Match List-I with List-II:
| List-I | List-II | ||
|---|---|---|---|
| (A) | Returns to scale | (I) | One factor is held fixed and the other is increased |
| (B) | Law of variable proportions | (II) | In the long run, as there are no fixed costs |
| (C) | Factor proportions | (III) | The ratio in which the two inputs are combined to produce output |
| (D) | Total cost equals total variable cost | (IV) | Studied only in the long run, when all factors can be varied |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A)-(IV), (B)-(I), (C)-(III), (D)-(II)
Ask whether one factor is fixed or all factors can change.
| List-I | List-II | Reason |
|---|---|---|
| (A) Returns to scale | (IV) Studied only in the long run, when all factors can be varied | Returns to scale need all factors to change, which can happen only in the long run. |
| (B) Law of variable proportions | (I) One factor is held fixed and the other is increased | The law arises because factor proportions change while one factor is held fixed. |
| (C) Factor proportions | (III) The ratio in which the two inputs are combined to produce output | This is the meaning of factor proportions. |
| (D) Total cost equals total variable cost | (II) In the long run, as there are no fixed costs | With no fixed costs in the long run, TC and TVC coincide. |
NCERT (2026-27): “3.6 Returns to Scale The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. … Remember that this can happen only in the long run. One special case in the long run occurs when both factors are increased by the same proportion, or factors are scaled up.” “3.4 The Law of Diminishing Marginal Product and the Law of Variable Proportions … Why does this happen? In order to understand this, we first define the concept of factor proportions. Factor proportions represent the ratio in which the two inputs are combined to produce output. As we hold one factor fixed and keep increasing the other, the factor proportions change. Initially, as we increase the amount of the variable input, the factor proportions become more and more suitable for the production and marginal product increases. But after a certain level of employment, the production process becomes too crowded with the variable input.” “3.7.2 Long Run Costs In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run average cost (LRAC) is defined as cost per unit of output, i.e. …” |