1.

The following table portrays Tony’s total utility from consumption of

spiderman comic books – he is an avid collector. The column for
marginal utility is shown below. Calculate the values for marginal
utility and fill in the blanks for the total utility and marginal utility
column. (5 pts)

Quantity
Marginal
purchased of Total utility
utility
comics
0 0 0
1 100 100
2 190 90
3 270 80
4 330 60
5 380 50

b. Does Tony experience the law of diminishing marginal utility from

consuming spiderman comics? How do you know? Explain your general
interpretation. (5 pts)
Answer: Tony experience the law of diminishing marginal utility in is
consumption of Spiderman comic books because base on the figures in the
marginal utility column it decreases from 100 to 50 from the first purchased of
the comics until the fifth comics.

c. In the space below, sketch graphs for total utility function and the
marginal utility function in the y axis and quantity in the x axis. (5 pts)

(The answer is on the other sheet of paper)

2. Pilot Company establishes the following information for its profit
planning activities:

Unit sales per price P200

Unit variable cost 120
Total fixed costs P400,000
Unit sold 8,000 units

Determine the breakeven point in units?

200 - 120 = 80 UCM

BEP = FC/UCM
400,000/80 = 5,000
5,000 is the Breakeven point

3. The information about the costs of a firm is given below.

Output FC VC/u
50 2,500.00 10.00
100 2,500.00 8.00
150 2,500.00 6.67
200 2,500.00 6.50
250 2,500.00 6.80
300 2,500.00 7.33
350 2,500.00 8.00
400 2,500.00 8.75

a. What is the firm’s fixed cost?

FC= FC*Q
2,500 * 50 = 125,000

b. If the firm produces 250 units, what is the average cost?

ATC= FC+VC
ATC = 2,500 + 6.80 = 2,506.8

c. What is the total cost of producing 200 units?

TC= (FC + VC) * Q
TC= (2,500 + 6.50)*200 = 501, 300

d. If the firm closed down and produces no output, what will be its total
cost?
No output - no variable cost. The firm's cost will then be limited to its
fixed cost, 
TC= FC= 125,000