# ECON 101 SEU Microeconomics Long Run Production of Bicycles Questions

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College of Administrative and Financial Sciences
Assignment-2
Course Name: Microeconomics
Students Name:
Course Code: ECON101
Students ID Number:
Semester: I
CRN:
For Instructors Use only
Instructors Name:
/ 5
Level of Marks: High/Middle/Low
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The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
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Assignments submitted through email will not be accepted.
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Students are advised to make their work clear and well presented, marks may be reduced for
poor presentation. This includes filling your information on the cover page.
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Students must mention question number clearly in their answer.
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Late submission will NOT be accepted.
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Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
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All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
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Submissions without this cover page will NOT be accepted.
Assignment Questions
Maximum Marks-05
1) Consider the long-run production of Bicycles. The cost of the indivisible inputs used in the production
of bicycles is \$6000 per day. To produce one Bicycle per day, the firm must also spend a total of \$80
on other inputs-labor, materials, and other capital. For each additional bicycle, the firm incurs the
a) Compute the average cost for 30 bicycles, 60 bicycles, 100 bicycles, and 300 bicycles. (1 marks)
b) Draw the long-run average cost curve for 30,60,100 and 300 bicycles per day. (1 marks)
2) Draw a graph of perfectly competitive market and explain equilibrium of the firm by choosing output
level at which
a. P=MC=MR and Firm is making zero economic profit (1 Mark)
b. P=MC=MR and Firm is making a loss (1 Mark)
c. Explain shut down rule with the help of graph (1 Mark)