What are total fixed cost, total variable cost and total cost of a firm? How are they related?

3

(a)

What are the average fixed cost, average variable cost and average cost of a firm? How are they related?

3

(a)

Why does SMC curve cut AVC curve at the minimum point of AVC curve?

3

(a)

At which point does the SMC curve cut the SAC curve? Give reason in support of your answer.

3

(a)

What is meant by variable (prime) cost of a firm? Give examples.

3

(a)

Explain the behaviour of aver age fixed cost using numerical example.

3

(a)

An individual is both the owner and the manager of a shop taken on rent. Identify.implicit cost and explicit cost from this information. Explain.

3

(a)

State the distinction between explicit cost and implicit cost. Give an example of each.

3

(a)

What is the behaviour of (a) Average Fixed Cost and (b) Average Variable Cost as more and more units of a good are produced?

3

(a)

Can MC increase when AC falls?

3

(a)

AC schedule of a firm is given. Calculate the firm's MC for (i) 6 and (ii) 7 units.

Quantity	5	6	7
AC	40	41	42

3

(a)

The fixed cost of a firm is Rs. 120. Its marginal cost at different levels of output is given below. Calculate the total cost and average variable cost at each output.

Output	1	2	3	4
Marginal cost(Rs.)	60	52	56	64

3

(a)

Given below is the cost schedule of a firm. Its average fixed cost is RS. 20 when it produces 3 units.

Output(Units)	1	2	3
Average Variable cost(Rs.)	30	28	32

3

(a)

How does AFC behave as output is increased?

3

(a)

What is the behaviour of average fixed cost as output increases?

3

(a)