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Thread: eco401 Economics Assignment No.02 spring 27 May 2011

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    Icon16 eco401 Economics Assignment No.02 spring 27 May 2011

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    Semester “Spring 2011”
    “Economics (ECO401)”
    Assignment No.02 Marks: 20
    Question:
    A firm operating in competitive environment faces the following price (P),
    quantity (Q), total fixed cost (TFC) and total variable cost (TVC) schedules
    respectively:
    A. Calculate total revenue (TR), marginal revenue (MR), total cost (TC),
    marginal cost (MC) and profit (π) for each level of output (Q).
    B. Find the optimal level of output and price which maximizes firm’s
    profit.
    Marks: A= 18 (1 for each value), B= 2
    Important Note:
    �� Solution of Part A should be in the following format.
    Important Tips
    1. This Assignment can be best attempted from the knowledge acquired after
    watching video lecture no. 13 to lecture no 22 and reading handouts as well
    as recommended text book.
    2. Video lectures can be downloaded for free from
    Q P TFC TVC
    400 2.5 150 750
    500 2.25 150 830
    600 2 150 905
    700 1.75 150 995
    Q P TFC TVC TR MR TC MC Profit (π)
    400 2.5 150 750
    500 2.25 150 830
    600 2 150 905
    700 1.75 150 995


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    Senior Member saneha's Avatar
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    Icon16 eco401 Economics Assignment No.02 idea solution spring 27 May 2011

    eco401 Economics Assignment No.02 idea solution spring 27 May 2011

    Q P TFC TVC TR MR TC MC Profit
    400 2.5 150 750 1000 - 900 - 100
    500 2.25 150 830 1125 125 98 80 145
    600 2 150 905 1200 75 1055 75 145
    700 1.75 150 995 1225 25 1145 90 80

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    Junior Member ironwood's Avatar
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    Word Icon 35px Jpg.ashx solution?

    is here!
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    Assignment # 2

    Question:
    A firm operating in competitive environment faces the following price (P),quantity (Q), total fixed cost (TFC) and total variable cost (TVC) schedules respectively:

    A. Calculate total revenue (TR), marginal revenue (MR), total cost (TC),marginal cost (MC) and profit (π) for each level of output (Q).


    Solution:-


    Q
    P
    TFC
    TVC
    TR
    MR
    TC
    MC
    π
    400
    2.5
    150
    750
    1000

    900

    100
    500
    2.25
    150
    830
    1125
    1.25
    980
    0.8
    145
    600
    2
    150
    905
    1200
    0.75
    1055
    0.75
    145
    700
    1.75
    150
    995
    1225
    0.25
    1145
    0.9
    80

    B. Find the optimal level of output and price which maximizes firm’sprofit.

    Answer:-
    As we know that profit is maximized at the point where MC = MR. The optimal level of Output (Q) and Price (P) at which maximizes firm’s profit is 600 and 2.



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