Gce Model Questions Vol1 2019 Economics Question 6

Practice objective / multiple choice question 6 from the 2019 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2019 Economics Objective / Multiple Choice Medium Difficulty
Question 6 GCE_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • objective

A firm operates in a monopolistically competitive market. Its demand curve is \( P = 120 - 2Q \). Its marginal cost is \( MC = 20 + Q \). Fixed costs are ₦200. Determine (a) the profit‑maximising output and price, (b) the firm's profit, and (c) the Lerner index of market power at that output.

Answer Options

A. Output = 22 units, Price = ₦76, Profit = ₦880, Lerner index = 0.55
B. Output = 20 units, Price = ₦78, Profit = ₦600, Lerner index = 0.45
Correct Answer C. Output = 20 units, Price = ₦80, Profit = ₦800, Lerner index = 0.5
D. Output = 18 units, Price = ₦84, Profit = ₦720, Lerner index = 0.45
Correct Answer
C
Correct Option:
Output = 20 units, Price = ₦80, Profit = ₦800, Lerner index = 0.5

About This Question

This is Gce Model Questions Vol1 2019 Economics Question 6. It is one of the objective questions from the 2019 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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