Practice Assignment № 5

1. The function of total costs is presented by definite equation in accordance to the individual variant. Its general view is TC=26+3Q+Q² (Q is quantity of produced units). Follow the instructions below to do the tasks 1.1 – 1.6 using basic cost function:

1. Write the functions of fixed costs and variable costs:

FC =26 VC =3Q+Q²

2. Fill the gaps in the following schedule after calculating all the costs for every definite volume of output. Then calculate total revenue under the price equals $P:

Q	FC, $	VC, $	TC, $	TR, $	Profit, $	Efficiencyecon	Profitability
0	26	0	26	0	-26		0
1	26	4	30	26	0		1
2	26	10	36	52	16		1.44
3	26	18	44	78	34		1.77
4	26	28	54	104	50		1.92
5	26	40	66	130	64		1.96

Make a conclusion about production unit activity, using such terms as economic efficiency and profitability: __________________________________________________

3. Plot the graph of FC, VC, TC, TR after choosing proper scale.

4. Write the functions of average total, average fixed and average variable costs:

ATC =26/Q + 3 + Q; AFC =26/Q; AVC = 3 + Q

5. Fill the gaps in the following schedule after calculating all the costs for every definite volume of output:

   Q	AFC, $	AVC, $	ATC, $	MC, $	P, $
   0
   1
   2
   3
   4
   5

6. Plot the graph of AFC, AVC, ATC, MC, P after choosing proper scale.

2. Find the analogous concepts in the theory of the firm.

Consumer theory	Theory of the Firm
Total Utility	Total Revenues
Marginal Utility	Marginal Costs
Utility Function	Costs Function
The law of diminishing marginal utility	The law of diminishing marginal productivity
Consumption	Production
Indifference curve	Isoquant
Consumer budget
Budget line	Isocost
MRS
Consumer’s Optimal choice

VARIANT	Total Cost function	P, $
1	TC=25+2Q+3Q2	20
2	TC=20+2Q+2Q2	10
3	TC=15+3Q+2Q2	23
4	TC=35+2Q+Q2	40
5	TC=30+3Q+2Q2	35
6	TC=24+4Q+Q2	28
7	TC=12+6Q+4Q2	25
8	TC=60+2Q+Q2	42
9	TC=45+Q+Q2	30
10	TC=10+5Q2	50
11	TC=25+5Q+3Q2	30
12	TC=40+2Q+2Q2	45
13	TC=15+3Q2	18
14	TC=44+2Q+Q2	38
15	TC=5+3Q+2Q2	8
16	TC=26+3Q+Q2	26
17	TC=12+5Q+2Q2	13
18	TC=50+2Q+Q2	46
19	TC=18+2Q+Q2	25
20	TC=60+5Q2	55
21	TC=24+2Q+Q2	14
22	TC=15+2Q+Q2	17
23	TC=16+2Q+Q2	31
24	TC=22+4Q+2Q2	36
25	TC=40+2Q+Q2	49