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The table shows a firm’s marginal costs
Output Marginal cost ($)
1 40
2 30
3 20
4 30
5 40
If the Average Fixed Cost of producing 5 units is $6, calculate the total cost of producing 5 units.
n each of the following snerios, categories the price elasticity of demand as either elastic, inelastic or unit elastic.(use mid point method in calculation)
a) The price of personal computers falls from $2750 to $2250 and the quantity demanded increases from 40,000 to 60,000
b) Pakistan posts increases the price of stamp for Rs.2 cents to Rs 4,but it's total revenue unchanged
Explain what causes a perfectly competitive firm to suffer losses.
The schedule shows the short run marginal costs of producing good X.
Units of X Marginal cost ($)
1 40
2 30
3 30
4 60
5 120
Given that the total fixed cost is $20, calculate the level of output which minimises Average Total Cost (ATC).
A firm in perfect competition currently sells 100 units at $5 each. What will be the revenue obtained by the firm if it increases its price to $6?
A firm has a total production cost of $200,000. Its average fixed cost is $120 and its average variable
cost is $80. Calculate the firm’s total fixed costs.
3. Providing a suitable example, explain how Investment Spending (I) depends on interest rates.
4. Based on the following equation and assumptions, answer the questions:
For an economy, Y = C + I (here Y stands for national income, C stands for consumer spending, I stands for investment spending)
C = 400 + .6Y
I = Planned Investment + Unplanned investment
Planned investment is fixed at 500
Planned expenditure = C + Planned Investment
No government and closed economy
a. If Y=2500, what will be C and planned expenditure? (10) b. What is the amount of unplanned investment if Y=2500? (10) c. If Y=800, find planned expenditure. (10)
d. Find the Y for which Y = Planned expenditure.
1. Drawing diagram explain the process of “crowding out”. Also explain why the private sector might find budget deficit detrimental to their business planned projects.2. “Increase in net capital inflow will increase interest rates in the domestic loanable funds market” – do you agree with this statement? Explain by drawing a diagram and comment how you think investment will change if there is an increase in capital inflow.
a. “Natural resources are the most important determinant of long-term economic growth” – do you agree with this statement. Briefly explain your views.
b. What do you understand by the term “closed economy”? For a closed economy show, National savings = National Investment.
2. Consumer spending in an economy is defined by the following function: Consumer spending = 200 + .85 (Disposable Income) a. Draw this function in a diagram. b. If Disposable income increases by a dollar, how much will consumer spending increase or decrease? c. Assuming closed economy and no government, what will be the economy’s saving if income is 4000?
Assume that a firm has a plant of fixed size and that it can vary its output only by varying the amount of labor it employs. The table below shows the relationships between the amount of labor employed, the output of the firm, the marginal product of labor and the average product of labor
