||| VuHelp4U ||| ECO402 solution requried

Salaam all, we can find required info by these formulas

b ka formula Total cost/output

c ka formula revenue- labor cost 

d ka formula revenue - labor cost- capital cost

is this correct, and how do we find Total cost and capital cost? plz help aaj last date hey?

Question:

Sialkot is well known for the production and distribution of sports products. The market

of sports works under monopolistic competition where each firm has to compete with

several firms. These firms not only manufacture sports goods to meet domestic demand

but also export to other countries. Consider a new firm, Ahmed Brothers, started its

business of manufacturing sports goods in Sialkot. The owner of Ahmed Brothers had

invested capital of amount Rs. 15, 00,000 to start this business. He also had the option

to invest this capital in a bank at 10% rate of interest per annum but he preferred to start

his own business. In the starting year, the firm employed 100 workers and paid total

amount of Rs. 500,000 to these employees. The average salary of the employees was

Rs. 5, 000. The firm incurred cost of Rs. 400, 000 in setting up its business including

cost of plant and machinery. Further, the firm paid Rs. 400, 000 for raw material. The

rent of building paid in this year was Rs. 180, 000 and the lump sum amount of tax for

this year was Rs. 20,000. This firm produced total 9, 000 units in this year. The selling

price of each unit was Rs. 200.

Requirements:

Part A:

From the information given above, calculate:

a. Fixed cost and variable cost of the firm.

b. Average cost of firm.

c. Accounting profit of the firm.

d. Economic profit of the firm.

Part B:

What production decision firm will take for future after calculating economic profit?

(Marks: Part A=8+4+5+5, Part B=3)

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