2B

Question 1

how to work out variable cost

Answer 1

VC= $12 x W

i.e. $12 = cost of each worker

Question 2

how to work out total cost

Answer 2

TC = FC + VC

Question 3

how to work out AVC

Answer 3

AVC = VC/Q

Question 4

how to work out ATC

Answer 4

ATC = TC/Q

Question 5

how to work out MC

Answer 5

MC= ΔTC/ ΔQ

Question 6

Discrete model curves

Answer 6

MC > ATC > AVC

Question 7

Factors that shift supply curve

Answer 7

1. Technology- increase production
2. Input prices -
3. Expectations- i.e. can expect new opportunities to produce more/ less
4. Changes in pricing for other goods- can shift focus to goods that have higher demand
5. Number of suppliers- larger suppliers = larger the right shift in aggregate supply curve

Question 8

Elasticity (supply)

Answer 8

P/Q x 1/ slope

Question 9

price of elasticity supply

Answer 9

denotes the percentage change in the quantity supplied resulting from a very small percentage change in price

Question 10

law of supply

Answer 10

Supply curves have the tendency of being upward sloping

Question 11

Factors that make supply curves more or less elastic

Answer 11

1. availability of raw materials- i.e. more mats = more elasticity, less mats = inability to produce
2. factors mobility- faster a firm can divert its factor of production of one good to another, the more elastic
3. inventory, excess capacity- more inv = can quickly increase amount supplied to the market
4. time horizon- more time = produces to plan and revise their production