5.a) Explain the difference between the Explicit and Implicit costs. Illustrate with an example

b) State the Law of diminishing returns. What will be the shape of the Marginal product curve, when firm enters this phase of production.

c) State the relationship between Productivity curves(MP and AP curves) and Cost curves(MC and AC)

(d) Write a brief note on short run costs(Total Cost, Average Total Cost and Marginal Cost

(e)Write a short note on long run costs

(in questions (d) and (e))

6. a) What is utility-maximizing rule ?

b)What is indifference curve and why does it slope downward.(see Appendix)?

7.a) Make a distinction between price ceilings and Price floors.(Give examples of each of the price controls.

b) Define Price elasticity of demand. If a firms demand curve is less elastic(less than 1), should it raise or lower the price in order to improve its total revenue.

c) Make distinction between normal goods and inferior goods. Provide examples. Which elasticity measure (price, income or cross elasticity) classifies goods as inferior and normal goods.

d)Why different consumers (corporate versus residential) pay different prices for the use of electricity (power)?

e) What is a deadweight loss?