Rajasthan Board RBSE Class 12 Economics Chapter 6 Production Function
RBSE Class 12 Economics Chapter 6 Practice Questions
RBSE Class 12 Economics Chapter 6 Multiple Choice Questions
Question 1.
Production function defines the relationship between which two variables ?
(a) Inputs and outputs
(c) Demand and cost
(b) Supply and cost
(d) Consumption and income
Answer:
(a)
Question 2.
Which relationship between means and product is defined by production function?
(a) Quantitative
(b) Qualitative
(c) Economic
(d) None of these
Answer:
(a)
Question 3.
On the basis of time period, production and functions are :
(a) short-term
(b) long-term
(c) medium-term
(d) Both (a) and (b)
Answer:
(d)
Question 4.
Who did not use the term “law of diminishing marginal production”?
(a) Mrs. Joan Robinson
(b) Marshall
(c) Stigler
(d) E.H. Chamberlin
Answer:
(d)
Question 5.
In the production function P = f (L, K, N, T, E), what does the line drawn above the factors of production mean?
(a) Factors below the straight line are variable
(b) Factors below the straight line are constant
(c) Factors below the straight line are uniform
(d) None of these
Answer:
(b)
RBSE Class 12 Economics Chapter 6 Very Short Answer Type Questions
Question 1.
What is function?
Answer:
Function means the quantitative relationship found between two variables (independent and dependent variables).
Question 2.
What is production function?
Answer:
Production function expresses the technical relationship between production inputs and the final product. It shows the fundamental relationship between quantity of production and means of production for a given time period.
Question 3.
According to time period, what are the types of production functions?
Answer:
Production functions are of two types according to time period. These are:
- Short-term production function
- Long-term production function.
Question 4.
What does input mean?
Answer:
Inputs imply the means of production.
Question 5.
What is meant by scale?
Answer:
Scale can imply any one specific unit of measurement, like metre, litre, kilogram, hectare, etc.
RBSE Class 12 Economics Chapter 6 Short Answer Type Questions
Question 1.
Explain in brief the concept of production function.
Answer:
The production of any commodity depends on the means of production. Thus, the relationship between the means of production and its production is called production function. It defines the physical relationships between quantity of production and means of production in a given time period. It is a quantitative relationship, not a qualitative one.
Question 2.
Explain in brief the characteristics of production function.
Answer:
Following are the main characteristics of production function:
- Production function is an engineering concept.
- Production fundction is cost independent, i.e. it is not dependent on costs.
- Production function is related to the flow of means and production.
- On the basis of time period, it is short-term and long-term.
- Production function relates to a fixed time factor.
- It is related with the given technology.
- Production function accepts the substitution possibilities of means of production.
Question 3.
Describe the assumptions of production function.
Answer:
The following are the assumptions of production function :
- There should be no change in the level of technical knowledge.
- The costs of means of production should remain the same.
- Production function is related to a definite time period.
- The means of production should be divisible.
- The most efficient techniques of production should be employed.
- The means of production can be substituted upto a limited extent.
- There is uniformity among the means of production.
- The objective of the firm should be maximization of production.
Question 4.
Between law of diminishing marginal production or law of returns of variable proportions of means, which term according to you, is correct and why? Explain in brief.
Answer:
Economists like Adam Smith, Prof. Marshall and Ricardo related the law of diminishing marginal production with agriculture. They were of the view that if no improvement is made in agricultural techniques, then by increasing the quantity of labour and capital used on land, there will be less increase in general proportion of total produce. Modern economists do not agree with this concept. According to modem economists, this law applies in the sphere of manufacturing. The supporters of this ideology are economists John Robinson, Benham, Stigler, Bolding, etc.
According to modem economists, this law is ultimately applicable to every field of production. Initially, the production increase law applies, then, the law of equal production, and finally diminishing production law applies. Hence, these economists call this ideology “the law of returns of the variable proportions of means”. This name seems more appropriate, since it explains all the three states of production.
Question 5.
Explain in brief the difference between returns to scale and returns to expenditure outlay.
Answer:
In the case of returns to scale, changes are made in all sources by equal proportion or percentage, not by different proportions or percentages. As such, changes are not made in land area by 20%, capital by 10% and workers by 50%. When the means of production are converted according to the expenses incurred on them in equal or varying proportion, then it is known as the Return of Outlay/Expenditure.
RBSE Class 12 Economics Chapter 6 Essay Type Questions
Question 1.
Explain in detail the concept of production function.
