage I: MP increases due to better utilization of fixed factors and specialization.
2. Stage II: MP declines as fixed factors become overutilized.
3. Stage III: MP becomes negative, meaning additional inputs reduce total output.

This law helps businesses determine the most efficient level of production.

6 Marks Questions

1. Explain the law of variable proportions with the help of total and marginal physical product curves.

The Law of Variable Proportions states that when additional units of a variable factor (e.g., labor) are added to a fixed factor (e.g., land), the output first increases at an increasing rate, then at a decreasing rate, and eventually starts declining.

Explanation with Total Product (TP) and Marginal Product (MP) Curves:

The law operates in three stages:

1. Stage I: Increasing Returns to a Factor
   • TP increases at an increasing rate.
   • MP is rising due to better utilization of fixed factors.
2. Stage II: Diminishing Returns to a Factor
   • TP increases but at a diminishing rate.
   • MP declines, though it remains positive.
   • This is the most productive phase for a rational producer.
3. Stage III: Negative Returns to a Factor
   • TP declines.
   • MP becomes negative, meaning additional inputs reduce output.

Diagram:

The Total Product (TP) curve first rises steeply, then flattens, and eventually declines.
The Marginal Product (MP) curve rises initially, then falls, and ultimately becomes negative.

(Draw a standard TP and MP graph with stages clearly marked.)

2. Explain the likely behavior of total product and marginal product when for increasing production only one input is increased while all other inputs are kept constant.

When only one input (e.g., labor) is increased while keeping other inputs (e.g., land, machinery) constant, production follows the Law of Variable Proportions:

Behavior of Total Product (TP):

1. Initially Increases at an Increasing Rate – Due to better coordination and specialization.
2. Increases at a Decreasing Rate – Fixed inputs start limiting further growth.
3. Eventually Declines – Excess labor leads to inefficiencies.

Behavior of Marginal Product (MP):

1. Initially Rises – Additional labor increases efficiency.
2. Starts Falling – Overcrowding of fixed inputs reduces effectiveness.
3. Becomes Negative – Too many workers reduce overall output.

This explains why firms should balance input use to avoid inefficiencies and maximize productivity.

3. Explain the law of diminishing returns with the help of a hypothetical schedule and diagram.

The Law of Diminishing Returns states that if a variable factor (e.g., labor) is added to a fixed factor (e.g., land), the additional output (marginal product) will eventually decrease after a certain point.

Hypothetical Schedule:

• Initially, TP increases rapidly, and MP is high.
• After a point, TP increases slowly, and MP starts declining.
• Eventually, TP remains constant or even declines, and MP becomes negative.

Diagram:

• TP Curve: Rises steeply, then flattens, and finally falls.
• MP Curve: Initially rises, then falls, and becomes negative.

(Draw a TP and MP graph to represent these trends.)

Conclusion:

This law highlights the importance of balanced resource allocation, as excessive use of one factor leads to inefficiencies.

Production Function Class 11 Notes Economics

4. Explain reasons for:

(i) Increasing Returns to a Factor:

Increasing returns to a factor occur in the initial stage of production when additional units of a variable factor (e.g., labor) lead to a more than proportionate increase in output. The reasons are:

1. Better Utilization of Fixed Factors – Fixed resources like machinery and land are used more efficiently when labor increases.
2. Division of Labor and Specialization – More workers allow specialization, leading to increased productivity.
3. Improved Coordination – Additional inputs improve the workflow, leading to better resource allocation.
4. Indivisibility of Fixed Factors – Some fixed resources (like large machinery) cannot be divided, so adding more variable inputs improves their efficiency.

(ii) Diminishing Returns to a Factor:

Diminishing returns occur in the second stage, where adding more units of a variable factor leads to a less than proportionate increase in output. The reasons are:

1. Overutilization of Fixed Factors – With too many workers and the same machinery, overcrowding reduces efficiency.
2. Limited Substitution of Factors – Fixed factors cannot be expanded in the short run, leading to declining productivity.
3. Decreasing Coordination and Management Issues – More inputs create difficulties in supervision, reducing efficiency.

5. Discuss the relationship between:

(i) Marginal Product (MP) and Total Product (TP):

• When MP increases, TP rises at an increasing rate.
• When MP starts declining but remains positive, TP rises at a decreasing rate.
• When MP is zero, TP reaches its maximum point.
• When MP becomes negative, TP starts declining.

🔹 Graphically, the MP curve cuts the TP curve at its maximum point.

(ii) Average Product (AP) and Marginal Product (MP):

• When MP > AP, AP rises.
• When MP = AP, AP is at its maximum.
• When MP < AP, AP falls.

🔹 Graphically, the MP curve cuts the AP curve at its highest point.

Conclusion:

• The relationship between MP and TP helps determine optimal production levels.
• The relationship between MP and AP helps in efficient input utilization.

6. Distinguish between:

(i) Variable Factors and Fixed Factors

(ii) Short Run and Long Run

Conclusion

This was all about Production Function Class 11 Important Questions. If you have any doubts, you can either join my telegram channel or ask your doubts directly in the comments.