1.

Shogun Rua used to work as a medical representative for P80,000 per month but
quit in order to start his own catering business. To buy the necessary equipment,
he withdrew P120,000 from his savings (which paid 3.85 percent interest monthly)
and borrowed P85,000 from his uncle whom he pays monthly interest of 2.75
percent. Every month, he pays P25,000 for operations and has a revenue of
P93,170. How much is the
A. explicit cost?
B. implicit cost?
C. economic cost?

D. Accounting profit?
E. Economic profit?

2.

Classify the following as fixed or variable cost. Write FC or VC.

A. Advertisement
F. Insurance premiums
B. Fuel (factory machines)
G. Wage payments
C. Interest on company issued
H. Depreciation charges
bonds
I. Sales taxes
D. Raw materials
J. Rent on leased office
E. Executive salaries
machineries

3.

The data below shows the costs for a firm.

Q
0
1
2
3
4
5
6
7
8
9
10

4.

VC
0
30
50
60
72
85
110
140
180
230
290

TC
100

A. Solve for AFC, AVC, AC, MC for each level of q. on a

tabular format.
B. Using the MR=MC rule and the TR-TC rule, What is q*,
B.1. if the price is 30
B.2. if the price is 50
B.3. if the price is 10
C. What is the lowest price that a firm can take to continue
production? Justify.
D. What is the shutdown price? Justify.

ABCD Company, a perfectly competitive firm, has the following cost function
= 1,600 + 12 + 42
A. If the equilibrium price in that market is 60, what is q*?
B. What is the AVC at q*?