Part A

Sujhoon has a cake business in Dubai. She makes cakes and sell them online. The following table
shows labor and total product combinations of Sujhoon’s cake production process.
Required:

a. Calculate average product (5 marks)

b. Calculate marginal product (5 marks)
c. Identify the “stages” of MP (5 marks)
d. Draw the Labor and Total product curve in the first given graph space (5 marks)
e. Draw the Labor and the average product and the marginal product in the second given
graph space (5 marks)
f. Show the “stages of MP” in both graphs (5 marks)
Labor Total Product Average Product Marginal Product Stages of MP
0 0 - -
1 15
2 32
3 52
4 68
5 80
6 90
7 91
8 88
9 81
10 70

Graph the total product curve. Make X axis 10 units (meaning 0 to 10). Make Y axis 100 units
(meaning 0 to 100 with increments of 10). Plot the total product curve. Identify the 3 stages on the
graph.
Graph the average product and marginal product curves. Make X axis range from 0 to 10 with
increments of 1. Make Y axis range from -15 (negative) to +30 (positive) in increments of 5. Plot
both curves on this graph. Identify the 3 stages on the graph.
Part B
(a) The following information is known for Dubai AI-technologies.
· Quantity of AI products sold during the year: 10,000
· Average Fixed Cost: AED 300 per one AI product
· Average Variable Cost: AED 400 per one AI product
· Price per one AI product: AED 1000

Required: Calculate firm profit. (10 marks)

(b) The cost structure of the Dubai AI-Technologies is given in the table below. The company
total fixed cost is estimated to be AED 200.
TP TFC TVC TC AFC AVC ATC MC
0 - - - - -
1 200
2 290
3 370
4 450
5 540
6 650
7 740
8 850
9 980
10 1130

Required:
1. Fill in all the columns of the above table. (20 marks)
2. Draw the TFC, TVC and TC graph on the area provided below (first graph) (10 marks)
3. Draw the AVC, ATC and MC curve on the area provide below (second graph) (10 marks)
Draw the TFC, TVC and TC graph here. Make the X axis range from 0 to 10 with increments of 1.
Make the Y axis range from 0 to 1500 at increments of 100.

Draw the AVC, ATC and MC graph here. Make the X axis range from 0 to 10 at increments of 1.
Make the Y axis range from 0 to 200 at increments of 10.
Part C
The following table shows long-run cost structure of Al Ain Aviation.
Number of Total Cost Average Total Cost (ATC)
Units
Produced (Q)
1 100
2 160
3 210
4 240
5 300
6 360
7 420
8 640
9 810
10 1000

Required:
(a) Calculate ATC
(b) Draw the long-run ATC curve
(c) Identify economies of scale and diseconomies of scale on the graph.
(d) Give reasons for economies of scale
(e) Give reasons for diseconomies of scale
Make the X axis range 0 to 10 at increments of 1. Make Y axis range from 0 to 100 at increments of
10.