SSC CGL Finance – Theory of Production & Cost – Level 3 · Challenge

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SSC CGL Finance – Theory of Production & Cost – Level 3 · Challenge – 8 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.

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1.  
Total product with 1 to 8 workers (capital fixed): 10, 24, 39, 52, 60, 64, 64, 60. Stage III (negative returns) begins with the:

Correct Answer: B [8th worker]

Explanation:

MP: 10, 14, 15, 13, 8, 4, 0, −4.

2.  
TC = 80 + 40Q − 10Q² + Q³. AVC is minimum at Q =

Correct Answer: D [5]

Explanation:

AVC = Q² − 10Q + 40 → minimum at Q = 10/2 = 5.

3.  
For TC = 80 + 40Q − 10Q² + Q³, the minimum value of AVC (the shutdown price) is:

Correct Answer: C [₹ 15]

Explanation:

AVC(5) = 25 − 50 + 40 = 15 (= MC at Q = 5).

4.  
Isoquant L × K = 50; wage ₹ 2, price of capital ₹ 4. The least cost of producing this output is:

Correct Answer: A [₹ 40]

Explanation:

Tangency K/L = w/r = 1/2 → L = 10, K = 5 → cost 20 + 20 = ₹ 40.

5.  
True/false countHow many statements are true?
(i) TFC is positive even at zero output.
(ii) AVC and ATC come closer as output rises.
(iii) MC depends on TFC.
(iv) When AP is falling, MP is below AP.

Correct Answer: C [Three]

Explanation:

(iii) is false: MC = ΔTVC, so TFC does not affect it.

6.  
TFC = ₹ 60. Output rises from 4 to 8 units. AFC falls by:

Correct Answer: D [₹ 7.5]

Explanation:

AFC: 60/4 = 15 → 60/8 = 7.5; fall = 7.5.

7.  
Using the cost table (ATC for 1–6 units: 100, 65, 50, 45, 46, 50), the break-even price for a competitive firm is:

Correct Answer: A [₹ 45]

Explanation:

Break-even (zero economic profit) at minimum ATC = ₹ 45.

8.  
Diagram-basedThe figure shows AFC, AVC, ATC and MC.
Which curve is AFC?

Correct Answer: B [Curve D]

Explanation:

AFC is the only curve that falls continuously (rectangular hyperbola) – curve D.

➤ 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
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