**Very Short Answer Question:**

**1). Define production.****Ans:** Production refers to the process of creating goods and services using various inputs such as labor, capital, and raw materials to satisfy human wants and needs.**2). What is meant by production function?Ans: **A production function describes the relationship between inputs (such as labor and capital) and outputs (goods or services) in the production process. It shows how much output can be produced with given quantities of inputs.

**3).** **Define total product.Ans: **Total product refers to the total quantity or output of goods produced by a firm within a specific period of time using a given amount of inputs.

**4). What is meant by average product?Ans: **Average product is the output produced per unit of input (such as per worker or per machine) in the production process. It is calculated by dividing total product by the quantity of input used.

**6). What is the law of variable proportions?Ans: **The law of variable proportions states that as more of a variable input (like labor) is added to fixed inputs (like capital), the marginal product of the variable input will eventually diminish, assuming other factors remain constant.

**7). What is increasing returns to scale?Ans: **Increasing returns to scale occur when an increase in all inputs by a certain percentage leads to a more than proportionate increase in output. This means that doubling inputs more than doubles the output.

**5). What do you mean by marginal product?Ans: **Marginal product is the additional output produced by using one more unit of input, while keeping other inputs constant. It indicates the change in total product due to a change in the quantity of input.

**8). What is constant returns to scale?Ans: **Constant returns to scale occur when an increase in all inputs by a certain percentage leads to an equal percentage increase in output. In other words, doubling inputs exactly doubles the output.

**9). Give any one difference between the law of variable proportions and the law of returns to scale.Ans: **The law of variable proportions focuses on changes in output due to varying levels of a single input (like labor), while the law of returns to scale examines changes in output resulting from proportional changes in all inputs (capital, labor, etc.)

**Short Answer Question :**

**1. What is production function? Explain its types.****Ans: Production Function:** A production function describes the relationship between inputs (such as labor and capital) and output (goods or services) in the production process. It quantifies how much output can be produced from different combinations of inputs.**Types of Production Function:**

**Linear Production Function:**

Output increases at a constant rate with each additional unit of input. Mathematically, it can be represented as Q = a + bL + cK, where Q is output, L is labour input, K is capital input and a, b ,c are constants.**Cobb-Douglas Production Function: **

Represents a specific form of production function where output is a function of labor and capital raised to certain exponents. It is expressed as$Q=A.{L}^{\alpha}.{K}^{\beta}$, where A istotal factor productivity,$\alpha \beta $are output elasticities of labor and capital, respectively.

**2. What is total product? Derive the total product curve with the help of a table.****Ans:** **Total Product:** Total product refers to the overall output produced by a firm using a specific quantity of inputs over a given period.

**Table Example:**

Units of Labor (L) | Units of Capital(k) | Total Product (Q) |

0 | 1 | 0 |

1 | 1 | 10 |

2 | 1 | 25 |

3 | 1 | 37 |

4 | 1 | 46 |

**The total product curve slopes upwards initially, reflecting increasing returns to scale as more units of labor are employed.**

**3. Define average product. Derive average product curve with the help of a table.****Ans: Average Product:** Average product is the output produced per unit of input, calculated as total product divided by the quantity of input used.specific quantity of inputs over a given period.

**Table Example:**

Units of Labor (L) | Units of Capital(k) | Total Product (Q) |

0 | 0 | – |

1 | 10 | 10 |

2 | 25 | 12.5 |

3 | 37 | 12.33 |

4 | 46 | 11.5 |

**The average product curve initially rises, reaches a peak, and then declines due to diminishing marginal returns..**

**4. What do you mean by marginal product? Derive marginal product curve with the help of a table.****Ans:Marginal Product:** Marginal product is the additional output produced by using one more unit of input, while other inputs are held constant

**Table Example:**

Units of Labor (L) | Units of Capital(k) | Total Product (Q) |

0 | 0 | – |

1 | 10 | 10 |

2 | 25 | 15 |

3 | 37 | 12 |

4 | 46 | 9 |

**The marginal product curve initially rises, peaks, and then declines due to diminishing marginal returns.**

**5. Describe the nature of marginal production curve.****Ans: **The marginal product curve initially rises due to increasing returns to the variable input (labor), where each additional unit contributes more to total output. It reaches a maximum point and then declines due to diminishing marginal returns, indicating that each additional unit of input adds less to total output.

**6. Explain the law of decreasing returns to scale.****i) Law of Decreasing Returns to Scale:** This law states that if all inputs in the production process are increased by a certain proportion, the resulting increase in output will be less than proportional. In other words, doubling all inputs does not double the output; instead, it increases output by less than double.**ii) Explanation:** When a firm increases its scale of production by expanding all inputs (such as labor, capital, and raw materials) by a certain percentage, it may initially experience increasing returns to scale where output increases at a greater rate than inputs. However, as production continues to expand, diminishing marginal returns set in, leading to a situation where additional units of input contribute less to output growth. Eventually, the firm may reach a point where increasing inputs further results in even smaller increases in output or potentially no increase at all.

