# f.4 econ!!!!!!! 2題30分,,,

1,Mr. chan owns a tutorial centre which provides education services

a) what does total fixed cost mean?give TWO examples of fixed cost of the tutorial centre in the short run

b)what does total variable cost mean?give two examples of variable cost of the tutorail centre in the short run.

c)in the long run,is the total cost of mr.chan&#39;s tutorial centre equal to the total variable cost?explain your answer.

2)explain TWO economies of scale that may arise from a company employing more singers instead of only one singer.

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1a) fixed cost is a cost that is paid in a fixed amount and does not related to the output level (no matter how many you produce, fixed cost does not change). So, it is the same for fixed cost or TOTAL fixed cost. (fixed cost can also be said as &quot;period cost&quot; in accounting)

in short run(within one period,i.e. one month), fixed costs can be rent for the tutorial centre, the installation cost of equipment, etc. It is because no matter how many service you provide(to students), they are still fixed

b) variable cost is a cost that is directly proportional to the output level (the more you produce, the more the variable cost). And total variable cost is the sum of all (marginal) variable cost.

in short run, variable costs can be the cost of printing the notes, the salary of teachers, etc. It is because when you serve more students, you have to pay a larger amount of these costs.

c) in long run, there is no more fixed cost as all cost become variable. It is because in long run(using the above example:longer than a month), you will have to pay the rent again and again in every period, that means the longer time you operate the tutorial centre, the more rent you have to pay.

Since Total Cost(TC) = Total Fixed Cost(FC) + Total Variable Cost(VC)

When FC = 0, TC = VC~

2)If a company employ more singers, their (average)cost of renting a studio per each singer is lower. Also, the (average)advertising cost is lower because they can advertise more singers in one page of the advertisment. Furthermore, the (average)management cost is lower too~!

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