Waec Model Questions Vol1 2017 Economics Question 14

Practice objective / multiple choice question 14 from the 2017 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 14 WAEC_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

A monopolist faces the linear demand curve \(P = 500 - 2Q\) and has a total cost function \(TC = 20Q\) (no fixed cost).\n(a) Determine the monopoly output, price and profit.\n(b) Under perfect competition the firm would produce where price equals marginal cost. Determine the competitive output and price.\n(c) Compute the consumer surplus in both the monopoly and the competitive outcome and state which market structure yields a higher consumer surplus.

Answer Options

Correct Answer A. Monopoly: Q=120, P=260, Profit=28,800; Competitive: Q=240, P=20; Consumer surplus - monopoly N14,400, competition N57,600 (competition higher).
B. Monopoly: Q=130, P=240, Profit=28,600; Competitive: Q=250, P=20; Consumer surplus - monopoly N16,900, competition N60,000 (competition higher).
C. Monopoly: Q=110, P=280, Profit=27,000; Competitive: Q=230, P=20; Consumer surplus - monopoly N12,600, competition N55,200 (competition higher).
D. Monopoly: Q=120, P=260, Profit=28,800; Competitive: Q=240, P=20; Consumer surplus - monopoly N14,400, competition N57,600 (monopoly higher).
Correct Answer
A
Correct Option:
Monopoly: Q=120, P=260, Profit=28,800; Competitive: Q=240, P=20; Consumer surplus - monopoly N14,400, competition N57,600 (competition higher).

About This Question

This is Waec Model Questions Vol1 2017 Economics Question 14. It is one of the objective questions from the 2017 Waec Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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