Answer all the questions below:

A firm's total fixed costs are $1,200. If at a certain output level, its average costs per unit are $12

and the average variable cost per unit is $8, then the level of output is:

A 100 units.

B 150 units.

C 300 units.

D 600 units.

(i) Define the terms 'marginal physical product of labour' ( ) MPPL and 'average physical

product of labour'( ) APPL .

(ii) Draw diagrams to illustrate the relationship between MPPL , APPL and total physical

product of labour ( L TPP ).

The short-run marginal cost curve will eventually slope upwards because of the law of:

A diminishing marginal utility.

B diminishing marginal returns.

C increasing marginal utility.

D increasing marginal returns.

6.4 If MC > AC:

A AC is rising faster than MC.

B AC is falling slower than MC.

C AC is falling.

D AC is rising.

6.5 Decreasing returns to scale occur when:

A short-run marginal cost exceeds short-run average cost.

B short-run average cost exceeds short-run marginal cost.

C long-run marginal cost exceeds long-run average cost.

D long-run average cost exceeds long-run marginal cost.

Diminishing marginal productivity:

A suggests that the marginal product of labour must eventually become negative.

B is relevant in both the long run and the short run.

C suggests that doubling both labour and capital inputs will lead a less than proportionate

increase in output.

D suggests that adding additional workers to fixed capital inputs will lead to smaller

increases in output.

Consider the indicator random variable, I,, defined by IK = o T(x) = k T(x) 0, that a. ax k] k>0 and use it to show that a, zaq Pr(an 2 a;) = am Pr(T > 2,). A unit is to be used to purchase a combination benefit consisting of a life income of I per year payable continuously while (x) survives and an insurance of J payable immediately on the death of (x). Write the present-value random variable for this combination and give its mean and variance. Using the assumption of a uniform distribution of deaths in each year of age and the Illustrative Life Table with interest at the effective annual rate of 6%, calculate a. a to b. a 40:30) C. 30| 4 40