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Chapters
1: Microeconomics and Macroeconomics: Introduction
2: Demand and Law of Demand
3: Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
4: Elasticity of Demand
5: Supply - Law of Supply and Price Elasticity of Supply
6: Market Mechanism: Equilibrium Price and Quantity in a Competitive Market
7: Laws of Returns - Returns to a Factor and Returns to Scale
▶ 8: Cost and Revenue Analysis
9: Forms of Market
10: Producer's Equilibrium
11: Determination of Equilibrium Price and Output Under Perfect Competition
SECTION 2: THEORY OF INCOME AND EMPLOYMENT
12: Theory of Income and Employment
SECTION 3: MONEY AND BANKING
13: Money: Meaning and Functions
14: Banks: Commercial Bank and Central Bank
SECTION 4: BALANCE OF PAYMENTS AND EXCHANGE RATE
15: Balance of Payments and Exchange Rate
SECTION 5: PUBLIC FINANCE
16: Fiscal Policy
17: Government Budget
SECTION 6: NATIONAL INCOME
18: National Income and Circular Flow of Income
19: National Income Aggregates
20: Methods of Measuring National Income
SECTION 7: PROJECT WORK
21: Project Work
22: Model Short Answer Questions
![Frank solutions for Economics [English] Class 12 ISC chapter 8 - Cost and Revenue Analysis - Shaalaa.com](/images/economics-english-class-12-isc_6:872f47036b5c4267ae061d4279703803.jpg "Frank solutions for Economics [English] Class 12 ISC chapter 8 - Cost and Revenue Analysis")
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Solutions for Chapter 8: Cost and Revenue Analysis
Below listed, you can find solutions for Chapter 8 of CISCE Frank for Economics [English] Class 12 ISC.
Frank solutions for Economics [English] Class 12 ISC 8 Cost and Revenue Analysis TEST YOURSELF QUESTIONS [Pages 168 - 175]
Select the correct option from each of the following questions: (1 mark each)
Economic cost refers to the sum total of both explicit cost and implicit cost ______.
including excess profit
including normal profit
including net profit
including abnormal profit
Opportunity cost of a good is ______.
anticipated cost
real cost
next best alternative good that could be produced with given resources
accounting cost
Social cost refers to ______.
explicit cost and implicit cost
accounting cost
private cost + real cost
private cost + external cost
Pain, sacrifices and discomforts involved in the production of a commodity is known as ______.
real cost
opportunity cost
economic cost
accounting cost
Which one out of the following costs is implicit cost?
payment made for advertisement
wages and salaries
payment made for the use of raw material
rent for self-owned factory used in production
What is the nature of expenditure on raw material, power and labour?
fixed cost
variable cost
implicit cost
explicit cost
Total variable cost can be calculated by ______.
TVC = ∑MC
TVC = TC − TFC
TVC = AVC × Q
all of these
AVC curve cannot touch AC(ATC) curve because ______.
MC starts falling
AFC is always positive
AFC is falling
none of these
Which of the following shows the functional relationship between output and cost of production?
Production function
Supply function
Cost function
Demand function
Which of the following is not a fixed cost?
Wages
Rent of the factory
Insurance Premium
Interest
Which of the following options is true about total fixed cost curve?
Parallel to X-axis
Parallel to Y-axis
Positively sloping
Negatively sloping
Mark the right option about the shape of the average cost curve:
parallel to X-axis
U-shaped
rectangular hyperbola shape
none of these
A producer starts the business in his own building. The imputed rent of this building will be considered as ______.
explicit cost
opportunity cost
implicit cost
variable cost
Mark the right option about the shape of the AVC curve.
U-shaped
(b) Horizontal straight line
Vertical straight line
None of these
Area under the MC curve is equal to ______.
AC
AFC
AVC
Total Cost (TC)
Identify two cost curves which start from the same point on the Y-axis.
