Gce Model Questions Vol1 2019 Economics Question 23

Practice objective / multiple choice question 23 from the 2019 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2019 Economics Objective / Multiple Choice Hard Difficulty
Question 23 GCE_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • objective

A monopolist faces the demand curve \(P = 120 - 0.5Q\) and has total cost \(TC = 5{,}000 + 10Q + 0.02Q^{2}\).\n\n(a) Determine the profit‑maximising output, the corresponding price, and the profit.\n(b) If a per‑unit tax of \(£5\) is imposed on the output, recompute the profit‑maximising output, price and profit.

Answer Options

Correct Answer A. Without tax: output ≈105.77 units, price ≈£67.12, profit ≈£817.31. With £5 per‑unit tax: output ≈100.96 units, price ≈£69.52, profit ≈£300.50.
B. Without tax: output ≈110.23 units, price ≈£65.00, profit ≈£750.00. With £5 per‑unit tax: output ≈95.40 units, price ≈£71.20, profit ≈£250.00.
C. Without tax: output ≈100.00 units, price ≈£68.50, profit ≈£800.00. With £5 per‑unit tax: output ≈98.00 units, price ≈£68.00, profit ≈£350.00.
D. Without tax: output ≈108.50 units, price ≈£66.00, profit ≈£900.00. With £5 per‑unit tax: output ≈102.00 units, price ≈£70.00, profit ≈£280.00.
Correct Answer
A
Correct Option:
Without tax: output ≈105.77 units, price ≈£67.12, profit ≈£817.31. With £5 per‑unit tax: output ≈100.96 units, price ≈£69.52, profit ≈£300.50.

About This Question

This is Gce Model Questions Vol1 2019 Economics Question 23. It is one of the objective questions from the 2019 Gce Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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