# Producer Behaviour and Supply-Cost (CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics): Questions 24 - 32 of 47

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## Question number: 24

Essay Question▾

### Describe in Detail

On the basis of the information given below, determine the level of output at which the producer will be in equilibrium. Use the marginal cost – marginal revenue approach. Give reasons for your answer

 Output (units) Average Revenue (Rs) Total Cost (Rs) 1 7 8 2 7 15 3 7 21 4 7 26 5 7 33 6 7 41

### Explanation

 Output (units) Average Revenue (Rs) Total Cost (Rs) Marginal cost Marginal revenue 1 7 8 - 7 2 7 15 7 7 3 7 21 6 7 4 7 26 5 7 5 7 33 7 7 6 7 41 8 7

Marginal cost = Tc2-Tc1 It means 15 - 8

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## Question number: 25

### Write in Short

What is meant by cost in economics?

## Question number: 26

### Write in Short

Give meanings of marginal cost

## Question number: 27

Essay Question▾

### Describe in Detail

Distinguish between average cost and marginal cost giving an example.

### Explanation

 Characteristics average cost marginal cost Definition average cost is the cost of producing amount of output divided by the cost per unit When a firm increases its output by one unit, there is a change in the total cost of producing that commodity this change in cost is known as marginal cost. Formula AC= MC =

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## Question number: 28

Essay Question▾

### Describe in Detail

 Output (units) Total Variable cost (Rs) Average variable cost Marginal cost 1 10 - - - - 8 6 3 27 - - - - 10 13

### Explanation

 Output (units) Total Variable Cost (Rs) Average variable cost Marginal Cost 1 10 10 10 2 16 8 6 3 27 9 11 4 40 10 13

In that sum find in first row find average variable cost

Average variable

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## Question number: 29

Essay Question▾

### Describe in Detail

Distinguish between fixed cost and variable cost giving examples an example.

### Explanation

 Characteristics Fixed cost Variable cost Definition Fixed cost means it is indirect cost it is not dependent on level of goods or services. Variable cost means cost of labor, material and change in volume of production. Behavior It is constant for given time period It changes with change in the output level Examples Rent, salary Wages, Packing Expenses

## Question number: 30

### Write in Short

Give meaning of ‘opportunity cost’

## Question number: 31

### Write in Short

What does cost mean in economics?

## Question number: 32

Essay Question▾

### Describe in Detail

 Output (units) Total Variable cost (Rs) Average variable cost Marginal cost 1 - 12 - 2 20 - - - - 10 10 4 40 - -

### Explanation

 Output (units) Total Variable Cost (Rs) Average variable cost Marginal Cost 1 12 12 12 2 20 10 8 3 30 10 10 4 40 10 10

In that sum find in first row find average variable cost

= = =12

Then in third row find

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