Q4 of 25 Page 1

Which of the following is a variable cost?

a. Salary of permanent staff


b. Rent of premises


c. License fees


d. Wages


OR


If Total Variable Cost and Total Fixed Cost of producing 10 units are 500 & 200, the value of the average cost would be?


a) 50


b) 70


c) 20


d) 80

(d)

Wages for the employees is the variable cost. Because in the firm the employees are variable inputs, they vary according to the change in the production of output. To produce more output there will be a need for more employees there the variable cost increases. Therefore the Wages are the variable cost incurred by the firm.


OR


(b)


TVC for producing 10 units is 500


TFC for producing 10 units is 200


Therefore TC will be TFC+TVC = 500+200


= 700


Average Cost is the Total Cost divided by the Output.


= TC/Q


= 700/10


=70


Hence 70 is the average cost.


More from this chapter

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2

If the Total Revenue of a firm increases by Rs. 45,000 due to an increase in the sale of Good X from 50 units to 65 units, then marginal revenue will be _____________?

 3

A Production Possibility Curve would be _______ curve if all the available resources in an economy are equally efficient to produce both the goods. (Choose the correct alternative)

a. A straight line


b. Convex to origin


c. Concave to origin


d. Upward sloping

 5

Distinguish between Normative Economics and Positive Economics, with suitable examples.

OR


Why do central problems arise? Discuss briefly.

 6

Mr. Atal Singh is consuming two goods X and Y. If he is facing a situation of MUX/PX >MUY/PY, discuss how would he reach the level of equilibrium.