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Cs 11

1) The table shows production quantities (Q), average variable costs (AVC), average costs (AC), marginal costs (MC), price (P), marginal revenue (MR), total revenue (TR), total costs (TC) and profits for a firm at different output levels. 2) Total profit for the firm is Rs. 108.72. So the firm will enjoy economic profits. 3) For the second table with a lower price of Rs. 35, total profit is negative Rs. 36.4. So the firm must shutdown its operations.

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Ammar Akhter Uz Zaman
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23 views1 page

Cs 11

1) The table shows production quantities (Q), average variable costs (AVC), average costs (AC), marginal costs (MC), price (P), marginal revenue (MR), total revenue (TR), total costs (TC) and profits for a firm at different output levels. 2) Total profit for the firm is Rs. 108.72. So the firm will enjoy economic profits. 3) For the second table with a lower price of Rs. 35, total profit is negative Rs. 36.4. So the firm must shutdown its operations.

Uploaded by

Ammar Akhter Uz Zaman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Q4

Q AVC AC MC P MR TR TC Total Profit Marginal Profit


9 41.10 52.21 30.70 271.00 50.00 2439 469.89 1969.11 19.30 Cost Curves
10 40.00 50.00 30.10 271.00 50.00 2710 500 2210 19.90 60.00
11 39.10 48.19 30.10 271.00 50.00 2981 530.09 2450.91 19.90
12 38.40 46.73 30.70 271.00 50.00 3252 560.76 2691.24 19.30
13 37.90 45.59 31.90 271.00 50.00 3523 592.67 2930.33 18.10
14 37.60 44.74 33.70 271.00 50.00 3794 626.36 3167.64 16.30 50.00
15 37.50 44.17 36.10 271.00 50.00 4065 662.55 3402.45 13.90
16 37.60 43.85 39.10 271.00 50.00 4336 701.6 3634.4 10.90
17 37.90 43.78 42.70 271.00 50.00 4607 744.26 3862.74 7.30
40.00
18 38.40 43.96 46.90 271.00 50.00 4878 791.28 4086.72 3.10
19 39.10 44.36 51.70 271.00 50.00 5149 842.84 4306.16 -1.70
20 40.00 45.00 57.10 271.00 50.00 5420 900 4520 -7.10

Cost ($)
30.00 AVC
AC
MC
Ans Q4 (B)
20.00
Total profit = 108.72

So the firm will Enjoy Economic Profits


10.00

0.00
0 5 10 15 20 25
Quantity

Cost Curves
60.00
Q AVC AC MC P MR TR TC Total Profit Marginal Profit
9 41.10 52.21 30.70 35.00 35.00 315 469.89 -154.89 4.30
10 40.00 50.00 30.10 35.00 35.00 350 500 -150 4.90
11 39.10 48.19 30.10 35.00 35.00 385 530.09 -145.09 4.90 50.00
12 38.40 46.73 30.70 35.00 35.00 420 560.76 -140.76 4.30
13 37.90 45.59 31.90 35.00 35.00 455 592.67 -137.67 3.10
14 37.60 44.74 33.70 35.00 35.00 490 626.36 -136.36 1.30
15 37.50 44.17 36.10 35.00 35.00 525 662.55 -137.55 -1.10 40.00
16 37.60 43.85 39.10 35.00 35.00 560 701.6 -141.6 -4.10
17 37.90 43.78 42.70 35.00 35.00 595 744.26 -149.26 -7.70
18 38.40 43.96 46.90 35.00 35.00 630 791.28 -161.28 -11.90
Cost ($)

19 39.10 44.36 51.70 35.00 35.00 665 842.84 -177.84 -16.70 30.00 AVC
20 40.00 45.00 57.10 35.00 35.00 700 900 -200 -22.10 AC
MC

20.00

Ans Q4 (C)

Total profit = 108.72


10.00
CM = TR - TVC = 490 - (37.6 x 14) = -36.4

So the firm must Shutdown its operation


0.00
0 5 10 15 20 25
Quantity

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