Gce Model Questions Vol1 2018 Economics Question 30

Practice objective / multiple choice question 30 from the 2018 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2018 Economics Objective / Multiple Choice Medium Difficulty
Question 30 GCE_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • objective

In a perfectly competitive market the industry supply curve is horizontal at the marginal cost of \(MC = 20\). The market demand curve is \(P = 100 - 2Q\). (i) Determine the equilibrium price and quantity under perfect competition. (ii) If the industry were a monopoly with the same cost structure, find the monopoly's profit‑maximising price and quantity. (iii) Calculate the dead‑weight loss resulting from monopoly power.

Answer Options

A. Competitive equilibrium: P=20, Q=30. Monopoly: P=70, Q=15. Dead‑weight loss = 525.
B. Competitive equilibrium: P=20, Q=45. Monopoly: P=55, Q=22. Dead‑weight loss = 300.
C. Competitive equilibrium: P=20, Q=40. Monopoly: P=50, Q=25. Dead‑weight loss = 250.
Correct Answer D. Competitive equilibrium: P=20, Q=40. Monopoly: P=60, Q=20. Dead‑weight loss = 400.
Correct Answer
D
Correct Option:
Competitive equilibrium: P=20, Q=40. Monopoly: P=60, Q=20. Dead‑weight loss = 400.

About This Question

This is Gce Model Questions Vol1 2018 Economics Question 30. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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