TVC and TFC curves
TVC and AVC curves
TFC and TC curves
TFC, AFC curves
With increase in output the difference between TC curve and TVC curve ______.
increases
decreases
remains constant
none of these
Which one of the following statements is true?
AR = `("MR")/"Q"`
TR = MR × Q
TR = ∑MR
None of these
Under imperfect competition, what happens to MR when TR curve is positively sloped?
Decreases
Increases
is positive
May increase or decrease
A firm is able to sell any quantity of a good at a given price (i.e. a situation of perfect competition). The firm’s MR will be:
MR > AR
MR = AR
MR < AR
none of these
Mark the right option from the options given below about the shape of AR curve under monopoly/ imperfect competition:
upward sloping
horizontal line
U-shaped
downward sloping
The slope of the total revenue curve equals ______.
marginal revenue
marginal product
average revenue
average product
With increase in output, the difference between AC curve and AVC curve ______.
increases
decreases
remains constant
none of these
Given below are two statements marked as Assertion (A) and Reason (R). Read the statements carefully and choose the correct option.
Assertion (A): When average cost is constant, AC curve is at its minimum point.
Reason (R): At this point, MC curve cuts AC curve, which implies MC = AC.
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation for Assertion (A).
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation for Assertion (A).
Assertion (A) is true and Reason (R) is false.
Both Assertion (A) and Reason (R) are false.
Assertion (A): Total variable cost (TVC) changes in the short-run.
Reason (R): The quantity of variable factors used in the short-run varies in accordance with the level of output.
Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.
Match the correct pair of statements given in Column I and Column II.
| Column I | Column II |
| A. AFC | 1. Cost that does not change in the short run |
| B. Fixed cost | 2. Best alternative good that is given up to produce a particular good |
| C. Opportunity cost | 3. Money cost of production |
| D. Explicit cost | 4. Per unit cost of production of fixed factors of production |
A - 4, B - 2, C - 3, D - 1
A - 1, B - 2, C - 4, D - 3
A - 3, B - 2, C - 1, D - 4
A - 4, B - 1, C - 2, D - 3
From the following statements given in Column I and Column II, choose the correct pair of statements.
| Column I | Column II |
| A. Total Revenue | 1. ∑MR |
| B. Marginal Revenue | 2. $$\frac{TR}{Q}$$ |
| C. Average Revenue | 3. $$TR_n - TR_{n-1}$$ |
A - 1, B - 2, C - 3
A - 1, B - 3, C - 2
A - 3, B - 2, C - 1
Given below are two statements marked as Assertion (A) and Reason (R). Read the statements carefully and choose the correct option.
Assertion (A): Under imperfect competition total revenue is at its maximum point when marginal revenue is zero.
Reason (R): Marginal revenue is always less than average revenue under imperfect competition.
Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.
Assertion (A): Average Fixed Cost (AFC) curve is a rectangular hyperbola.
Reason (R): Total Fixed Cost (TFC) = Average Fixed Cost (AFC) × Q.
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation for Assertion (A).
Both Assertion (A) and Reason (R) are true, but reason (R) is not the correct explanation for Assertion (A).
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.
Very Short Answer Questions (2 marks each)
Define economic cost.
What is explicit cost?
Define implicit cost.
Distinguish between implicit costs and explicit costs.
What costs are included in economic costs?
Distinguish between implicit costs and explicit costs.
Give three examples of implicit costs in a household enterprise.
Give three examples of explicit costs in a household enterprise.
Give three examples of explicit cost in a tailoring shop.
Give three examples of implicit cost in a tailoring shop.
Identify whether the rent for self-owned land is an implicit cost or an explicit cost. Justify your answer.
Identify whether the payment made for advertising is an implicit cost or an explicit cost. Justify your answer.
Distinguish between economic cost and accounting cost.
Define normal profits.
What is opportunity cost?
Give an example of opportunity cost.
Give one difference between accounting cost and opportunity cost.
What is the opportunity cost of a factor of production?
What is real cost of production?
Define social cost.
Give an example of social cost.
Distinguish between private costs and social costs.
