Gce Model Questions Vol1 2017 Economics Question 21

Practice objective / multiple choice question 21 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 21 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

A firm in a monopolistically competitive market faces the demand curve \(P = 120 - 2Q\) and has total cost function \(TC = 20Q + 0.5Q^{2}\). (a) Determine the profit‑maximising output and the corresponding price. (b) Calculate the firm's profit at this output. (c) Based on the relationship between price and average variable cost, state whether the firm should produce or shut down in the short run.

Answer Options

A. Q=20 units, P=£70, profit=£-200, shut down
B. Q=25 units, P=£70, profit=£500, produce
C. Q=15 units, P=£90, profit=£-250, produce
Correct Answer D. Q=20 units, P=£80, profit=£1,000, produce
Correct Answer
D
Correct Option:
Q=20 units, P=£80, profit=£1,000, produce

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 21. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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