eco401 Economics Assignment No.02 spring 27 May 2011

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Semester “Spring 2011”
“Economics (ECO401)”
Assignment No.02 Marks: 20
Question:
A firm operating in competitive environment faces the following price (P),
quantity (Q), total fixed cost (TFC) and total variable cost (TVC) schedules
respectively:
A. Calculate total revenue (TR), marginal revenue (MR), total cost (TC),
marginal cost (MC) and profit (π for each level of output (Q).
B. Find the optimal level of output and price which maximizes firm’s
profit.
Marks: A= 18 (1 for each value), B= 2
Important Note:
�� Solution of Part A should be in the following format.
Important Tips
1. This Assignment can be best attempted from the knowledge acquired after
watching video lecture no. 13 to lecture no 22 and reading handouts as well
as recommended text book.
2. Video lectures can be downloaded for free from
Q P TFC TVC
400 2.5 150 750
500 2.25 150 830
600 2 150 905
700 1.75 150 995
Q P TFC TVC TR MR TC MC Profit (π
400 2.5 150 750
500 2.25 150 830
600 2 150 905
700 1.75 150 995