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6 marksTheory of Supply

CAPE Economics Unit 1 · 2007 · Paper 2 · Question 2(a)(ii)

A table shows a garment manufacturer's short-run production function relating labour input to garment output per day.

Copy and complete the short-run production function table by calculating APP and MPP.

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Other parts of this question

  1. 2(a)(i)State the formulae for average physical product (APP) and marginal physical product (MPP).[2 marks]
  2. 2(b)(i)Draw a diagram displaying the average physical product and marginal physical product curves.[8 marks]
  3. 2(b)(ii)Discuss the relationship between the average physical product curve and the marginal physical product curve.[6 marks]
  4. 2(b)(iii)Explain why the firm's marginal product initially rises and then falls as additional units of labour are employed.[9 marks]
  5. 2(c)Construct a table showing Total Fixed Cost, Total Variable Cost, Total Cost, Average Variable Cost, Average Total Cost, and Marginal Cost, given that Total…[12 marks]
  6. 2(d)(i)State the formula for calculating price elasticity of demand when the manufacturer sells 30 garments at 4 per garment and 25 garments at 5 per garment.[2 marks]
  7. 2(d)(ii)Calculate the elasticity of demand and state the effect on total revenue of an increase in price.[5 marks]

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