1. Define an isoquant and outline its general properties 2. The total cost in thousands of shilings (f(C) of producing Qunits of product is given by the following function. TC=1,000+2Q^2-12Q You are required to compute the following: (i) The total fixed costs. (ii) The output level that will minimize the marginal cost. (1 mark) (iii) The marginal 48-13=0 when the lefor of output is 5000 units. (2 marks) (1) marks) 3. profit-bothin the short run and in the long run. Under what conditions does he make losses? https://www.hight.com/again.com/com/age/call-com/assignment/ (8 marks) 4. Given the following demand and supply functions: Commedity 2: (1) Explain the relationship petween the two commodities (2 morks) (ii) Determine the equilibrium quantities and price for each commodity. (3 marks) B. Distinguish between: (i) Microeconomics and Macroeconomics (ii) Short run and long run (2 marks) (iii) Describe the three stages of production, and explain, with reasons, the most optimal stage for a rational producer (2 marks) (5 marks)

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1. Define an isoquant and outline its general properties 2. The total cost in thousands of shilings (f(C) of producing Qunits of product is given by the following function. TC=1,000+2Q^2-12Q You are required to compute the following: (i) The total fixed costs. (ii) The output level that will minimize the marginal cost. (1 mark) (iii) The marginal 48-13=0 when the lefor of output is 5000 units. (2 marks) (1) marks) 3. profit-bothin the short run and in the long run. Under what conditions does he make losses? https://www.hight.com/again.com/com/age/call-com/assignment/ (8 marks) 4. Given the following demand and supply functions: Commedity 2: (1) Explain the relationship petween the two commodities (2 morks) (ii) Determine the equilibrium quantities and price for each commodity. (3 marks) B. Distinguish between: (i) Microeconomics and Macroeconomics (ii) Short run and long run (2 marks) (iii) Describe the three stages of production, and explain, with reasons, the most optimal stage for a rational producer (2 marks) (5 marks)

Answer 1

1. An isoquant is a graphical representation of all possible combinations of inputs that yield the same level of output. It is used in production theory to depict the different combinations of inputs that a firm can use to produce a given level of output.General properties of an isoquant:- Isoquants are downward sloping, indicating that as the quantity of one input increases, the quantity of the other input must decrease to maintain the same level of output.- Isoquants do not intersect, as each isoquant represents of- Isoquants are convex to the origin, reflecting the diminishing marginal rate of technical substitution (the rate at which one input can be substituted for another input while maintaining the same level of output).2. (i) The total fixed costs are the costs that do not change with the level of output. In the given total cost function, TC = 1,000 + 2Q^2 - 12Q, the fixed cost is 1,000.(ii) To minimize the marginal cost, we need to find the output level where the marginal cost is equal to the average variable cost. The marginal cost is the derivative of the total cost function with respect to the quantity. In this case, the marginal cost is 4Q - 12. To minimize the marginal cost, we set it equal to the average variable cost, which is (2Q^2 -Q Q. Solving this equation will give us the output level that minimizes the marginal cost.(iii) To find the marginal cost when the level of output is 5,000 units, we substitute Q = 5,000 into the marginal cost function: 4(5,000) - 12 = 19,988.3. Profit in the short run and long run:In the short run, a firm can make losses if the price is below the average variable cost. In the long run, a firm can make losses if the price is below the average total cost.4. (i) The relationship between the two commodities can be explained by analyzing their demand and supply functions. If the demand function for one commodity is steeper than the supply function, it indicates that consumers are more responsive to price changes for that commodity compared to producers.(ii) and price for each commodity, we need to set the demand function equal to the supply function and solve for the equilibrium price and quantity. This can be done by finding the intersection point of the demand and supply curves.B. (i) Microeconomics focuses on the behavior of individual economic agents, such as households and firms, while macroeconomics examines the economy as a whole, including aggregate variables like GDP, inflation, and unemployment.(ii) In the short run, at least one input is fixed, while in the long run, all inputs are variable.(iii) The three stages of production are:1. Increasing returns stage: In this stage, as the quantity of output increases, the average cost decreases.2. Diminishing returns stage: In this stage, as the quantity of output increases, the average Negative returns stage: In this stage, as the quantity of output increases, the average cost increases at an increasing rate.The stage for a rational producer is the diminishing returns stage, as it is the stage where the firm can maximize its profits by producing at the level where marginal cost equals marginal revenue.

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