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CodeVID-M11-WS
Producer's Equilibrium — Practice Worksheet
Chapter: Producer's Equilibrium
Topic: Producer's Equilibrium
Maximum Marks: 35
Time: 30 minutes
Name: ____________________ Roll No.: __________ Date: ____________

General Instructions

  • All questions are compulsory.
  • Choose the correct option (A, B, C or D) for each question.
  • The answer key is at the end — try the paper first!
Section A — Multiple Choice (1 mark each) 15 × 1 = 15 marks
1.
A producer aims to maximise:
  • A.Cost
  • B.Profit
  • C.Output only
  • D.Utility
2.
Profit equals:
  • A.TR − TC
  • B.TR + TC
  • C.TC − TR
  • D.TR × TC
3.
A producer is in equilibrium when his profit is:
  • A.Minimum
  • B.Maximum
  • C.Zero
  • D.Negative
4.
If TR = ₹600 and TC = ₹450, profit is:
  • A.₹150
  • B.₹1050
  • C.₹450
  • D.₹600
5.
In the TR–TC approach, the firm chooses the output where (TR − TC) is:
  • A.Smallest
  • B.Largest
  • C.Zero
  • D.Negative
6.
If MR is greater than MC, the firm should:
  • A.Produce more
  • B.Produce less
  • C.Stop
  • D.Do nothing
7.
If MR is less than MC, the firm should:
  • A.Produce more
  • B.Produce less
  • C.Double output
  • D.Ignore it
8.
Profit is maximised where MR equals:
  • A.MC
  • B.AR
  • C.TC
  • D.AFC
9.
The first condition for producer's equilibrium is:
  • A.MR = MC
  • B.AR = AC
  • C.TR = 0
  • D.MC = 0
10.
The second condition for producer's equilibrium is that MC must be:
  • A.Falling
  • B.Rising (cutting MR from below)
  • C.Zero
  • D.Constant
11.
MR = MC alone is not enough because MR and MC can be equal at:
  • A.Two points
  • B.No point
  • C.Only zero
  • D.Infinite price
12.
Both the TR–TC and MR–MC approaches give the:
  • A.Same equilibrium output
  • B.Different outputs
  • C.No output
  • D.Maximum cost
13.
The marginal approach is preferred because it shows clearly why the firm:
  • A.Stops at a particular output
  • B.Has no costs
  • C.Sets the price
  • D.Ignores revenue
14.
At the equilibrium point, the last unit produced adds:
  • A.More to revenue than cost
  • B.Equal amounts to revenue and cost
  • C.More to cost than revenue
  • D.Nothing to either
15.
If profits at outputs 2, 3, 4 are ₹5, ₹9, ₹7, the equilibrium output is:
  • A.2
  • B.3
  • C.4
  • D.5
Section B — Challenge / Olympiad (2 marks each) 10 × 2 = 20 marks
16.
A firm finds that producing the 6th unit adds ₹12 to revenue and ₹9 to cost. It should:
  • A.Produce the 6th unit (MR > MC raises profit)
  • B.Not produce it
  • C.Shut down
  • D.Cut to 3 units
17.
At the 7th unit MR = ₹8 and MC = ₹10. The firm should:
  • A.Not produce the 7th unit (MR < MC)
  • B.Produce it
  • C.Produce two more
  • D.Raise its fixed cost
18.
Combining the previous two, the firm's equilibrium output is most likely:
  • A.6 units (last unit with MR ≥ MC, then MR < MC)
  • B.7 units
  • C.3 units
  • D.10 units
19.
MR = MC occurs at two outputs of a firm. Profit is maximised at the one where MC is:
  • A.Rising
  • B.Falling
  • C.Zero
  • D.Negative
20.
Using a TR–TC table, a manager sees profit values 2, 5, 5, 3 at outputs 1-4. Equilibrium output is:
  • A.2 or 3 (where profit ₹5 is maximum)
  • B.1
  • C.4
  • D.5
21.
Why do the TR–TC and MR–MC approaches always agree?
  • A.Maximising the TR−TC gap is the same as setting marginal revenue equal to marginal cost
  • B.They use different data
  • C.One ignores cost
  • D.They never agree
22.
A firm currently makes a loss of ₹2 at 1 unit but ₹8 profit at 3 units. Moving from 1 to 3 units is wise because along the way:
  • A.MR exceeded MC, adding to profit each step
  • B.Costs were ignored
  • C.Price was fixed at zero
  • D.MR was negative
23.
At producer's equilibrium, producing one more unit would:
  • A.Reduce (or not raise) total profit
  • B.Always raise profit
  • C.Have no cost
  • D.Double revenue
24.
Profit equals TR − TC, so a firm with TR = ₹40 and TC = ₹34 earns:
  • A.₹6
  • B.₹74
  • C.₹40
  • D.−₹6
25.
The marginal approach is favoured in analysis because it pinpoints the exact unit at which:
  • A.Extra revenue just equals extra cost
  • B.Fixed cost is zero
  • C.Price is highest
  • D.Output is unlimited

Answer Key

Section A — Multiple Choice (1 mark each)
  1. (B) Profit
  2. (A) TR − TC
  3. (B) Maximum
  4. (A) ₹150
  5. (B) Largest
  6. (A) Produce more
  7. (B) Produce less
  8. (A) MC
  9. (A) MR = MC
  10. (B) Rising (cutting MR from below)
  11. (A) Two points
  12. (A) Same equilibrium output
  13. (A) Stops at a particular output
  14. (B) Equal amounts to revenue and cost
  15. (B) 3
Section B — Challenge / Olympiad (2 marks each)
  1. (A) Produce the 6th unit (MR > MC raises profit)
  2. (A) Not produce the 7th unit (MR < MC)
  3. (A) 6 units (last unit with MR ≥ MC, then MR < MC)
  4. (A) Rising
  5. (A) 2 or 3 (where profit ₹5 is maximum)
  6. (A) Maximising the TR−TC gap is the same as setting marginal revenue equal to marginal cost
  7. (A) MR exceeded MC, adding to profit each step
  8. (A) Reduce (or not raise) total profit
  9. (A) ₹6
  10. (A) Extra revenue just equals extra cost
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