Q No 4:

Consider the data in Table Below

a. Calculate the TC, VC, FC, AC, AVC, and MC . On a piece of graph paper, plot the AC and MC curves.

b. Assume that the price of labor doubles. Calculate a new AC and MC . Plot the new curves and compare them with those in a.

c. Now assume that total factor productivity doubles (i.e., that the level of output doubles for each input combination).

Repeat the exercise in b. Can you see two major factors that tend to affect a firm's cost curves?