Answer:
The functional relationship between physical input and physical output of a firm with a given state of technology is known as Production Function. A production function is a mathematical statement used to describe the technological relationship between input and output in physical terms. In its general form, it tells that production of a commodity depends on certain specific inputs. It presents the quantitative relationship between input and output. Besides, the production function represents the technology of a firm, of an industry, and of the economy as a whole. A production function may take the form of a schedule or table, a graphed line or curve, an algebraic equation or a mathematical model. But each of these forms of a production function can be converted into its other forms.
Definition of Production Function
The concept of production has been differently defined by different economists as stated below:
1. In words of Alfa. C. Chiang, “Function is a group of combination for variables (independent and dependent) in a specific order. The specialty of this function is that any value of X determines a unique value of Y.”
2. In words of Henderson and Quandt, “Production function is an engineering concept which explains the relationship between input and output. This relation is quantitave and assumes unchanging technology”.
3. As per Dr Balwant Kandoi, “If quantity of production is Q and the factors of production like labour, capital, land, management and technique (Ld, L, K, O, T) are used, then we will write the Production function as:
Y = f (Ld, L,K,0, T)”
4. According to the N Gregory Mankiw, “Relationship between factors of production or inputs and outputs is production function”.
5. According to Watson, “The production function is the relationship between a firm’s physical production (output) and the material factors of production (inputs) necessary to produce it.”
Features of Production Function
Production function has the following main features:
- It indicates a functional relationship between physical input and physical output of a firm.
- The production function is always in context to a period of time.
- The production function can specify either the maximum output that can be produced from a given set of inputs or the minimum quantity of inputs required to produce a given level of output.
- Production function is purely a technical relationship. It has no reference to cost of inputs or costs of products.
- Output in the production function is the result of combined use of factors of production.
- The production function includes all the technically efficient methods of production.
Assumptions of Production Function
- It presumes a fixed given technology.
- The costs of means of production remain the same.
- Production function presumes a definite time period.
- Combinations of factors of productions can be changed to an extent only.
- Factors of production are homogenous, i.e., labour = labour and capital = capital.
- Factors of production are variable.
- Substitutability of factors of production is upto a limited extent.
- The objective of firm is output maximization.
Question 2.
While differentiating the short-term and long-term production function, explain each in detail.
Answer:
Short-term: Short-term is a period in which some factors are fixed and some factors are variable. Fixed factors have fixed cost and variable factors have variable cost.. Therefore, law of variable proportion applies here. In short-term, output can be increased or decreased by changing variable factors only, but fixed factors cannot be varied.
The distinguishing characteristics of short-term is that certain factor-inputs are fixed in character, while other factor inputs are variable in nature only. The level of production can be changed. The scale of production cannot be changed.
The behavior of output when one output and one input is varied and others are held constant, is studied under the ‘law of variable proportions’. It is also known as the ‘Law of Diminishing Returns’ and the ‘Law of Non-proportional Returns.’
Long-term: Long period or long-term is defined as that period of time in which all factors of production or inputs are variable. Distinction between fixed and variable inputs obtains only in the short-term. In the long-term, all inputs become variable, i.e. the scale of production itself can be changed by installing new plant and equipment and hiring more labour and other factor inputs.
The behaviour of output when all inputs are varied, is studied under the “law of returns to scale”.
RBSE Class 12 Economics Chapter 6 Other Important Questions – Answers
RBSE Class 12 Economics Chapter 6 Multiple-Choice Questions
Question 1.
In short-term production function
(a) every factor is constant
(b) every factor is varied
(c) some are constant and some are varied
(d) None of these
Answer:
(c)
Question 2.
In long-term production function-
(a) every factor is constant
(b) every factor is varied
(c) some are constant and some are varied
(d) None of these
Answer:
(b)
Question 3.
Production function means-
(a) variations in the factors
(b) growth in production
(c) the relationship between factors and production
(d) None of these
Answer:
(c)
Question 4.
The relationship of law of variable proportions is applicable in :
(a) short term
(b) long term
(c) both Short term and Long term
(d) None of these
Answer:
(a)
Question 5.
This is not the characterstic of production function :
(a) Production function is cost independent.
(b) Production function is an engineering concept.
(c) Production function is the subject of Administrative economics.
(d) Production function is a time independent concept.\
Answer:
(c)
Question 6.
The word “Function” is derived from-
(a) sociology
(b) maths
(c) physics
(d) none of these
Answer:
(b)
Question 7.
“Function” means-
(a) quantitative relation between dependent and independent variables
(b) qualitative relation between two variables
(c) quantitative and qualitative difference between two variables
(d) none of the above
Answer:
(a)
Question 8.
