In the Cobb-Douglas production function Q = A L^α K^β, if α + β = 1, the production function exhibits: MCQ with Answer and Explanation

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In the Cobb-Douglas production function Q = A L^α K^β, if α + β = 1, the production function exhibits:

A. increasing returns to scale

B. decreasing returns to scale

C. negative returns

D. constant returns to scale

Answer: Option D

Solution (By JKSSB Mock Tests)

If α + β = 1, the Cobb-Douglas production function exhibits constant returns to scale.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Goods and Services Tax' on cheese is:

A. 18%

B. 28%

C. 12%

D. 5%

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Correct Answer: Option C

Explanation:
Cheese attracts 12% GST.

This question belongs to: Economy GK Economy Set 1

Question #2

The concept of 'Time Preference' is related to the theory of:

A. Interest

B. Profit

C. Rent

D. Wages

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Correct Answer: Option A

Explanation:
The time preference theory of interest (associated with Böhm-Bawerk and others) explains interest as arising from the preference for present goods over future goods.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a characteristic of a Giffen good?

A. Demand increases as price increases due to strong negative income effect

B. Income elasticity is positive

C. Demand decreases as price increases

D. It is a luxury good

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Correct Answer: Option A

Explanation:
A Giffen good is an inferior good for which the negative income effect outweighs the substitution effect, resulting in an upward-sloping demand curve.

This question belongs to: Economy GK Economy Set 1

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