Read the given paragraph carefully and answer the following questions.
Total Product, Average Product and Marginal Product
The relationship between the variable input and output, keeping all other inputs constant, is often referred to as total product (TP) of the variable input. Average product (AP) is defined as the output per unit of variable input. Marginal product (MP) of an input is defined as the change in output per unit of change in the input when all other inputs are held constant. According to the law of variable proportions, the marginal product of an input initially rises and then, after a certain level of employment, it starts falling. As long as AP increases, it must be the case that MP is greater than AP. Otherwise, AP cannot rise. Similarly, when AP falls, MP has to be less than AP. It follows that MP curve cuts AP curve from above at its maximum.
In the production of clothes, cotton is defined as.........
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Input
Cotton goes into the making of clothes, so it is an input. An input is anything a firm uses to produce output, such as labour, machines, land and raw materials.
Option (1) capital — Incorrect. Capital means goods such as machines and tools, which serve for many years. Cotton is a raw material and is used up in production.
Option (2) Input — Correct. A clothes maker combines cotton with labour and machines. Cotton is one of the things that go in, and clothes come out.
Option (3) Final Output — Incorrect. Final output is what a production process ends with. Here that is the clothes.
Option (4) Intermediate output — Incorrect. Goods used as raw material for other goods are called intermediate goods, and cotton is one of them. But in the making of clothes, cotton goes in and is not an output of this process.
NCERT (2026-27): “…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.… Introductory Macroeconomics — Chapter 2: National Income Accounting: …Of the total production taking place in the economy a large number of products don’t end up in final consumption and are not capital goods either. Such goods may be used by other producers as material inputs. Examples are steel sheets used for making automobiles and copper used for making utensils. These are intermediate goods, mostly used as raw material or inputs for production of other commodities. These are not final goods.…” |