Distinguish between fixed factors and variable factors of production.
Distinguish Between short-run and long-run.
What do you mean by fixed cost?
Give two examples of fixed costs.
Define variable cost.
Give two examples of variable costs.
Distinguish between fixed and variable costs. Give one example of each.
TVC is an avoidable cost. Give a reason for your answer.
Why is fixed cost a short run phenomenon?
Draw the Total Fixed Cost curve?
Draw TC, TFC and TVC curves in a single diagram.
If TFC and TVC are given, how will you estimate the TC?
Why are TC and TVC curves parallel to each other?
Why do TC and TFC become equal at zero level of output?
What is the shape of the TFC curve?
What is the shape of the TVC curve?
What is the shape of the AFC curve?
What is the shape of the AVC curve?
What is the shape of the AC curve?
Define the following:
Average cost
Define the following:
Average fixed cost
Define the following:
Average variable cost
Define marginal cost.
What would happen to the following type of cost as output is increased?
Total fixed cost
What would happen to the following type of cost as output is increased?
Total variable cost
What would happen to the following type of cost as output is increased?
Average fixed cost
What would happen to the following type of cost as output is increased?
Average variable cost
What would happen to the following type of cost as output is increased?
Average cost
Draw Average Variable Cost, Average Total Cost ad Marginal Cost curves in a single diagram.
What does the difference between ATC and AVC indicate?
Draw Average Fixed Cost curve.
Explain Average Fixed Cost curve.
Can AFC curve touch the Y-axis and X-axis?
Why does average fixed cost fall as output rises?
Why does the difference between ATC and AVC curves become smaller and smaller as output increases?
Define marginal cost.
Draw a marginal cost curve.
Why is the short-run marginal cost curve ‘U’-shaped?
Define marginal cost.
With the help of an example, show how marginal cost can be obtained from total cost.
Explain whether marginal cost can increase when the average cost decreases.
At what point of the average variable cost curve and average cost curve does the marginal cost curve cut?
What would you say about the position of the marginal cost curve of a firm when AC curve falls?
What would you say about the position of the marginal cost curve of a firm when AC curve is rising?
What will be the tendency of the average cost of a firm when MC < AC?
What will be the tendency of the average cost of a firm when MC > AC?
How is TVC derived from MC?
How is MC derived from TVC?
Distinguish between internal economies and external economies.
Give two examples of internal economies.
Give two examples of external economies.
What do you understand by total revenue?
What is an average revenue?
What is marginal revenue?
How can we derive TR from MR?
Define marginal revenue.
How can we get marginal revenue from total revenue?
Which concept of revenue is called ‘price’?
Distinguish between total revenue, average revenue and marginal revenue.
What happens to total revenue when the marginal revenue is positive?
What happens to total revenue when the marginal revenue is zero?
What happens to total revenue when the marginal revenue is negative?
State the relationship between AR and MR under perfect competition.
OR
Why is price per unit equal to AR and MR for a competitive firm?
State the relation between marginal revenue and average revenue.
Draw the TR and AR curves under perfect competition with the help of a schedule.
What are the shapes of the AR and MR curves when the firm sells its output at a constant price?
What are the shapes of the AR and MR curves when the firm has to reduce its price to sell more?
Why is total revenue curve facing a competitive firm straight line passing through the origin, having a constant positive slope?
State the relationship between AR and MR under monopoly.
What changes should take place in total revenue so that marginal revenue is positive and constant?
What changes should take place in total revenue so that marginal revenue is falling?
What happens to marginal revenue when total revenue increases?
What happens to marginal revenue when total revenue is maximum?
What happens to marginal revenue when total revenue falls?
Draw the TR and AR curves under perfect competition with the help of a schedule.
Using a diagram, explain the relationship between MR and TR under imperfect competition.
Why is price per unit equal to the average revenue and marginal revenue of a firm under perfect competition?
Draw the revenue curves under imperfect competition.
Why is the MR curve below the AR curve under imperfect competition?
