Production Function

The correct option is (B): The collection of all possible combinations of goods and services that can be produced from a given amount of resources and a given stock of technological knowledge

The correct option is (C) :Aggregate Income.

Step 1: Recall the distinction between short run and long run.
- In the short run, some factors are fixed and some are variable.
- In the long run, all factors of production become variable. There are no fixed inputs in the long run.
Step 2: Evaluate options.
- (A) “At least one factor varied” → short run condition, not long run.
- (B) Correct → in the long run, all inputs (land, labour, capital, organization) can be adjusted.
- (C) Incorrect → “factor remains fixed” is wrong for long run.
- (D) Incorrect → “only one factor” applies to short run, not long run.
Step 3: Conclusion.
Thus, in the long run, all factors are variable.
Final Answer:

Step 1: Recall the concepts.
- Production Possibility Frontier (PPF): The boundary curve showing the maximum output combinations achievable.
- Isoquant Curve: Represents different input combinations producing the same output.
- Isocost Line: Represents combinations of inputs purchasable for a given cost.
- Production Possibility Set: Represents all possible combinations of goods and services that can be produced with given resources and technology. The PPF is only the boundary of this set.
Step 2: Match with the question.
The question explicitly asks about the collection of all possible combinations, not just the efficient ones. Hence, the correct term is Production Possibility Set.
Final Answer:

Step 1: Recall definitions.
- Marginal Product (MP): Additional output generated by using one more unit of input, keeping others constant.
- Average Product (AP): Output per unit of input.
- Total Product (TP): Total output produced by all inputs.
- Returns to Scale: Relationship between proportional increase in inputs and resulting output.
Step 2: Apply to question.
The definition matches exactly with Marginal Product.
Final Answer:

Step 1: Match each item logically.
- (A) Relationship between variable input and output → Total Product (IV).
- (B) Output per unit of variable input → Average Product (I).
- (C) Change in output per unit of change in input → Marginal Product (II).
- (D) Marginal product first rises, then falls with input → Law of Variable Proportions (III).
Step 2: Verify with options.
This matches option (1).
Final Answer:

Step 1: Recall definition of returns to scale.
- Constant returns to scale: Output increases in exact proportion to inputs → .
- Increasing returns to scale: Output increases by more than proportionate → .
- Decreasing returns to scale: Output increases by less than proportionate → .
Step 2: Apply to question.
Since the question asks for decreasing returns to scale, the correct condition is: Final Answer: