Theory of Production and CostPYQ - Nov 2019Question 44 of 20

Which of the following is considered production in Economics?

Options

ATilling of soil

BSinging a song before friends

CPreventing a child from falling into a manhole on the road

DPainting a picture for pleasure

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Correct Answer

✅ Option a — Tilling of soil

All Options:

ATilling of soil
BSinging a song before friends
CPreventing a child from falling into a manhole on the road
DPainting a picture for pleasure

Detailed Solution & Explanation

To determine which option is considered production in Economics, we need to understand what production means in the context of economics. • Production refers to the process of creating goods or services that have value and can be used to satisfy human wants. • In economics, production involves the transformation of inputs into outputs, which can be either goods or services. • The key characteristic of production is that it creates something of value that can be used by others. The correct answer is the option that involves creating something of value, which is tilling of soil, as it is a process that prepares the land for cultivation and can lead to the production of crops. Options like singing a song before friends or painting a picture for pleasure are not considered production because they are not creating goods or services that have economic value, even though they may have personal value to the individual. • Preventing a child from falling into a manhole is also not considered production, as it is an act of protection rather than creation of value.

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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