Theory of Production and CostPYQ - Nov 2018Question 42 of 20
All Questions

Law of variable proportion is valid when:

Options

AOnly one input is fixed and all other inputs are kept variable
BAll factors are kept constant
CAll inputs are varied in the same proportion
DNone of these
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Correct Answer

✅ Option a — Only one input is fixed and all other inputs are kept variable

All Options:

  • AOnly one input is fixed and all other inputs are kept variable
  • BAll factors are kept constant
  • CAll inputs are varied in the same proportion
  • DNone of these

About This Chapter: Theory of Production and Cost

Paper

Paper 4: Business Economics

Weightage

10%

Key Topics

Function, Cost Concepts (Short/Long Run)

This chapter explores how firms produce goods and services. It covers Production Functions, the Laws of Returns (Increasing, Constant, Diminishing), and all cost concepts including Total Cost, Average Cost, Marginal Cost, Fixed Cost, and Variable Cost. Understanding why the AC and MC curves are U-shaped is crucial for exam success.

View Official ICAI Syllabus

Exam Strategy Tip

The relationship between MC and AC curves is a favorite examiner topic. Remember: MC cuts AC at its minimum point. Also focus on the difference between Short Run and Long Run cost curves.

Related Comparison Tables

Fixed Cost vs Variable Cost: Cost Concepts

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