Microeconomics

Q-1. State whether each of the following is an example of a fixed cost or variable cost. Example Fixed Cost or Variable Cost a) Packaging and advertising costs b) Cost of shipping products to market c) Costs that do not vary with the volume of output d) Rental payment for the use of a building e) Costs incurred even if the firm produces nothing Q-2. Label the adjacent figure and identify the curves. Curve 1: Curve 2: Curve 3: Curve 4: Part II. Short Answers (Each Question = 10 Marks) Q- 3. Label the curves in the diagram and answer following questions. a) What output should this firm produce Price 10 in order to maximize its profit? Cost b) What Price should this firm charge? c) What is the firms' total revenue at the profit maximizing output? d) What is the firms' total cost at the profit maximizing output? 300 400 500 600 Quantity Part II. Short Answers (Each Question = 10 Marks) Q-4. Assuming that all units of labour cost the same, fill in the blanks in the table. Units of Total TVC MC AVC a) At what level of labour is Labour output marginal cost at a minimum? 100 210 2 220 b) What is the marginal product of labour when 4 3 320 units of labour are used? 400