SSC CGL Finance – Theory of Production & Cost – Level 1 · Warm-up

← Back

SSC CGL Finance – Theory of Production & Cost – Level 1 · Warm-up – 12 questions, subject: Finance & Economics (Tier II Paper III). Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

Get daily current affairs & exam alerts – follow us YouTube WhatsApp Channel Telegram Channel Facebook Page Instagram
Share with friends & study groups
Link to this page from your website / blog (HTML code)
1.  
A production function shows the technical relation between:

Correct Answer: D [Physical inputs and physical output]

Explanation:

Q = f(L, K, …): inputs → output, in physical units.

2.  
The short run is a period in which:

Correct Answer: B [At least one factor of production is fixed]

Explanation:

In the short run some inputs (plant, machinery) cannot be changed.

3.  
Total product of 4 and 5 workers is 44 and 54 units. The marginal product of the 5th worker is:

Correct Answer: A [10 units]

Explanation:

Answer: 10 units. MP₅ = 54 − 44 = 10.

4.  
Six workers produce a total product of 84 units. Average product is:

Correct Answer: C [14 units]

Explanation:

Answer: 14 units. AP = TP/L = 84/6 = 14.

5.  
When marginal product of a factor is zero, total product is:

Correct Answer: B [At its maximum]

Explanation:

TP rises while MP > 0 and stops rising when MP = 0.

6.  
Which of these is a fixed cost for a factory in the short run?

Correct Answer: D [Rent of the factory building]

Explanation:

Rent does not change with output.

7.  
TFC = ₹ 90 and TVC = ₹ 150 at an output of 6 units. Average total cost is:

Correct Answer: C [₹ 40]

Explanation:

Answer: ₹ 40. ATC = (90 + 150)/6 = 40.

8.  
The shape of the average fixed cost (AFC) curve is:

Correct Answer: A [A rectangular hyperbola]

Explanation:

AFC × Q = TFC (constant) → rectangular hyperbola.

9.  
Total cost rises from ₹ 130 to ₹ 150 when output rises from 2 to 3 units. Marginal cost of the 3rd unit is:

Correct Answer: D [₹ 20]

Explanation:

Answer: ₹ 20. MC = ΔTC = 150 − 130 = 20.

10.  
For a price-taking firm under perfect competition, marginal revenue equals:

Correct Answer: A [Price (= average revenue)]

Explanation:

Each extra unit sells at the same price: P = AR = MR.

11.  
Implicit cost means:

Correct Answer: B [The opportunity cost of factors owned by the entrepreneur]

Explanation:

Imputed value of own land, capital, own salary forgone.

12.  
A firm earns 'normal profit' when:

Correct Answer: C [Total revenue just equals total economic cost (zero economic profit)]

Explanation:

Normal profit is the minimum return that keeps the firm in the industry; it is part of economic cost.

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Finance & Economics (Tier II Paper III) book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-finance-economics

📘 SSC CGL 2026 – General Studies – Finance & Economics (Tier II Paper III)
Here you get the answer with a one-line explanation. 1,064 original questions with worked answers · Part A Finance & Accounts and Part B Economics & Governance notes · practice sets + 3 mock tests
Get the book – ₹149 ₹299 →
Score: 0 Answered: 0 / 0