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Tutorial PDN & Cost

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10 views

Tutorial PDN & Cost

Uploaded by

2023469196
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

The table below shows the cost schedule of a firm

Total Price Total Cost Average Average Marginal


Product variable fixed cost cost
cost

0 - 50 - - -
1 35 70
2 35 85
3 35 95
4 35 100
5 35 110
6 35 130
7 35 165
a) Construct the cost schedule given. [3 m]

b) Find the profit maximizing output. Compute and identify the profit. [2 m]

c) Illustrate and state one distinction between average variable and average
fixed curves. [2 m]

2. The diagram below shows total and marginal product curves for a manufacturing
firm.
Product

90

60 TP

30

AP
Worker
0 2 4 6 8 10 MP

a) The law of diminishing marginal returns starts at ______ worker. [1 m]

b) The most efficient number of workers to be hired is _______ [1 m]

c) Identify the three stages of production based on the number of workers and the
number of total products. [3 m]
3. Table below shows values of short run costs for firm A

Total Fixed Variabl Total Average Average Average Marginal


product cost e cost cost fixed variable total cost
cost cost cost
0 20
1 80
2 100 10
3 15
4 20
5 160
6 195
7 245

a. Fill in the blanks ( 6 marks )


b. In a diagram sketch AFC, AVC, ATC and MC curves. ( 2 marks )
c. Define Law of Diminishing Returns and how it affect the shape of the curves.
( 2 marks )

4. The following table shows production costs of a firm

Total Fixe Variable Total Average Average Marginal


Product d Cost Cost Fixed Cost Cost Cost
(Unit) Cost (RM) (RM) (RM) (RM) (RM)
(RM)
0 10
1 30
2 30
3 65
4 115

a) Complete the above table.


(5 marks)

b) Is the firm operating in short-run or long-run period? Why?


(1 marks)

c) In one diagram, draw average fixed cost, marginal cost, average variable cost and
average cost curves. (2 marks)
5. The following table shows Total Product and Marginal Product of a production.

Number of Labours Total Product (TP) Marginal Product (MP)


0 0
1 30
2 80
3 116
4 140
5 155
6 164
7 158

a) Diminishing return sets in at the addition of the _______ labour.


(1 mark)
b) The marginal product of the third worker is ______ units.
(1 mark)
c) Total product is maximum when ______ workers are hired.
(1 mark)
d) State the relationship between marginal product and average product.
(2 marks)

6. The table below shows the total output of a manufacturing company:

Number of Number of output


workers
0 0
1 5
2 12
3 17
4 20
5 20
6 18
Assuming the quantity of capital remains constant at all output levels;

a) Calculate the marginal product of each worker. (1 ½


marks)

b) Draw the total product and marginal product curves. (1 ½


marks)

c) Over what range of employment do you see;


i) decreasing returns to worker? (1 mark)
ii) negative returns to worker? (1 mark)

d) Is this a short run or long run production? Why? (1 mark)

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