(a) "In economics, Price Elasticity and Market Structures contain the ideas of marketing and advertising". Refering to course material, explain this statement. (5 marks)

(b) Firm Y, a manufacturing firm, has daily fixed costs of $120. Each worker costs $60 per day and labor is the only variable cost.

L..............Q...............TFC...............TVC............TC.............MC.........................AFC.............AVC..................ATC

0 0

1 10

2 24

3 38

L = number of workers ; Q = output

Questions:

(a) Using this iinformation, calculate the costs TFC, TVC, TC, MC, AFC, AVC, ATC for L=2 and L=3 (6 marks)

(b) How many workers should be hired to minimize ATC? (2 marks)

(c) If output (Q) = 0 units, what should be the value of TFC and TVC? Explaiin (3 marks )