How is Total Revenue under perfect competition different from Total Revenue under imperfect competition? Give two points to show the difference.
Short Answer Questions (3 marks each)
Explain any three applications of the concept of opportunity cost.
State the differences between money cost and real cost.
Why does the TC curve start from the Y-axis and TVC curve from the origin?
Draw average variable cost and average total cost curves. Do they intersect each other? Give one reason for your answer.
Explain the shape of total fixed cost curve Give one reason to justify the shape of the curve.
Explain the shape of average fixed cost curve Give one reason to justify the shape of the curve.
Explain the following with an example:
Marginal cost.
Does fixed cost affect marginal cost? Give reasons.
Why is the short-run average cost curve (SAC) U-shaped?
Draw average variable cost and average total cost curves. Do they intersect each other? Give one reason for your answer.
Explain the relationship between marginal cost and average cost with the help of a cost schedule.
Explain any one internal economy.
Explain any one external economy.
Draw the TR and AR curves under perfect competition with the help of a schedule.
Explain the relationship between marginal revenue and total revenue with the help of a revenue schedule.
Explain the relationship between marginal revenue and total revenue with the help of a revenue schedule.
Long Answer Questions ( 6 marks each)
Define economic cost.
Explain the relationship between total cost, total fixed cost and total variable cost with the help of a diagram.
Define the following:
Average cost
Define marginal cost.
Explain the shapes of the average cost curves.
Explain the relationship between average total cost curve, average variable cost curve and marginal cost curve.
Explain the relationship between average cost and marginal cost with the help of an appropriate diagram.
Can the average cost rise when marginal cost is diminishing?
Explain the relationship between total cost, average cost and marginal cost with the help of diagrams.
Explain the shape of long-run average cost curve (LAC).
Show the relationship between LAC and LMC.
Why is long term average cost U-shaped?
Distinguish between internal economies and external economies.
Briefly explain main types of internal economies.
Compare the demand curve for the product of a firm under perfect competition with that of a firm under monopoly and explain the difference, if any.
Define marginal revenue.
Explain the relationship between marginal revenue and total revenue with the help of a revenue schedule.
How do changes in marginal revenue affect total revenue?
Explain the relationship between marginal revenue and total revenue with the help of a revenue schedule.
Frank solutions for Economics [English] Class 12 ISC 8 Cost and Revenue Analysis NUMERICAL QUESTIONS [Pages 175 - 176]
The cost function of a firm is given below:
| Output | 0 | 1 | 2 | 3 | 4 |
| Total cost (₹) | 60 | 80 | 100 | 111 | 116 |
Find:
- Total Fixed Cost
- Total Variable Cost
- Average Fixed Cost
- Average Variable Cost
- Marginal Cost
Calculate TVC and MC at each given level of output.
| Outputs (Units) | 0 | 1 | 2 | 3 | 4 |
| Total cost (₹) | 40 | 60 | 78 | 97 | 124 |
TFC of a firm is ₹ 12, the MC schedule is given below. Calculate TC and AVC for each given level of output.
| Output (Units) | 1 | 2 | 3 | 4 | 5 | 6 |
| MC (₹) | 9 | 7 | 2 | 4 | 8 | 12 |
Calculate TVC and TC from the following cost schedule of a firm, given the fixed cost of 10.
| Outputs (Units) | 1 | 2 | 3 | 4 |
| Marginal cost (₹) | 6 | 5 | 4 | 6 |
Calculate MC and TC from the following cost schedule of a firm whose total fixed costs are ₹ 15.
| Output (Units) | 1 | 2 | 3 | 4 |
| TVC (₹) | 10 | 19 | 29 | 40 |
A firm’s average fixed cost, when it produces 2 units, is Rs 30. Its average total cost schedule is given below. Calculate its marginal cost and average variable cost at each level of output.
| Output (Units) | 1 | 2 | 3 |
| ATC (₹) | 80 | 48 | 40 |
Calculate the ATC and MC from the following cost schedule of a firm, when its TC is ₹ 60.
| Output (Units) | 1 | 2 | 3 |
| Average variable cost (₹) | 20 | 25 | 24 |
Calculate the AVC and MC at each level of output from the following cost schedule of a firm.
| Output (Units) | 0 | 1 | 2 | 3 | 4 |
| Total cost (₹) | 60 | 75 | 96 | 123 | 152 |
The following table shows the total cost schedule of a firm. What is the total fixed cost schedule of this firm?
