Factors of Production and Laws of Production – MCQs
(Most Expected MCQs for JKSSB, UPSC, SSC | Home Academy)
1. Factors of production refer to
A. Goods consumed by people
B. Resources used to produce goods and services
C. Government policies
D. Market demand
✅ Answer: B. Resources used to produce goods and services
2. Which of the following is a factor of production?
A. Land
B. Labour
C. Capital
D. All of the above
✅ Answer: D. All of the above
3. Land as a factor of production includes
A. Soil and forests
B. Minerals and rivers
C. Climate and natural resources
D. All of the above
✅ Answer: D. All of the above
4. The reward for land is called
A. Profit
B. Interest
C. Rent
D. Wages
✅ Answer: C. Rent
5. Labour refers to
A. Natural resources
B. Human physical and mental effort
C. Machinery and equipment
D. Government services
✅ Answer: B. Human physical and mental effort
6. The reward for labour is
A. Rent
B. Profit
C. Wages
D. Interest
✅ Answer: C. Wages
7. Capital as a factor of production refers to
A. Money used for consumption
B. Man-made goods used for production
C. Natural resources
D. Human labour
✅ Answer: B. Man-made goods used for production
8. The reward for capital is
A. Wages
B. Rent
C. Interest
D. Profit
✅ Answer: C. Interest
9. The factor of production responsible for organizing other factors is
A. Labour
B. Land
C. Capital
D. Entrepreneurship
✅ Answer: D. Entrepreneurship
10. The reward of entrepreneurship is
A. Interest
B. Rent
C. Profit
D. Wages
✅ Answer: C. Profit
11. The concept of entrepreneurship was emphasized by
A. Joseph Schumpeter
B. Adam Smith
C. Karl Marx
D. David Ricardo
✅ Answer: A. Joseph Schumpeter
12. The Law of Variable Proportions operates in
A. Short run
B. Long run
C. Very long run
D. None of these
✅ Answer: A. Short run
13. The Law of Returns to Scale operates in
A. Short run
B. Long run
C. Medium run
D. Temporary period
✅ Answer: B. Long run
14. In the first stage of the law of variable proportions
A. Output decreases
B. Output increases at increasing rate
C. Output remains constant
D. Output becomes negative
✅ Answer: B. Output increases at increasing rate
15. The second stage of the law of variable proportions is known as
A. Stage of increasing returns
B. Stage of diminishing returns
C. Stage of negative returns
D. Stage of constant returns
✅ Answer: B. Stage of diminishing returns
16. In the third stage of production
A. Output increases rapidly
B. Output increases slowly
C. Output decreases
D. Output remains constant
✅ Answer: C. Output decreases
17. Increasing returns to scale means
A. Output increases less than inputs
B. Output increases more than proportionately
C. Output decreases
D. Output remains constant
✅ Answer: B. Output increases more than proportionately
18. Constant returns to scale means
A. Output increases more than inputs
B. Output increases in the same proportion as inputs
C. Output decreases
D. Inputs remain constant
✅ Answer: B. Output increases in the same proportion as inputs
19. Decreasing returns to scale means
A. Output increases more than inputs
B. Output increases less than proportionately
C. Output remains constant
D. Output doubles
✅ Answer: B. Output increases less than proportionately
20. Which economist discussed the law of variable proportions?
A. David Ricardo
B. Adam Smith
C. Karl Marx
D. Keynes
✅ Answer: A. David Ricardo