a) Present the above data graphically b) Show the three stages of production as per the law of diminishing returns 8. Explain the relationship between the following in the three stages of production: i. The TP and the MP ii. The AP and the MP iii. The AP and the TP 9. Define the following: a) Total Cost; b) Average Total cost; c) Fixed cost; d) Average fixed cost; e) Total variable cost; f) Average variable cost g) Marginal cost 10. By using the figures given for an industry in the short run, complete the table below. Draw the curves of AFC, AVC, ATC and MC by using the figures and explain their relationship. Output (units) TFC 1 P50 TC 150- AFC AVC MC P100 2 3 4 160 180 105 20 67.5 5 11. Why is the law of diminishing returns not applicable to a firm in the long run? 12. What is meant by the economies of scale? Indicate the important factors that explain its existence 6 13. What are the diseconomies of scale? What are the factors that bring diseconomies of scale? 14. Why is the long run ATC Curve of a firm generally U shaped? Use your knowledge of economies/diseconomies of scale to explain the shape of the long-run average cost curve. 15. Why is the equality of Marginal Revenue and Marginal Cost essential for profit maximisation in all market structures 16. Explain the basic characteristics of a pure/perfect competitive market. 17. Under pure competition the demand curve of the individual firm is perfectly elastic, why? 18. Why does the following situation arise under perfect competitive market? Average Revenue (AR)= Marginal Revenue (MR)=Price (P) 19. Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is purely competitive. 20. Under perfect competition, at what stage can a firm: a. Continue to operate even though it does not realise an economic profit b. Close or shut down? 21. Explain how a competitive firm will: (a) Attain equilibrium (b) Attain economic profit (c) incur losses 22. What are the characteristics of pure monopoly? Compare them with the characteristics of pure competition 23. Explain the factors that prevent the entry of other firms under monopoly. 24. How do the entry barriers help the monopoly firm to derive economies of scale? 25. Explain why the monopolist's demand curve is downward slopping, causing the MR curve to lie below it? 26. Why does demand curve of monopoly firm differ from that of pure competitive firm? 27. The pure monopolist has no supply curve why? 7