Question 1

Given a total cost function for a firm is TC = 400 + 150Q - 3Q² + 0.02Q³. Based on this equation, calculate.

1. Total fixed cost function
2. Total variable cost function
3. Average fixed cost function
4. Average variable cost function
5. Average total cost function
6. Marginal cost function
7. The output level at which marginal cost is minimum
8. The output level at which average variable cost is minimum

Question 2

The demand function for a product sold by a firm is given as Q_d = 20 - P. Find the marginal revenue and average revenue.

Question 3

Michael is an account executive earning RM 3,500 a month. He is considering to give up his job and to set up his own fitness centre. He estimates that renting for the space would be RM 1,2000 per year, his equipment's would cost RM 30,000 a year, hiring worker would be RM 30,000 a year and other expenses such as utilities would cost another RM 8,000. The source of initial deposits is from his fixed deposit of RM 80,000 from Bank XYZ which yields a return of 10% per annum. Michael estimated that his total revenue would be RM 100,000 per year. Advise Michael whether he should or should not start with his fitness centre.