Consider the following cost information for Yasir’s tea stall.
(Cups of tea per hour) Total Cost in Rs.
0 30
1 33
2 38
3 45
4 54
5 65
6 78
7 93
8 110
9 129
10 150
i. Calculate variable cost, average fixed cost, average variable cost, average total cost, and
marginal cost.
ii. What is the efficient scale of Yasir’s tea stall?
iii. Graph the curves for total cost, ATC, AVC, AFC, MC. Explain shape of these curves
and the relationship between ATC and MC.
iv. Over time Yasir decides to expand his business. In the long run he first experiences
economies of scale, followed by constant returns to scale and finally diseconomies of
scale as the output increases. Draw a diagram of his ATC in the short run and the long
run. Explain this diagram in detail.

Consider the following cost information for Yasir’s tea stall.

 If Yasir’s fixed cost is Rs. 30

1. Calculate variable cost, average fixed cost, average variable cost, average total cost, and marginal cost.
2. What is the efficient scale of Yasir’s tea stall?
3. Graph the curves for total cost, ATC, AVC, AFC, MC. Explain shape of these curves and the relationship between ATC and MC.
4. Over time Yasir decides to expand his business. In the long run he first experiences economies of scale, followed by constant returns to scale and finally diseconomies of scale as the output increases. Draw a diagram of his ATC in the short run and the long run. Explain this diagram in detail.

 Consider the following cost information for Yasir’s tea stall.

If Yasir’s fixed cost is Rs. 30

1. Calculate variable cost, average fixed cost, average variable cost, average total cost, and marginal cost. 

1. What is the efficient scale of Yasir’s tea stall?

iii.    Graph the curves for total cost, ATC, AVC, AFC, MC. Explain shape of these curves and the relationship between ATC and MC.

1.         Over time Yasir decides to expand his business. In the long run he first experiences economies of scale, followed by constant returns to scale and finally diseconomies of scale as the output increases. Draw a diagram of his ATC in the short run and the long run. Explain this diagram

Consider the following cost information for Yasir’s tea stall.

If Yasir’s fixed cost is Rs. 30

1. Over time Yasir decides to expand his business. In the long run he first experiences economies of scale, followed by constant returns to scale and finally diseconomies of scale as the output increases. Draw a diagram of his ATC in the short run and the long run. Explain this diagram in detail.