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12 marksTheory of Supply

CAPE Economics Unit 1 · 2007 · Paper 2 · Question 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 Fixed Cost is 30.00 and wage per worker is 20 per day.

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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(a)(ii)Copy and complete the short-run production function table by calculating APP and MPP.[6 marks]
  3. 2(b)(i)Draw a diagram displaying the average physical product and marginal physical product curves.[8 marks]
  4. 2(b)(ii)Discuss the relationship between the average physical product curve and the marginal physical product curve.[6 marks]
  5. 2(b)(iii)Explain why the firm's marginal product initially rises and then falls as additional units of labour are employed.[9 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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