The product that is produced in economics is called-
(a) input or means
(b) output or produce
(c) input and output
(d) none of these
Answer:
(b)
RBSE Class 12 Economics Chapter 6 Very Short Answer Type Questions
Question 1.
What is short term?
Answer:
Short term is the time period during which a firm can make changes only in its variable factors but not in its fixed factors.
Question 2.
What is long term?
Answer:
Long period or long-term is defined as that period of time in which all the factors of production or inputs are variable.
Question 3.
What do you mean by short term production function?
Answer:
When one production factor is changed while keeping all other factors constant, it is called short-term production function.
Question 4.
What do you mean by long-term production function?
Answer:
In long term, all the means of production are variable. The relation between production and its factors in this period is called long-term production function.
Question 5.
The law of variable proportions is related to which time period?
Answer:
It is related to short time period.
Question 6.
“Scale Return” is related to which time period?
Answer:
It is related to long time period.
Question 7.
On the basis of time period, production function is of how many types? Ans. On the basis of time period, production function is of two types-
- Short-term production function
- Long-term production function.
Question 8.
State two assumptions of production function.
Answer:
- A fixed, given technology is used.
- Costs of means of production remain the same.
Question 9.
State two characterstics of production function.
Answer:
- It indicates a functional relationship between physical input and physical output of a firm.
- The production function is always applied in context to a certain period of time.
Question 10.
What do you mean by scale?
Answer:
Scale can be a particular unit of measurement, like metre, litre, kilogram, hectare, etc.
Question 11.
What do you mean by “Return to Scale”?
Answer:
In economics, return of scale is established on that situation in which all the means of production are converted into a certain ratio or percentage.
Question 12.
Who was the economist who first used the term “Law of Diminishing Marginal Production”?
Answer:
French Economist Prof. Turgot.
Question 13.
State two types of production function.
Ans.
Production function are of two types:
- Cobb-Douglas production function
- Linear-Homogenous production function.
Question 14.
What is the use of production function in economics?
Answer:
In economics, to make decisions for optimum production, the information about different alternative production functions of any goods and services is necessary.
Question 15.
State one difference between short-term and long-term production function.
Answer:
In short-term, the proportion of fixed and variable factors keeps on changing along with the change in production. On the contrary, in the long-term, all factor inputs can be varied,
Question 16.
How is the supply of fixed means of production in the short term?
Answer:
In short-term, the supply of fixed means of productionis in elastic.
Question 17.
The quantity of production of goods and services depends on which two factors?
Answer:
The quantity of production of goods and services depends on the following two factors –
- On cost of production factors.
- On production function.
Question 18.
State one definition of production function.
Answer:
According to the N Gregory Mankiw, “Relationship between the quantity of factors of production and quantity of production is production function”.
Question 19.
How can indicators of production function be written?
Answer:
P = F (L, K, Ld, M, T, C)
Where,
P = production function
F = Function
L = Labour
C = Capital
Ld = Land
M = Management
T = Technology
C = Courage or Entrepreneurship.
Question 20.
Which production function is considered to he the most important among different production functions?
Answer:
The Cobb-Douglas production function is considered to be the most important.
Question 21.
Cobb-Douglas production function was rendered by whom?
Answer:
This production function was rendered by Prof. C. W. Cobb and P.H.Douglas.
Question 22.
The concept of Production Function is the subject of which economics?
Answer:
The concept of Production Function is the subject of a static economics because under this, cost of factors, level of technical knowledge and the time period is taken to be constant.
Question 23.
Explain Production Function in a mathematical equation.
Answer:
Production Function can mathematically be stated through the following equation:
X = f (a, b, c….n)
Where, X = production level of the goods, a, b, c, etc. are the means of production like land, labour, capital, entrepreneurship, etc.
f = function.
Question 24.
The commodity that is produced by a firm is known by what name in economics?
Answer:
The commodity that is produced by a firm is known as Output in economics.
Question 25.
The means through which production is done is known as what in economics?
Answer:
The means through which production is done is called Input in economics.
RBSE Class 12 Economics Chapter 6 Short Answer Type Questions
Question 1.
State the meaning of “Function”.
Answer:
Function is a technical term of mathematics. It means the quantitative relationship between two variables (independent and dependent variable). Like y = f (x), in which y is a dependent variable, that depends on the independent variable x. It means that the value of y is dependent upon the value of x. It also means that y is that dependent variable which is mathematically related to the independent variable x.
Question 2.
State the definition of Function in words of Alfa. C. Chiang.
Answer:
In words of Alfa. C. Chiang, “Function is a group of combination for variables (independent and dependent) in a specific order. The specialty of this function is that any value of X determines a unique value of Y.”
