Gce Model Questions Vol1 2021 Economics Question 5

Practice essay / theory question 5 from the 2021 Gce Model Questions Vol1 Economics examination. This question covers Cost and Revenue, Break‑even analysis, Profit maximisation .

Gce Model Questions Vol1 2021 Economics Essay / Theory
Topics: Cost and Revenue Break‑even analysis Profit maximisation
Question 5 GCE_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • essay

A small manufacturing firm produces a single type of widget. The firm incurs fixed costs of ₦200,000 per month. The variable cost per widget is ₦150 and the current selling price is ₦250 per widget. At present the firm produces and sells 2,000 widgets each month.

Question Parts

( a )
Calculate the firm’s total cost, total revenue and profit for the current level of output.
( b )
Determine the break‑even output (the number of widgets that must be sold for profit to be zero). Show the algebraic steps used.
( c )
The firm wishes to increase its profit by 20 % without changing the selling price. Assuming the variable cost per unit remains constant, calculate the minimum additional output required to achieve this target.
( d )
Discuss two non‑price factors that could cause the firm’s average total cost (ATC) curve to shift. For each factor, explain how the shift would affect the break‑even output.

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About This Question

This is Gce Model Questions Vol1 2021 Economics Question 5. It is one of the essay questions from the 2021 Gce Model Questions Vol1 Economics examination.

The question covers Cost and Revenue, Break‑even analysis, Profit maximisation .

View More Gce Model Questions Vol1 2021 Economics Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

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