These seven original questions mix the skills from cost and productivity from a supplied table. Write your own answer before opening each block.
For single-skill drills, try the production and costs practice set. The timed practice session builder can set the clock.
Questions 1 to 3: cost columns
Use this fictional table for Questions 1 to 3. Fixed cost is RM60.
| Q | TC (RM) |
|---|---|
| 0 | 60 |
| 1 | 90 |
| 2 | 112 |
| 3 | 130 |
| 4 | 152 |
| 5 | 180 |
Question 1. Find the marginal cost of the fourth unit and the average cost at Q = 5.
Answer
MC of the fourth = 152 − 130 = RM22. AC at Q = 5 = 180 ÷ 5 = RM36.
Question 2. Find the average cost at Q = 4 and Q = 5. Does AC rise or fall, and why?
Answer
AC at Q = 4 = 152 ÷ 4 = 38. AC at Q = 5 = 36. AC falls, because MC of the fifth unit (180 − 152 = 28) is below the earlier AC of 38.
Question 3. State the variable cost at Q = 3.
Answer
Variable cost = TC − fixed cost = 130 − 60 = RM70.
Questions 4 and 5: a missing value
Question 4. In a fictional table, TC is RM50 at Q = 0, RM72 at Q = 1 and RM88 at Q = 2. The marginal cost of the third unit is RM12. Find TC at Q = 3.
Answer
TC at Q = 3 = 88 + 12 = RM100.
Question 5. In the same table, AC at Q = 4 is RM28. Find TC at Q = 4, then the marginal cost of the fourth unit, and comment on consistency.
Answer
TC at Q = 4 = 28 × 4 = RM112. MC of the fourth = 112 − 100 = RM12. Consistency: MC at Q = 3 and Q = 4 are both 12, below AC of 33.33 at Q = 3 (100 ÷ 3), so AC falls to 28. The table agrees with itself.
Questions 6 and 7: productivity and explanation
Question 6. A fictional tailor shop made 1 200 shirts with 10 workers in March, and 1 500 shirts with 15 workers in April. Did productivity rise or fall, and by what percentage?
Answer
March: 1 200 ÷ 10 = 120 per worker. April: 1 500 ÷ 15 = 100 per worker. Productivity fell by (100 − 120) ÷ 120 × 100 = 16.7%, though output rose by 25%.
Question 7. In a fictional kitchen with one stove, total output for 1 to 4 cooks is 10, 26, 38 and 44 dishes. Explain the change in marginal product.
Answer
MP is 10, 16, 12 and 6. A full answer: “Marginal product rises to 16 at the second cook, then falls to 6. With one stove fixed in the short run, extra cooks share it, so each adds less. This is diminishing returns.”
If you got these wrong
- Questions 1 to 3: revisit total, average and marginal cost from a table.
- Questions 4 and 5: revisit recovering a missing cost value.
- Question 6: revisit output growth versus productivity growth.
- Question 7: revisit writing an economic explanation.
Log each slip in the mistake log. For a teacher to go through your attempts, see online one-to-one Economics tuition.