Which of the following pairs is correctly matched?

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Output of a firm – Consumed by consumers or used by other firms for further production

A firm's output may go to consumers, or to other firms that use it to produce something further.

Option (1) Output of a firm – Consumed by consumers or used by other firms for further production — Correct. Both uses of a firm's output are named.

Option (2) Production in the simple model – Takes a long time between combining inputs and getting output — Incorrect. The simple model takes production as instantaneous, with no time in between.

Option (3) Cost of production – The amount earned by selling the output — Incorrect. Cost of production is what the firm pays for its inputs. What it earns by selling output is revenue.

Option (4) Revenue – The amount paid to acquire inputs — Incorrect. Revenue is what the firm earns by selling its output. What it pays for inputs is cost.

NCERT (2026-27): “A Firm Effort In the previous chapter, we have discussed the behaviour of the consumers. In this chapter as well as in the next, we shall examine the behaviour of a producer. Production is the process by which inputs are transformed into ‘output’. Production is carried out by producers or firms. A firm acquires different inputs like labour, machines, land, raw materials etc. It uses these inputs to produce output. This output can be consumed by consumers, or used by other firms for further production. For example, a tailor uses a sewing machine, cloth, thread and his own labour to ‘produce’ shirts. A farmer uses his land, labour, a tractor, seed, fertilizer, water etc to produce wheat. …”

“A Firm Effort … We make certain simplifying assumptions to start with. Production is instantaneous: in our very simple model of production no time elapses between the combination of the inputs and the production of the output. We also tend to use the terms production and supply synonymously and often interchangeably. In order to acquire inputs a firm has to pay for them. This is called the cost of production. Once output has been produced, the firm sell it in the market and earns revenue. The difference between the revenue and cost is called the firm’s profit. We assume that the objective of a firm is to earn the maximum profit that it can.”