Question

Match List-I with List-II
List-I (Content/concept):
(A) The percentage change in one factor, divided by the per cent change in the other factor
(B) Indicates the change in curvature of total physical product curve
(C) Each additional unit of input adds less to the total product than the previous unit did
(D) Slope of production possibility curve
List-II (Concept):
(I) Marginal rate of product substitution
(II) Elasticity of substitution
(III) Inflection point
(IV) Law of decreasing returns
Choose the correct answer from the options given below:

• (A) - (II), (B) - (III), (C) - (IV), (D) - (I)
• (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
• (A) - (III), (B) - (II), (C) - (IV), (D) - (I)
• (A) - (III), (B) - (I), (C) - (IV), (D) - (II)

Hint:

The slope of a production curve represents a marginal rate. Since the Production Possibility Curve deals with outputs, its slope is the Marginal Rate of Product Substitution (D matches I).

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
This matching question covers core principles of production economics, including factor substitution, marginal productivity, and production possibility curves.
Detailed Explanation:
Let us analyze and match each concept:
- (A) Percentage change in one factor divided by the percentage change in another factor: This describes the (II) Elasticity of substitution ($\sigma$), which measures how easily inputs are substituted along an isoquant.
- (B) Indicates the change in curvature of total physical product curve: The point where the TPP curve changes from convex to concave is the (III) Inflection point, where marginal product reaches its maximum.
- (C) Each additional unit of input adds less to the total product than the previous unit did: This is the statement of the (IV) Law of decreasing returns (or diminishing marginal returns).
- (D) Slope of production possibility curve: The slope of the PPC represents the (I) Marginal rate of product substitution (MRPS) or Marginal Rate of Transformation (MRT).
This gives the matched sequence:
\[ \text{(A) - (II), (B) - (III), (C) - (IV), (D) - (I)} \]

Step 2: Final Answer:
The correct option matches the sequence in Option (A).