 # BBA 1st Sem Production Very Short Answers Questions Study Material

BBA 1st Sem Production Very Short Answers Questions Study Material Q.1. What do you mean by production?

Ans. The creation of utility for the satisfaction of human wants is known as production in economics.

According to Fraser, “Creation of utility in a goods is Productions.”

Q.2. What do you understand by production function?

Ans. The term function used in production function is a mathematical term implying the existence of inter-relationship between two variables. e.g., when we say that Y is a function of X when it means that ‘Y’ is dependent variable which depend upon the values of the independent variable X”. The functional relationship between X and Y is expressed briefly in the following manner:

Y = f (X)

Q.3. Give the characteristics of production function.

Ans. Following are the characteristics of production function :

(a) Production function expresses the relationship between the physical quantities of inputs and outputs.

(b) In the production function output is dependent variable while input are independent variables.

(c) The production function is completely independent of the price of output and prices of inputs.

(d) Production function is related with the time period also and its shape changes with a change in production period.

Q.4. Write the main factors of production.

Ans. The main factors of production are :

(a) Land

(b) Labour

(c) Capital

(d) Entrepreneur.

Q.5. What is Marginal Cost (MC)?

Ans. Marginal cost means the increase in total cost of Production as a result of producing an additional unit. In other words, if one unit is produced more or less, the change on the total cost of production will be marginal cost.

Q.6. What are the three assumptions of law of diminishing return?

Ans. The three assumptions of law of diminishing return are:

(a) During production process, technology remains unchanged.

(b) All the units of variable factors of production are homogeneous.

(c) Organizational set-up and entrepreneurs efficiently remain unchanged.

Q.7. Define isoqusant.

Ans. An isoquant is the locus of all such points which represent those combination of the factors of production that are capable of producing the same quantity of output. In the words of Keirstead, “Isoquant curve represents all possible combination of the two factors will give the sum total product.”

Q.8. Explain the law of diminishing return.

Ans. “Law of diminishing return explains, “An increase in the capital and labour applied in cultivation of land causes in general a less than proportionate increase in the amount of product raised unless it happens to coincide with an improvement in the arts of agriculture.”

Q.9. Explain law of increasing returns.

Ans. According to Dr. Marshall, “An increase of labour and capital leads generally to improved organization, which increases the efficiently of the work of labour and capital.”

Q.10. Define law of constant return.

Ans. The law of constant return is purely a temporary tendency that appears for a short period only at the middle phase of the law of increasing and diminishing returns.

According of Marshall “The law is an operation when all of the productive services are increased in the same proportion.”

Q.11. What is shut down point?

Ans. In economics, a firm will shut down production when the revenue received from the sale of the goods or services produced cannot even cover the variable costs of production. In that situation the firm will experience a higher loss when it produces compared to not producing at all.

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