Question 1

a) Explain briefly the various types of costs with suitable examples.

b) Explain the major determinants of the cost of production of goods and services in an organization.

Question two

a) What is meant by optimization and how does it help managers in decision making?

b) Discuss the types of risks faced by a business firm

c) Suppose that the firm's Total Revenue (TR) and total Cost function are given respectively

as:

TR = 300Q - 30Q

TC = 500 + 50Q+ 2Q²

Determine;

i) The quantity of output (Q) that maximizes the firm's profit.

ii) The profit function of the firm and prove that profit is maximum.