**7. Explain diagrammatically the law of increasing returns to scale.****i) Law of Increasing Returns to Scale:** Increasing returns to scale occur when increasing all inputs in a production process by a certain proportion leads to a more than proportional increase in output.**ii)** **Diagrammatic Representation:**In the diagram, output (Q) increases more than proportionately as inputs (L and K) are increased. This indicates that doubling inputs results in more than a doubling of output, showing increasing returns to scale.

**8. Describe constant returns to scale.****i)** **Constant Returns to Scale:** Constant returns to scale occur when increasing all inputs in a production process by a certain proportion results in an exactly proportional increase in output.**ii) Explanation:** If a firm doubles all inputs—such as doubling labor, capital, and other resources—the resulting output also doubles proportionally. This implies that the production function exhibits constant returns to scale, maintaining a linear relationship between inputs and outputs. Graphically, a constant returns to scale production function would appear as a straight line through the origin when plotted, indicating consistent output increases relative to input increases.

**Long Answer Question:**

**1. Explain the concept of total product, average product, and marginal product with the help of a figure.Ans: Total Product (TP):** Total product refers to the overall output or quantity of goods produced by a firm using a specific quantity of inputs (such as labor and capital) during a given period. It is represented as the sum of all marginal products at each level of input.

**Average product is the output produced per unit of input. Mathematically, it is calculated as total product divided by the quantity of input used. AP initially rises, reaches a peak, and then declines due to diminishing marginal returns.**

__Average Product (AP):__**Marginal product is the additional output produced by using one more unit of input, while keeping other inputs constant. MP initially increases, reaches a maximum, and then declines due to diminishing marginal returns.**

__Marginal Product (MP):__

__Figure Explanation:__In the figure, Total Product (TP) increases at a decreasing rate due to diminishing marginal returns. Average Product (AP) initially rises, peaks, and then declines as marginal product falls below average. Marginal Product (MP) initially increases, peaks, and then decreases, crossing the AP curve at its maximum point.

**2. State and explain the law of variable proportions.**** i) Law of Variable Proportions:** Also known as the law of diminishing returns, this law states that if a firm varies one input (like labor) while keeping all other inputs constant, there will be an initial stage of increasing returns, followed by diminishing returns, and eventually negative returns.

**Initially, increasing returns occur as additional units of the variable input (e.g., labor) enhance productivity due to specialization and division of labor. This leads to higher marginal product and total product. However, beyond a certain point, diminishing returns set in as the fixed inputs (e.g., capital) become over-utilized relative to the variable input, causing marginal product to decline. Eventually, negative returns occur where additional units of the variable input lead to a decrease in total product.**

__ii) Explanation:__**3. Explain the three stages of laws of variable proportions with diagram.****Ans: Three Stages:**__i)__**Stage of Increasing Returns:** In this stage, additional units of the variable input lead to increasing marginal product and total product. This is due to specialization and more efficient use of fixed inputs.** ii) Stage of Diminishing Returns:** As more units of the variable input are added, marginal product starts to decline while remaining positive. Total product continues to increase but at a decreasing rate.

**Beyond a certain point, adding more units of the variable input results in negative marginal product and a decrease in total product. This occurs due to over-utilization of fixed inputs and inefficiencies in production.**

__iii) Stage of Negative Returns:__**Diagram Explanation:**

The diagram illustrates the three stages: increasing returns where TP increases at an increasing rate, diminishing returns where TP increases at a decreasing rate, and negative returns where TP starts to decline.

**4. State and explain the laws of returns to scale.**** Laws of Returns to Scale:** Returns to scale refer to the effect of increasing all inputs in the production process by a certain proportion on the output. There are three main types:

**If all inputs are increased by a certain percentage, output increases by more than that percentage. This can result from economies of scale and efficient use of resources.**

__i) Increasing Returns to Scale:__**If all inputs are increased by a certain percentage, output increases by the same percentage. This implies a linear relationship between inputs and outputs, maintaining production efficiency.**

__ii) Constant Returns to Scale:__**If all inputs are increased by a certain percentage, output increases by less than that percentage. This occurs when production becomes less efficient with larger scale operations.**

__iii) Decreasing Returns to Scale:__**These laws help in understanding how changes in the scale of production impact overall efficiency and output. They are crucial for firms in determining optimal production levels and resource allocation strategies.**

__Explanation:__