Gce Model Questions Vol1 2020 Economics Question 36
Practice objective / multiple choice question 36 from the 2020 Gce Model Questions Vol1 Economics examination.
A city bus company has a fixed monthly cost of 500,000 Naira and a variable cost of 200 Naira per passenger. The current fare is 800 Naira and the average monthly ridership is 2,000 passengers. Market research indicates that the price elasticity of demand for bus rides is constant at -1.5. Assuming the company can change the fare and that the elasticity remains unchanged, what fare (in Naira) will maximise the company's monthly profit?
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About This Question
This is Gce Model Questions Vol1 2020 Economics Question 36. It is one of the objective questions from the 2020 Gce Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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