Production and Costs Quiz - CBSE Class 12 Economics

Free practice quiz: Production and Costs (CBSE Class 12 Economics). 18 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

This CBSE Class 12 Economics practice quiz has 18 multiple-choice questions on Production and Costs, and 18 of them come with an explanation. Try the 5 sample questions below (tap an option to check yourself), then play the full quiz online. No sign-up needed.

Sample questions

1. What is the primary factor of production?

   1. Land
   2. Labor
   3. Capital
   4. Entrepreneurship
   Show answer

   Answer: A. Land

   Land is considered the primary factor of production because it encompasses all natural resources.

2. What does the term 'total cost' refer to?

   1. Fixed cost only
   2. Variable cost only
   3. Sum of fixed and variable costs
   4. None of the above
   Show answer

   Answer: C. Sum of fixed and variable costs

   Total cost is the combination of fixed costs, which do not change with output, and variable costs, which do change with output.

3. Which of the following is a characteristic of perfect competition?

   1. Few sellers
   2. Differentiated products
   3. Price takers
   4. High barriers to entry
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   Answer: C. Price takers

   In a perfectly competitive market, firms are price takers because they cannot influence the market price of their products.

4. Which cost is incurred even when production is zero?

   1. Variable cost
   2. Marginal cost
   3. Total cost
   4. Fixed cost
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   Answer: D. Fixed cost

   Fixed costs are incurred regardless of production levels, remaining constant even when output is zero.

5. In which market structure do firms have a downward-sloping demand curve?

   1. Perfect competition
   2. Monopoly
   3. Oligopoly
   4. All of the above
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   Answer: B. Monopoly

   Monopolistic firms face a downward-sloping demand curve as they are the only suppliers of the product, allowing them to set prices.

More questions in this quiz

Answers and explanations are in the full quiz.

1. Which of the following is not a factor of production?
2. What does 'diminishing returns' refer to in production?
3. If a firm is producing its output at the minimum of its average total cost curve, it is said to be:
4. What is the impact of technological advancement on production?
5. If marginal cost is greater than average total cost, what happens to average total cost?
6. In the long run, firms in a competitive market will:
7. What is the relationship between fixed costs and short-run production decisions?
8. What happens to the marginal product of labor as more workers are hired?
9. The law of diminishing returns primarily affects which type of cost?
10. Which of the following would lead to economies of scale?
11. What determines the price in a perfectly competitive market?
12. What happens to the average fixed cost as production increases?
13. Which of the following is likely to increase the marginal cost?

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