Economics – 11th Jayshree Periwal High School Worksheet-9

(Micro) COST (2021-22)

Very Short Questions (1 Mark Each)

1. What is meant by cost? Define it.
2. What is meant by fixed costs? Give two examples of fixed costs.
3. Define variable costs. Give two examples of variable costs.
4. Define marginal cost.
5. If TFC and TVC are given, how will you estimate the TC?
6. What does the difference between total cost and total fixed cost indicate in the short-run?
7. What does the difference between total cost and total variable cost indicate in short-run?
8. Why are TC and TVC curves parallel to each other?
9. How does total fixed cost change when output changes?
10. How will you estimate the average fixed cost? What is its shape?
11. How will you estimate average variable cost? What is its shape?
12. Give a formula to estimate the average total cost of a firm.
13. Why is average total cost greater than average variable cost?
14. What does the difference between AC and AVC indicate?
15. Can AFC curve touch the x-axis?
16. Why does average fixed cost fall as output rises?
17. What is the general shape of MC curve?
18. What is the general shape of AC curve?
19. What will happen to AC when MC > AC?
20. What happens to AC when MC < AC?
Short Answer Questions (3-4 Marks)
1. Distinguish between short period and long period.
2. Distinguish between fixed costs and variable costs with two examples.
3. Draw the total fixed cost curve and explain its shape.
4. How is the total cost calculated in the short run? Draw a diagram showing total cost, total
fixed cost and total variable cost.
5. What does the difference between total cost and total variable cost curves represent? What
is the nature of this difference? Show it in the diagram.
6. How is average fixed cost calculated? Give a schedule of AFC.
7. How is average variable cost calculated? Give a schedule and diagram of AVC.
8. Why is the MC curve in the short-run U-shaped?
9. Why is the AC curve in the short-run U-shaped? Explain with diagram.
10. Explain the relationship between SMC and AVC with the help of a diagram.
Numericals
1. From the table given below, calculate marginal cost:
Quantity 1 2 3 4 5 6
AVC (Rs.) 60 40 28 25 28 35

2. From the total cost schedule given below, calculate average and marginal costs:
Quantity Produced 0 1 2
Total Cost (Rs.) 10 15 22

3. The average cost schedule of a firm is given below:

 Quantity Produced (Units) 5 6 7
Average Cost (Rs.) 40 41 42
Calculate the firm's marginal cost for the production of (i) 6, and (ii) 7 units

4. From the following data on the cost of production of a firm calculate (i) average fixed cost,
and (ii) average variable cost of producing eight units:
Output 0 3 8
Total Cost (Rs.) 80 104 152

5. From the following data on the cost of production of a firm calculate (i) average fixed cost,
and (ii) average variable cost of producing four units and the marginal cost of the fourth
unit:
Output 0 1 2 3 4
Total Cost (Rs.) 80 102 122 140 156

6. From the following data on the cost of production of a firm, calculate (i) average fixed cost,
and (ii) average variable cost of producing five units of output:
Units of output (no.) 0 3 5
Total Cost (Rs. thousands ) 50 80 120

7. Calculate TC and AVC

Units of output AFC (Rs.) MC (Rs.)
1 60 32
2 30 30
3 20 28
4 15 30

8. Calculate Average Cost and Total Cost with the help of the following data:
Average Fixed cost of producing 2 units of output is 5.
Quantity (Units) 1 2 3
Marginal Cost (Rs.) 10 8 6
9. Complete the following:
Output (Units) TC (Rs.) AFC (Rs.) AVC (Rs.) MC (Rs.)
1 20 6
2 26 3
3 39 2
10. Complete the following:
Output AFC(Rs.) MC (Rs.) AVC(Rs.) AC (Rs.)
1 60 20 — —
2. — — 19 —
3 20 — 18 —
4 — 18 — —
12 — — 31