Table 1

Unit Unit Unit

No of Labour TP AP
1 80 80
2 250 125
3 480 160
4 800 200
5 1200 240
6 1560 260
7 1840 262.857142857
8 1896 237
9 1755 195
10 1430 143
11 880 80

Table 2
RM RM
Q
Quantity Fixed Cost Varible Cost
Output FC VC
50 0
1 50 50
2 50 78
3 50 98
4 50 115
5 50 131
6 50 151
7 50 175
8 50 204
9 50 242
10 50 300
11 50 385
 Figure 1 Diminishing marginal returns
Unit
MP
-
TP, AP and MP
170 2500
230 2000
320 1500
400
1000
360
280 500
56 0
1 2 3 4 5 6 7 8 9 10 11
-141 -500
-325 -1000
-550
No of Labour

Figure 2 Costs function

RM RM RM RM RM 120
(FC+VC) (ΔTC/ΔQ) (FC/Q) (VC/Q) (AFC+AVC)
Total Cost Marginal Cost
100
TC MC AFC AVC ATC
50
100 50 50.0 50.0 100.0 80
128 28 25.0 39.0 64.0
148 20 16.7 32.7 49.3 60
165 17 12.5 28.8 41.3
181 16 10.0 26.2 36.2
40
201 20 8.3 25.2 33.5
225 24 7.1 25.0 32.1
254 29 6.3 25.5 31.8 20
292 38 5.6 26.9 32.4
350 58 5.0 30.0 35.0 0
435 85 4.5 35.0 39.5 1 2 3 4 5 6

1. What is the break-even price?

if P=MC
when AVC=MC=P, BEP
AVC=MC = Shutdown
ATC = MC = Breakeven Point

2. What is the break-even output?

3. What is the shut-down price?
4. What is the break-even output?
ing marginal returns

P and MP

Unit TP
Unit AP
Unit MP

7 8 9 10 11

FC remain constant, AFC will decrease, remain

AFC wont touch MC

the distance between ATC-AVC=AFC-X-axis

ATC
AFC
AVC
MC

3 4 5 6 7 8 9 10 11
AFC will decrease, remain positiive

n ATC-AVC=AFC-X-axis