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Past Year 2011 September

R

Robert

Very Active Member
29 You are given the following data concerning the production costs and the average
revenue of a profit maximising firm that produces Good X. The fixed costs of
production are £100.
Output of Short Run Average Average Revenue
Good X Variable Cost (£s) (£s)
1 110 300
2 95 250
3 80 210
4 75 180
5 82 150
6 85 120
7 90 100
8 100 90
9 110 80
10 120 70

(i) Calculate the profit maximising output of the firm. [1]
(ii) State the level of output at which average total costs are minimised. [1]
(iii) State what will happen to the production in the short run if the fixed costs of
production rise from £100 to £400. [1]
(iv) Calculate the smallest rise in total variable costs (to the nearest pound) that
would force the firm to cease production in the short run. [2]

May I know if i could get the full solution(steps included) of this question ?
 
What is the combined effect of an increase in the cost of production and a rise in
consumer income on the equilibrium price and quantity of a normal good?
A The effect on price is indeterminate but quantity will fall.
B The effect on price is indeterminate but quantity will rise.
C The effect on quantity is indeterminate but price will rise.
D The effect on quantity is indeterminate but price will fall.

May I know why this question ,the answer is C ? Is there any graph to prove ?
 
25 Given the following labour hours required to produce 1 unit of each of Goods X and
Y, which one of the statements below is TRUE?
Country Good X Good Y
A 8 10
B 10 20
A Country A has a comparative advantage and an absolute advantage in producing
Good Y.
B Country B has a comparative advantage in producing Good X and an absolute
advantage in producing Good Y.
C Country A has a comparative advantage in producing Good X and an absolute
advantage in producing Good Y.
D Country B has a comparative advantage in producing Good Y and an absolute
advantage in producing Good X.

Personally i think that the answer for this is B? as Country A should nt be hvg any absolute advantage ?
 
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