Q1Managerial Economics & Financial Accounting
Question
a) Complete the following table: (0.25\times30 =7.5) | QTY (UNITS) | TFC (Rs.) | TVC (Rs.) | TC (Rs.) | AVC (Rs.) | ATC (Rs.) | MC (Rs.) | |---|---|---|---|---|---|---| | 0 | 60 | ..... | ..... | ..... | ..... | ..... | | 1 | ..... | 30 | ..... | ..... | ..... | ..... | | 2 | ..... | ..... | 100 | ..... | ..... | ..... | | 3 | ..... | ..... | ..... | ..... | ..... | 5 | | 4 | ..... | ..... | ..... | ..... | 28.75 | ..... | | 5 | ..... | ..... | ..... | 15 | ..... | ..... | b) Draw graph/graphs showing relationship between any five Costs with Quantity (Units). You can show them in single graph or in separate five graphs. (0.5\times5=2.5)
Answer
Completed cost table deriving missing TFC, TVC, TC, AVC, ATC, and MC values based on cost relationships.
Given TFC is 60 at Q=0, TFC remains 60 for all levels of output. TC = TFC + TVC. MC is the change in TVC.
| QTY | TFC | TVC | TC | AVC | ATC | MC | |---|---|---|---|---|---|---| | 0 | 60 | 0 | 60 | - | - | - | | 1 | 60 | 30 | 90 | 30 | 90 | 30 | | 2 | 60 | 40 | 100 | 20 | 50 | 10 | | 3 | 60 | 45 | 105 | 15 | 35 | 5 | | 4 | 60 | 55 | 115 | 13.75 | 28.75 | 10 | | 5 | 60 | 75 | 135 | 15 | 27 | 20 |
- Q=2: TC is given as 100. TFC=60, so TVC = 40. AVC = 40/2 = 20. ATC = 100/2 = 50. MC = 40 - 30 = 10. - Q=3: MC is given as 5. Previous TVC was 40, so new TVC = 45. TC = 60+45=105. AVC = 45/3 = 15. ATC = 105/3 = 35. - Q=4: ATC is given as 28.75. TC = 28.75 × 4 = 115. TVC = 115 - 60 = 55. AVC = 55/4 = 13.75. MC = 55 - 45 = 10. - Q=5: AVC is given as 15. TVC = 15 × 5 = 75. TC = 60 + 75 = 135. ATC = 135/5 = 27. MC = 75 - 55 = 20.