Gce Model Questions Vol1 2019 Agricultural Science Question 36

A wheat farmer has fixed costs of \(\text{₦}120{,}000\) per season and a variable cost of \(\text{₦}30{,}000\) per ton. The market price is \(\text{₦}45{,}000\) per ton. The government offers a per‑ton subsidy \(S\) that reduces the effective variable cost. The farm can produce at most 12 tons per season. The farmer wants a profit of at least \(\text{₦}150{,}000\).\n\n(a) Determine the minimum subsidy \(S\) (in ₦ per ton) required to achieve the target profit at the current price.\n(b) If the market price falls to \(\text{₦}40{,}000\) per ton, demand falls by 10 % for each \(\text{₦}5{,}000\) drop, so the farmer would produce 10.8 tons. With the subsidy found in part (a), would the profit still meet the target? Answer "Yes" or "No".