Question 3.
State any two definitions of Production Function.
Answer:
Two definitions of Production Function are:
- In words of Henderson and Quandt, “Production function is an engineering concept which explains the technological relationship between physical inputs and outputs of the goods present in production”.
- According to the N Gregory Mankiw, “Relationship between factors of production and production is production function”.
Question 4.
State the difference between short-term and long-term production function.
Answer:
Short-term: Short-term is a period in which some factors are fixed and some factors are variable. Fixed factors have fixed cost and variable factors have variable cost.
Long-term: Long period or long-term is defined as that period of time in which all factors of production or inputs are variable. In the long-term, all inputs become variable, i.e. the scale of production itself can be changed by installing new plant and equipment and hiring more labour and other factor inputs.
In short-term, the proportion of fixed and variable factors keep on changing along with the change in production. On the contrary, in the long-term, all factor inputs can be varied.
Question 5.
State five types of Production Function.
Answer:
Five types of Production Function are:
(a) Linear Homogenous Production Function
(b) Cobb-Douglas Production Function
(c) Input-Output Production Function
(d) Activity analysis Production Function
(e) Transcendental – Logarithmic Production Function.
Question 6.
What is the significance of production function?
Answer:
The direct relation of production function is not with economics but with engineering, and to make decisions for optimum production, information about all the alternative production functions of any goods and services is necessary. This comparison only can give us the desired result, since with the comparison of production functions only, the ideal proportion of production means can be properly conceptualized.
Question 7.
What do you mean by short-term production period?
Answer:
Short-term is a period in which some factors are fixed and some factors are variable. Fixed factors have fixed cost and variable factors have variable cost. Therefore, law of variable proportions applies here. In short-term, output can be increased or decreased by changing variable factors only, but fixed factors cannot be varied.
The distinguishing characteristics of short-term is that certain factor inputs are fixed in character, while other factor inputs are variable in nature. The level of production can be changed. The scale of production cannot be changed.
Question 8.
What do you mean by long-term Production Function?
Answer:
Long period or long-term is defined as that period of time in which all factors of production or inputs are variable. Distinction between fixed and variable inputs is obtained only in the short-term. In the long-term, all inputs become variable, i.e. the scale of production itself can be changed by installing new plant and equipment and hiring more labour and other factor inputs.
Question 9.
What do you mean by “Returns to Outlay”?
Answer:
When factors of production are changed by different ratios or percentages on the basis of the overheads/expenses (outlays) ‘done on them, then it is called “Returns to Outlays”. Proportion or ratio of factor changes when outlays on factors of production are changed in an equal proportion or ratio.
Question 10.
“Production has a definitive technique”. Explain this assumption of production function.
Answer:
It is one of the main assumptions of production function, that the technique of production should not be varied. This is because, the production of goods is affected by the level of factors, along with the dependence on production technique. Better techniques result in better production of goods. When the technique is of lower grade, without even decreasing the level of factors, the production can be decreased. And that is why, with a definitive technique of production function, it can be said that what will be the effect on the level of production with the variation in level of production means.
Question 11.
“Production function is cost independent”. Explain.
Answer:
The Production function is only related to the physical quantities of the production. It has no relation with the costs of means of production or the produced goods. But still, this is also true that, when each producer decides the level of production and selects the combination of means, he always keep the price of goods and means in his mind.
Question 12.
Production function accepts the substitution possibilities of means. Clarify this statement.
Answer:
The concept of production function accepts that the substitution of means of production is possible, meaning that one factor can be used in place of means another. Example- capital can be used in place of labour.
Question 13.
Why is Production function considered as a subject of static economics ?
Answer:
Production function is considered as a subject of static economics because in the theories of Production function, the cost of means of production, the level of technical knowledge and time period is considered static. That is why, it is not a part of dynamic economics, but of static economics.
Question 14.
What do you mean by long-term Production function?
Answer:
Under long-term production function, the changes occurring in quantity of production as a result of changes in the quantities of all the means of production are studied. In long-term, all the means of production are variable, thus in long-term, the law of returns to scale applies.
Question 15.
State the difference between Returns to Scale and Returns to outlays.
Answer:
In conditions of returns to scale, the ratios of combination of factors of production remain constant as earlier. But in returns to outlays, the combination proportions change.
Question 16.
Why are the law of returns variable proportions and law of diminishing marginal production considered the same?
Answer:
Today, economists have started considering the law of returns of variable proportions and law of diminishing marginal production as one. According to the law of returns of variable proportions, with the use of fixed means along with the variable menas, the ratio of means get changed and its effect is visible on the production. This effect can be seen on the increasing returns, equal returns and diminishing returns, and the condition of increasing returns is in the initial stage only. Eventually, it means diminishing returns only. Therefore, both these laws are considered to be the same.
