SSC CGL Finance – Theory of Production & Cost – Exam-Level Drill

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SSC CGL Finance – Theory of Production & Cost – Exam-Level Drill – 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.

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1.  
TVC = Q³ − 9Q² + 30Q. Marginal cost is minimum at Q =

Correct Answer: B [3]

Explanation:

MC = 3Q² − 18Q + 30 → minimum at Q = 18/6 = 3.

2.  
For TVC = Q³ − 9Q² + 30Q, the short-run shutdown price is:

Correct Answer: D [₹ 9.75]

Explanation:

AVC = Q² − 9Q + 30, minimum at Q = 4.5: 20.25 − 40.5 + 30 = 9.75.

3.  
A competitive firm with the cost table TC (0–6 units) = 60, 100, 130, 150, 180, 230, 300 faces a price of ₹ 40. At its best output it:

Correct Answer: A [Produces 4 units with a loss of ₹ 20]

Explanation:

P = 40 > min AVC (30): produce.

4.  
Q = 4L0.5K0.5. With L = 16 and K = 25, output is 80. If both inputs are doubled, output becomes:

Correct Answer: C [160]

Explanation:

Exponents add to 1 → constant returns: output doubles to 160.

5.  
A firm's revenue is ₹ 8,40,000; explicit costs ₹ 5,10,000; implicit costs ₹ 2,10,000. Economic profit is:

Correct Answer: A [₹ 1,20,000]

Explanation:

8,40,000 − 5,10,000 − 2,10,000 = 1,20,000 (accounting profit = 3,30,000).

6.  
Assertion–Reason
A: In the short run a firm may keep producing even at a loss.
R: If price covers AVC, the loss from producing is smaller than the TFC lost by shutting down.

Correct Answer: C [Both A and R are true and R explains A]

Explanation:

Shutting down still costs TFC; covering AVC reduces the loss below TFC.

7.  
Match the followingMatch the internal economy with its source:
P. Technical Q. Managerial R. Financial
1. Specialist managers for each function 2. Large, indivisible machines 3. Cheaper and easier borrowing

Correct Answer: D [P-2, Q-1, R-3]

Explanation:

Technical = machines/plant; managerial = specialisation of management; financial = credit terms.

8.  
Isoquant L × K = 64, wage ₹ 4, price of capital ₹ 16. At the least-cost combination, capital used is:

Correct Answer: B [4 units]

Explanation:

K/L = w/r = 1/4 → L = 16, K = 4 (cost 64 + 64 = ₹ 128).

9.  
The short-run supply curve of a perfectly competitive firm is:

Correct Answer: C [The part of the MC curve above minimum AVC]

Explanation:

Below minimum AVC it supplies nothing; above it, P = MC.

10.  
All inputs are increased by 20% and output rises by 30%. Returns to scale are:

Correct Answer: D [Increasing]

Explanation:

Output rises by a larger proportion than inputs.

11.  
AP of 5 workers is 20 units and AP of 6 workers is 19 units. MP of the 6th worker is:

Correct Answer: B [14 units]

Explanation:

Answer: 14 units. TP: 100 → 114; MP = 14.

12.  
Reverse questionAt Q = 10, ATC = ₹ 28 and AVC = ₹ 22. Total fixed cost is:

Correct Answer: A [₹ 60]

Explanation:

AFC = 6 → TFC = 6 × 10 = ₹ 60.

➤ 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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