Short Run Average and Marginal Costs

Q. Following table shows estimates of cost of production of certain commodities. Present the data in the form of a sub-divided bar diagram:

Estimate of Cost	Goods
	A	B	C	D
Raw materia Wages Fixed Costs Office expenses	50 40 10 10	40 40 12 8	45 40 15 10	50 40 15 5
Total Cost	110	100	110	110

Q.

Average daily wage of 50 workers of a factory was Rs. 200. Each worker is given a raise of Rs. 20. What is the new average daily wage?

Q. Which of the following is variable cost?

1. Wages of labour
2. Prices of raw material
3. Fuel and power used
4. All of the above

Q. Find out the range and the coefficient of range from the following data:

Daily Wage (₹)	6	7	8	9	10	11	12	15
Number of Workers	10	15	12	18	25	20	10	4

Q. The following table gives the total cost schedule of a firm. It is also given that the average fixed cost at 4 units of output is Rs. 5. Find the TVC, TFC, AVC, AFC, SAC and SMC schedules of the firm for the corresponding values of output.

Q	1	2	3	4	5	6
TC	50	65	75	95	130	185

Q. Which of the following is a variable cost in the short run?

1. Rent of the factory.
2. Wages paid to the factory labour.
3. Interest payments on borrowed financial capital.
4. Payment on the lease for factory equipment.

Q. The variable costs are also known as _________.

1. Prime costs
2. Special costs
3. Direct costs
4. All of them

Q. You know share market is going bullish during the last several months. Collect weekly data on the share price of any two important industries during the past six months. Calculate the range of share prices. Comment on how volatile are the share prices.

Q. Suppose the first four units of a variable input generate corresponding total outputs of $200,350,450,500$. The marginal product of the third unit of input is ______.

1. $50$
2. $100$
3. $200$
4. $150$

Q. The distinction drawn between fixed and variable costs is based on whether the ______________.

1. cost can or cannot be changed during the life of the plant
2. costs do not enter the calculation of total costs
3. costs do or do not vary with the output produced in the short run
4. costs are or are not legally contracted, hence, unchangeable.

Q. Following a cut in the level of output, the difference between average total cost and average variable cost decreases.

1. True
2. False

Q. The slope of the total variable cost curve equals _________.

1. marginal physical product.
2. average variable cost.
3. marginal cost.
4. average cost.

Q. Match the following:

List - I	List - II
A. U-shaped curve	(i) AC = MC
B. Rectangular Hyperbola	(ii) TC
C. Continuously rising curve	(iii) AFC
D. Optimum output	(iv) AC

1. A (iv), B (iii), C (ii), D (i)
2. A (iii), B (ii), C (i), D (iv)
3. A (ii), B (i), C (iii), D (iv)
4. A (i), B (iv), C (ii), D (iii)