Gce Model Questions Vol1 2021 Economics Question 38

Practice objective / multiple choice question 38 from the 2021 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2021 Economics Objective / Multiple Choice Medium Difficulty
Question 38 GCE_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

In a monopolistically competitive market the demand curve is \( P = 100 - 2Q \) and the total cost function is \( TC = 20Q + 0.5Q^{2} \). (i) Find the profit‑maximising output and price for the monopolist. (ii) Calculate the monopolist's profit at this output. (iii) Under perfect competition price equals marginal cost; what would be the output and profit in that case? Compare the two profit levels.

Answer Options

A. Monopolist: Q=14, P=72, profit=560; Perfect competition: Q≈28.57, profit=0; Monopolist profit is higher.
B. Monopolist: Q=16, P=68, profit=640; Perfect competition: Q≈26.67, profit=0; Perfect competition profit is higher.
C. Monopolist: Q=18, P=64, profit=720; Perfect competition: Q≈24.00, profit=0; Monopolist profit is higher.
Correct Answer D. Monopolist: Q=16, P=68, profit=640; Perfect competition: Q≈26.67, profit=0; Monopolist profit is higher.
Correct Answer
D
Correct Option:
Monopolist: Q=16, P=68, profit=640; Perfect competition: Q≈26.67, profit=0; Monopolist profit is higher.

About This Question

This is Gce Model Questions Vol1 2021 Economics Question 38. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support