DEPARTMENT OF HUMANITIES & SOCIAL SCIENCES (HSS), ITER, SOA UNIVERSITY

PRINCIPLES OF MICROECONOMICS (HSS-1021)

1ST SEMESTER B.TECH. / BRANCH:- CSE / CSIT /CE / ME (ALL SECTION)

QUIZ TEST II (SET 01)

1. Suppose a firm is operating under a perfect competitive market conditions, in
the short run. It has the following revenue and cost conditions.
TR = 12Q
TC = 2 + 4Q + Q2, where TR = Total revenue, TC = Total Cost & Q = Quantity
Find out profit maximizing output and total profit for the above firm.
2. Discuss how competitive market is different from monopoly market.
3. Suppose Hondas total cost of producing 4 cars is Rs.22,50,000 and its total
cost of producing 5 cars is Rs.25,00,000. What is the average total cost of
producing 5 cars? What is the marginal cost of the fifth car? Draw the
marginal-cost curve and the average-total-cost curve for a typical firm, and
explain why these curves cross where they do.
4. Vaca Family Dairy Farm operates in perfectly competitive market. Total
revenue earned by Vaca Family Dairy at each level of production is given in
the following table. If the farm incurs a fixed cost Rs. 3000 and average
variable cost of Rs. 2 per unit, find out how much output the farm will sell to
maximize its profit and what is the maximum profit?
Quantity (000 Ltrs)
Total Revenue (000 Rs.)

0
0

1
6

2
12

3
18

4
24

5
30

6
36

7
42

8
48