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Tutorial 5 Tutorial 5: P Q TR AR MR

The document provides information on 5 tutorials covering concepts in microeconomics including: 1) Demand schedules, total revenue, average revenue, and marginal revenue graphs 2) Production costs, total costs, marginal costs, and profit maximization for a firm 3) Cost structures and equilibrium output levels for competitive firms 4) Fixed and variable costs and equilibrium output for perfect competitive firms 5) Cost structures and equilibrium output levels given demand conditions.

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ihsan ehsan
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80 views

Tutorial 5 Tutorial 5: P Q TR AR MR

The document provides information on 5 tutorials covering concepts in microeconomics including: 1) Demand schedules, total revenue, average revenue, and marginal revenue graphs 2) Production costs, total costs, marginal costs, and profit maximization for a firm 3) Cost structures and equilibrium output levels for competitive firms 4) Fixed and variable costs and equilibrium output for perfect competitive firms 5) Cost structures and equilibrium output levels given demand conditions.

Uploaded by

ihsan ehsan
Copyright
© © All Rights Reserved
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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MEF 1013 [TUTORIAL 5]

TUTORIAL 5

1. Given below is the demand schedule for an individual.

P QD TR AR MR
30 0
30 1
30 2
30 3
30 4
30 5

a. Complete the above.


b. Graphically illustrate TR, AR and MR.
c. Identify the market structure under which the firm operates.

2. The table below shows the production costs and revenues to a firm.

Output TC TR MC MR
0 24 -
1 33 6
2 41 12
3 48 18
4 54 24
5 61 30
6 69 36

a. Complete the table above.


b. Calculate the VC for the third and fourth output level.
c. What is the FC.
d. The profit maximizing output to this firm is _______.
e. Sketch a diagram to show an equilibrium position for this firm.

3. The table below shows total costs a competitive firm which sells its its output at
RM90

Q TC MC AC AVC
0 10 -
1 150 100
2 210 80
3 280 76.67
4 370 80
5 500 90
6 680 105

a. Complete the table above.


b. What is the equilibrium level of output?
c. Calculate the amount of profit or loss at equilibrium.
d. Based on answer in (c), sketch a diagram to illustrate the equilibrium.

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MEF 1013 [TUTORIAL 5]

4. The following schedule shows fixed cost and variable cost of a perfect competitive
market.

Output FC VC
1 50 100
2 50 160
3 50 230
4 50 320
5 50 450
6 50 630

a. What is the equilibrium output if the price of the good is RM90 per unit?
b. Calculate the total profit or loss at the equilibrium output.
c. Based on answer in (b), sketch a diagram to illustrate the equilibrium

5. The table below shows the cost structure for a firm under perfect competition.

Q TC VC AVC AC MC AFC
0 0
1 60
2 110
3 150
4 220
5 300

a. Assuming that the fixed cost is RM80, answer the following questions.
b. Assuming the firm’s MR is RM50, determine the equilibrium level of output for the
firm.
c. Calculate the loss or profit at this equilibrium.

1. Tom leases a farmer’s field and grows pineapples. Tom hires student to pick and
pack the pineapples. Table 1 sets out Tom’s total product schedule.
a. Calculate the marginal product of three student
b. Calculate average product of three students.
c. Over what numbers of student does marginal product increase
d. When the marginal product increases, compare average product and
marginal product.

Labor (student per day) 0 1 2 3 4 5 6 7


Total products 0 100 220 300 360 400 420 430
( Pineapples per day)

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MEF 1013 [TUTORIAL 5]

2. A company rents several small rooms in an office building for RM600 a month
and has leased computer equipment that costs RM480 a month. Use these
information to answer questions below:

Quantity Variable Total Average Average Average Marginal


(Q) Cost Cost Fixed Variable Total Cost
(VC) (TC) Cost Cost Cost (MC)
(AFC) (AVC) (ATC)
0
1 400 1480 400
2 965 450
3 1350 2430
4 1900 475
5 2500 216
6 4280 700
7 4100
8 5400 135
9 7300
10 10880 980

(a) Complete the above table.


(b) In one diagram, sketch the FC, VC and TC

3. A t shirt manufacturing plant currently produces 4000 T shirt per day. Fixed cost
for the plant are RM 20000 a day. Variable cost are RM 60000 per day. At the
current output level, calculate :
a. total cost
b. average cost, average fixed cost and average variable cost

INA-T5 3

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