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2025 - ECS2601 - ASSESSMENT 6 - QUESTIONS AND ANSWERS - SEMESTER 1 R85,33
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  5. Intermediate Microeconomics (ECS2601)

Exam (elaborations)

2025 - ECS2601 - ASSESSMENT 6 - QUESTIONS AND ANSWERS - SEMESTER 1
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  • January 7, 2025
  • 75
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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2025 – ECS2601 – ASSESSMENT 6 – EXPECTED Q&A



Assessment 6
Started on Tuesday, 12 November 2024,
State Finished
Completed on Tuesday, 12 November 2024,
Time taken
Marks 60.00/60.00
Grade 100.00 out of 100.00


Question 1




The maximum profit available to the firm is …

a.
R35

b.
R155

c.
R20

d.
R30

Feedback
Your answer is correct.

In a perfect competition set up: P = MR = MC in order to maximise profit, Therefore

Profit = TR –TC at a level where P = MR = MC


1

, 2025 – ECS2601 – ASSESSMENT 6 – EXPECTED Q&A


= 150 -115 where P =MR= MC =30

=R35


The correct answer is:
R35



Question 2
Which of the following statements about the graphs of short-run cost curves is
FALSE?

a.
The SMC curve intersects the lowest point on the SAC curve.

b.
The average fixed cost (AFC) at every level of output equals the gap between the
short run average cost (SAC) and the average variable cost (AVC) curves at that
level of output.

c.
The short-run marginal cost (SMC) curve lies above the marginal variable cost
(MVC) curve.

d.
The MVC curve intersects the lowest point on the AVC curve.

Feedback
Your answer is correct.

The short-run marginal cost (SMC) curve lies above the marginal variable cost
(MVC) curve is FALSE because the SMC and MVC curves actually coincide. To see
why, remember that MVC shows the change in a firm's total variable cost if its output
changes by one unit, while SMC shows the change in its short-run total cost if its
output changes by one unit. Now, in the short-run, if a firm changes its output by one
unit, it can change the quantity of the variable inputs it uses but not the quantity of
the fixed inputs, so the change in its total cost equals the change in the cost of its
variable inputs.



2

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