Calculate the TVC, AFC, AVC, SAC and SMC schedules of the firm.
| L | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| TPL | 10 | 30 | 45 | 55 | 70 | 90 | 120 |
Complete the following table:
| Units of output | TC | TFC | TVC | MC |
| 0 | 45 | – | – | – |
| 1 | 75 | – | – | – |
| 2 | 100 | – | – | – |
| 3 | 120 | – | – | – |
Complete the following table:
| Outputs (units) | Price | TR | MR |
| 1 | 7 | – | – |
| 2 | 6 | – | – |
| 3 | 4 | – | – |
| 4 | 2 | – | – |
Calculate price, AR and TR from the following data:
| Units of output | 1 | 2 | 3 | 4 |
| MR (₹) | 20 | 16 | 9 | 3 |
Thinking Beyond...
‘There is an inverse relationship between cost curves and product curves.’ Explain.
What would be the shape of the AR curve if total revenue does not change with increase in sale, i.e., TR curve is a horizontal?
If MR curve is parallel to X-axis, what does it indicate about the price elasticity of demand for the commodity?
Solutions for 8: Cost and Revenue Analysis
Frank solutions for Economics [English] Class 12 ISC chapter 8 - Cost and Revenue Analysis
Shaalaa.com has the CISCE Mathematics Economics [English] Class 12 ISC CISCE solutions in a manner that help students grasp basic concepts better and faster. The detailed, step-by-step solutions will help you understand the concepts better and clarify any confusion. Frank solutions for Mathematics Economics [English] Class 12 ISC CISCE 8 (Cost and Revenue Analysis) include all questions with answers and detailed explanations. This will clear students' doubts about questions and improve their application skills while preparing for board exams.
Further, we at Shaalaa.com provide such solutions so students can prepare for written exams. Frank textbook solutions can be a core help for self-study and provide excellent self-help guidance for students.
Concepts covered in Economics [English] Class 12 ISC chapter 8 Cost and Revenue Analysis are Revenue Concepts, Introduction to Cost of Production, Significance of Revenue Curve, Total Cost Curves, Relationship Between Total, Average and Marginal Revenues Under Perfect Competition, Relationship Between Total, Average and Marginal Revenue Under Imperfect Competition, Average Cost Curves, Money Cost Or Accounting Cost / Explicit Cost, Marginal Cost (MC), Relationship between Average and Marginal Cost, Long-Run Cost Curves, Economic Cost, Opportunity Cost, Real Cost, Private and Social Cost, Fixed Cost and Variable Cost, Different Cost Concepts, Long-run Average Cost (LAC) Curve, Long-run Marginal Cost (LMC) Curve, LAC Curve U-shaped - Economies and Diseconomies of Scale, Numerical Problems Long-run Cost Curves, Behaviour of Revenue Under Different Market Structures, Numerical Problems of Revenue.
Using Frank Economics [English] Class 12 ISC solutions Cost and Revenue Analysis exercise by students is an easy way to prepare for the exams, as they involve solutions arranged chapter-wise and also page-wise. The questions involved in Frank Solutions are essential questions that can be asked in the final exam. Maximum CISCE Economics [English] Class 12 ISC students prefer Frank Textbook Solutions to score more in exams.
Get the free view of Chapter 8, Cost and Revenue Analysis Economics [English] Class 12 ISC additional questions for Mathematics Economics [English] Class 12 ISC CISCE, and you can use Shaalaa.com to keep it handy for your exam preparation.
