This unit covers short-run and long-run production functions, the Cobb-Douglas production function, the law of variable proportions, isoquants and the marginal rate of technical substitution, the iso-cost curve, optimal employment of inputs, and the laws of returns to scale.
Theory of Production
Theory of Production
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Nov 7, 2026
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1.
Asked in 2077 (2 marks)
What is production function?
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2.
Asked in 2077 (10 marks)
Explain the laws of returns to scale.
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3.
Asked in 2078 (2 marks)
Let \( c = \text{Rs. } 2000, r = \text{Rs. } 50, w = \text{Rs. } 40 \). Determine the slope of iso-cost line.
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4.
Asked in 2078 (10 marks)
Let, production function, \( Q = 14L + 7L^2 - L^3 \). Compute TP, AP and MP, graph them and explain three stages of production with proper reasons.
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5.
Asked in 2079 (2 marks)
What are the causes for the operation of the law of increasing returns?
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6.
Asked in 2079 (15 marks)
Describe the significance of production function in business decision-making. How do firms achieve optimal employment of two variable inputs? Explain.
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