MICROECONOMICS CH : 8 CONCEPTS OF COST — Economics STD 11 Commerce — Question

MC is only a variable cost. Why?

Find out the average revenue and marginal revenue on the basis of the following data:

Units of Production	Total Revenue (₹)	Average Revenue (₹)	Marginal Revenue (₹)
1	20
2	36
3	48
4	56
5	60
6	60
7	56

Read the following information carefully and answer the questions 1-2 on the basis of the same:
In a perfectly competitive market, a firm believes that it can sell as many units of the good as it wants by setting a price less than or equal to the market price. But, if this is the case, surely there is no reason to set a price lower than the market price. In other words, should the firm desire to sell some amount of the good, the price that it sets is exactly equal to the market price. A firm earns revenue by selling the good that it produces in the market. Let the market price of a unit of the good be p. Let q be the quantity of the good produced, and therefore sold, by the firm at price p. Then, total revenue (TR) of the firm is defined as the market price of the good (p) multiplied by the firm's output (q). Hence, TR = p x q.
1. State the relationship between marginal revenue and total revenue.
2. Under perfect competition, rate of TR never declines. Do you agree?"

State three features of perfect competition.

Calculate the co-efficient of correlation of the following data by the Spearman's rank co-relation method.

X	19	24	12	23	19	16
Y	9	22	20	14	22	18

Draw straight line supply curves with price elasticity of supply equal to (i) one, (ii) less than one, (iii) more than one, (iv) infinity, and (v) zero.

Locate median of the following distribution:

Variable (X)	10	11	12	13	14	15	16
Frequency (f)	8	15	25	20	12	10	5

A consumer's budget is ₹40. He is buying Good-1 and Good-2. Price of Good-1 is ₹8 per unit, and of Good-2 is ₹10 per unit. Draw a budget line on the basis of these figures.

From the following total cost and total revenue schedule of a firm, find out the level of output, using marginal cost and marginal revenue approach, at which the firm would be in equilibrium. Give reasons for your answer.

Output (Units)	Total Revenue (₹)	Total Cost (₹)
1	10	8
2	18	15
3	24	21
4	28	25
5	30	33