Gce Model Questions Vol1 2017 Economics Question 48

Practice objective / multiple choice question 48 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Hard Difficulty
Question 48 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

A manufacturing firm has the total‑cost function \(TC = 0.02Q^{3} - 0.3Q^{2} + 15Q + 200\) (measured in million Naira). The market price of the product is \(\text{₦}40\) per unit.\n\n(a) Determine the profit‑maximising output level before any tax is imposed.\n(b) Compute the profit at that output.\n(c) The government introduces a specific tax of \(\text{₦}5\) per unit. Calculate the new profit after the tax and the change in profit.\n(d) State whether the firm should continue operating after the tax.

Answer Options

Correct Answer A. Profit‑maximising output = 26 units; profit before tax = ₦301.28 million; profit after tax = ₦171.28 million; profit falls by ₦130 million; firm continues operating.
B. Profit‑maximising output = 26 units; profit before tax = ₦310.00 million; profit after tax = ₦180.00 million; profit falls by ₦130 million; firm shuts down.
C. Profit‑maximising output = 24 units; profit before tax = ₦280.00 million; profit after tax = ₦150.00 million; profit falls by ₦130 million; firm continues operating.
D. Profit‑maximising output = 28 units; profit before tax = ₦320.50 million; profit after tax = ₦190.50 million; profit falls by ₦130 million; firm continues operating.
Correct Answer
A
Correct Option:
Profit‑maximising output = 26 units; profit before tax = ₦301.28 million; profit after tax = ₦171.28 million; profit falls by ₦130 million; firm continues operating.

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 48. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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