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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
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20. the difference between the average total cost and average fixed cost shows average variable cost (2) implicit cost (3) normal profit (4) opportunity cost (1
20. The difference between the average total cost and average fixed cost shows average variable cost (2) implicit cost (3) normal profit (4) opportunity cost (1) 3itea ytedarita aTPA (2) 3744E d (3) HHTA TH (4) 3HaH TA 21. An increase in a firm's fixed cost will (1) change marginal cost but not total cost 2 change both marginal and total costs (3) change variable cost but not marginal cost (4) change total cost but not marginal cost (1) zHAIA AMA ytada 7 f ga T (3) uftadrfta arm yftada 7 f atHi aTA 22. The 'expansion path' is the locus of points of producer's equilibrium resulting when the o(1) price of labour input changes (2) price of capital input changes (3) money outlay of the entrepreneur is varied (4) entrepreneur shifts onto a higher isoquant PLEASE TELL ME QUESTIONS. 20, 21 & 22
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Souradeep roychowdhury Best Answer
Q 20. correct option 1 We know ATC= AFC +AVC So, ATC-AFC = AVC. Q 21. correct option 2 Suppose for producing 1 shirt, fixed cost is 10 and variable cost is 5 So total cost = 15 Now suppose, for 2nd shirt, fixed cost remains same and variable cost increases to 10. Now total cost is 20. Now marginal cost will be 5. Now suppose for 3rd shirt, fixed cost changes to 20 and variable cost remains same. So total cost for 3rd shirt is 30 and maginal cost is 10. Thus after fixed cost has increased, both marginal cost and fixed cost increases. Q 22. correct option is 4. Expansion path occurs when the amount of capital and labor employed by the producer increases and thus the isoquant shifts rightward and his equilibrium takes place at this higher isoquant. So option 4 is the most appropriate answer. Option 3 though may seem to be the correct option, but for expansion path money outlay that is the total expenditure for the entrepreneur has to increase specifically, not just 'vary'. He employs more factors of production so his total outlay has to 'increase', which is not mentioned specifically in option 3. So it is incorrect.