Chapter 6 Solutions for Class 12 Microeconomics by Sandeep Garg
FAQs on Chapter 6 Solutions for Class 12 Microeconomics by Sandeep Garg
1. What is the step-by-step method to solve for Total Cost (TC), Average Cost (AC), and Marginal Cost (MC) when given a schedule of Total Variable Cost (TVC) and a fixed Total Fixed Cost (TFC)?
To correctly solve such a problem from Chapter 6, follow this method as per the CBSE pattern:
Step 1: Calculate Total Cost (TC). For each level of output, use the formula TC = TFC + TVC. Remember, TFC remains constant at all output levels, including zero.
Step 2: Calculate Average Cost (AC). For each output level greater than zero, divide the Total Cost by the quantity (Q). The formula is AC = TC / Q.
Step 3: Calculate Marginal Cost (MC). This is the additional cost from producing one more unit. Use the formula MCn = TCn - TCn-1, where 'n' is the current output level. For the first unit, MC is equal to the TVC of that unit.
2. How can you find the Total Fixed Cost (TFC) in a problem if only the Total Cost (TC) at zero output is provided?
The correct approach is to understand the fundamental definitions of cost. By definition, Total Cost (TC) is the sum of Total Fixed Cost (TFC) and Total Variable Cost (TVC). At an output level of zero (Q=0), there are no variable inputs used, so TVC is zero. Therefore, the formula simplifies to TC = TFC + 0. This means the Total Cost at zero output is always equal to the Total Fixed Cost. This value remains constant for all other levels of output in the short run.
3. What is the correct way to solve for missing values of Average Variable Cost (AVC) and Total Cost (TC) in a cost schedule from Sandeep Garg's textbook?
To find missing values in a cost schedule, you must work systematically using the relationships between different cost concepts:
To find AVC: First, ensure you have the Total Variable Cost (TVC). You can often derive it using the formula TVC = TC - TFC. Once you have the TVC for a given output level (Q), calculate AVC using the formula AVC = TVC / Q.
To find TC: If you have TFC and TVC, simply add them: TC = TFC + TVC. If you have Average Cost (AC) and output (Q), you can calculate it using TC = AC * Q. The method depends on the information provided in the problem.
4. How do the Sandeep Garg Solutions for Chapter 6 help in presenting answers for cost analysis questions as per the CBSE 2025-26 guidelines?
The solutions provide a clear template for structuring answers to meet CBSE evaluation criteria. They demonstrate the correct way to present solutions by:
Showing Formulas: Explicitly stating the formulas used for calculation (e.g., MC = ΔTC / ΔQ) before applying them.
Organised Tables: Presenting all calculations in a neat, well-labelled tabular format, which makes it easy for the examiner to follow your work.
Step-wise Derivations: Breaking down complex problems into logical steps, ensuring no part of the calculation is missed.
Following this structured approach helps in scoring full marks by showcasing a clear understanding of the methodology.
5. Why must the Marginal Cost (MC) curve intersect the Average Cost (AC) curve at its lowest point? How does this rule help verify a graphical solution?
This relationship is a mathematical certainty and is crucial for solving and verifying problems. The logic is:
When MC is less than AC, the cost of producing an additional unit is lower than the average cost so far. This new, lower cost pulls the average down. Therefore, the AC curve is downward sloping.
When MC is greater than AC, the cost of an additional unit is higher than the average, which pulls the average up. Therefore, the AC curve is upward sloping.
When MC equals AC, the average is neither being pulled up nor down. This can only happen at the minimum point of the U-shaped AC curve. When drawing cost curves to solve a problem, ensuring MC cuts AC at its minimum acts as a critical check for accuracy.
6. What is a common mistake made when calculating Average Fixed Cost (AFC), and what is the correct method?
A frequent error is to calculate AFC by dividing the Total Fixed Cost (TFC) by the change in output (ΔQ), which is incorrect. This method is used for Marginal Cost. The correct step-wise method is to divide the Total Fixed Cost (TFC) by the corresponding absolute level of output (Q). The correct formula is AFC = TFC / Q. Since TFC is constant, AFC will continuously fall as output increases, but it will never become zero.
7. When solving a problem, why is it impossible for Total Cost (TC) to be less than Total Fixed Cost (TFC)?
This is impossible because of the core structure of short-run costs. The Total Cost is defined as TC = TFC + TVC. Both TFC (e.g., factory rent) and TVC (e.g., raw material cost) are expenditures and can only be positive or zero. Since TVC can never be a negative value, the TC will always be either equal to TFC (when output and TVC are zero) or greater than TFC. If your calculation results in TC < TFC, it signals a fundamental error in your problem-solving steps.
