Gce Model Questions Vol1 2017 Economics Question 44

Practice objective / multiple choice question 44 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 44 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

A single firm operates in a market with total cost function \( TC = 100 + 20Q + Q^{2} \) (costs are in £). The market price is currently £70. (a) Find the profit‑maximising output and the profit earned. (b) Discuss whether the market can be regarded as contestable, given that the fixed cost of £100 is sunk if the firm exits.

Answer Options

A. Profit‑maximising output = 25 units; profit = £600; market not fully contestable because of the £100 sunk cost.
Correct Answer B. Profit‑maximising output = 25 units; profit = £525; market not fully contestable because of the £100 sunk cost.
C. Profit‑maximising output = 30 units; profit = £525; market not fully contestable because of the £100 sunk cost.
D. Profit‑maximising output = 20 units; profit = £400; market not fully contestable because of the £100 sunk cost.
Correct Answer
B
Correct Option:
Profit‑maximising output = 25 units; profit = £525; market not fully contestable because of the £100 sunk cost.

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 44. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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