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8 marksTheory of Supply

CAPE Economics Unit 1 · 2012 · Paper 2 · Question 2(a)(ii)

A perfectly competitive microchip firm has a fixed cost of $128. Its variable costs across output levels 0 to 4 are provided.

Copy and complete the table to determine Total Cost, Marginal Cost, Average Fixed Cost, and Average Total Cost for output levels 0 through 4.

This question uses a figure or table from the paper — you'll see it when you practise.

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Other parts of this question

  1. 2(a)(i)State the formula for each of the following costs: Total cost, Marginal cost, Average fixed cost, Average total cost, and Variable cost.[5 marks]
  2. 2(b)Using a diagram, explain the relationship between marginal cost and average total cost.[6 marks]
  3. 2(c)Using a diagram, explain the relationship among the marginal cost curve, the firm's supply curve, and the average variable cost curve.[6 marks]

More practice: the rest of this paper · more Theory of Supply questions · all CAPE Economics Unit 1 past papers