Question 17.
While expressing the production function in the form of formula, the symbols of which means of production in the-short term are highlighted with a line drawn above them?
Answer:
In the short-term production function, only labour is a variable factor. Rest means are constant. Therefore, other than the labour, every means is highlighted with a line drawn above them.
Question 18.
Show the status of the production function of variable proportions using a table.
Answer:
Table of production functions of variable proportions
It is clear from the above table that the quantity of land is fixed and the change is happening only in labour, as a result of which the total production is also changing. In this, the factor ratio varies constantly.
Question 19.
Show the status of the production function of fixed proportions asing a table.
Answer:
Table of production function of fixed proportions:
It is clear from the above table that changes in means in the long-term are in equal proportion. Their mutual proportion remains as earlier.
Question 20.
Is means of long-term production function, highlighted with a straight line in the formula?
Answer:
Ip the long-term production function, every means is variable, none of them is static. Therefore, there is no straight line drawn above the means in the formula of long-term production function. The formula of production function in this case is – P = f (L, Ld, K, T, E)
RBSE Solutions for Class 12 Economics Chapter 6 Essay Type Questions
Question 1.
State the difference between short-term and long-term production function.
Answer:
Following differences can be seen between short-term and long-term production function:
1. Short-term production function is related to the law of variable ratios, while long-term production function is relatted to the return of scale.
2. In the short-term production function, or law of variable ratios, some means are static while some are variable, because firms do not have that much time to make changes in every means. While in a long-term production function, every means is varied, since firms have that much time that they can vary every means. .
3. Short-term production function is real, because it can be seen in real, while long run production function is not real, since it is not really seen in any law.
4. In the short-term production function, the costs of variable means of production do not remain constant, while in the long-term production function, the price of produced commodity and cost of means are considered as constant.
5. The increased and decreased return in both the production functions are regulated through different reasons. In short-term production function, they are active because in this type of production, one mean is considered static while others are considered varied, and in long run production function, they are active due to the internal and external savings and the components.
Question 2.
State the definition of production function and also state its characterstics.
Answer:
Production function is the physical or quantitative relation between production and the means which contribute in production. Following are the definitions of production function-
1. In words of Henderson and Quandt, “Production function is an engineering concept which explains the relationship between input and output. This relation is quantitave and assumes a fixed, given technology”.
2. As per Dr Balwant Kandoi, “If quantity of production is Q and the factors of production like labour, capital, land, management and technique (Ld, L, K, O) are used, then we will write the Production function as:
Y = f (Ld, L, K, O)”
3. According to the N Gregory Mankiw, “Relationship between physical quantity factors of production or inputs and the production is production function”.
4. According to Watson, “The relationship between a firm’s physical production (output) and the material factors of production (inputs) necessary to produce it is called production function”.
On the basis of the above definitions, production function can be defined in simple terms as follows :
Production Function is the physical relation between Input and Output.
General characteristics of Production Function
1. Production Function is cost independent- Production Function has no relation with the price of produced goods and the cost of means used to produce them. Its relation is mainly with the physical quantities of production. Although, each producer, at the time of deciding the level of production or selecting the combination of means, always keeps the price of goods and means in his mind.
2. Production Function is an Engineering concept, not an economic concept- The task of Production Function is to interpret the relation between the means of production and the physical level of production. Therefore, it is considered as an Engineering concept, not on economic concept.
3. Production Function is a time dependent concept- The relation of production function is with a specific time period. It does not have any meaning if the time period is changed. That is why it is considered as a time dependent concept.
4. Production Function accepts the substitution possibilities of means – The concept of Production function accepts that the substitution possibilities of means of production exist, meaning one means can be used in place of another. Example- capital can be used in place of labour.
5. Production Function accepts the complete divisibility of means- Production Function accepts the complete divisibility of means; that means, it accepts that every mean of production can be divided.
6. Production Function is related to a definite given technique- The technique of production must not vary, it is based on the single technique. When the technique is of lower grade, without even decreasing the level of means, the production can be decreased.
7. Production Function is the subject of static economics- The concept of Production Function is the subject of static economics because under this, cost of means, level of technical knowledge and the timeline is considered to be constant.
8. Production Function is short-term or long-term on the basis of time period- Production Function is categorised as short-term or long-term on the basis of time period. There is a difference between these two types of production functions on the basis of proportion of means. In short-term, the ratio of varied and constant means keeps on changing with the production, while in long term, the ratio of every means remains equal.