Gce Model Questions Vol1 2021 Economics Question 47

Practice objective / multiple choice question 47 from the 2021 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2021 Economics Objective / Multiple Choice Medium Difficulty
Question 47 GCE_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

A firm operates in a monopolistically competitive market. Its demand curve is \( P = 200 - 4Q \) and its total cost function is \( TC = 20Q + 0.5Q^{2} \). (a) Determine the profit‑maximising output, price and profit. (b) If the same firm were a price‑taking firm in perfect competition, what output and profit would it obtain when price equals marginal cost? Compare the two outcomes.

Answer Options

Correct Answer A. Monopolistic‑competition: Q=20, P=120, profit=₦1,800; Perfect competition: Q=36, profit=₦648; the former produces less, charges more and earns higher profit.
B. Monopolistic‑competition: Q=18, P=128, profit=₦1,600; Perfect competition: Q=30, profit=₦540; the former produces less, charges more and earns higher profit.
C. Monopolistic‑competition: Q=22, P=112, profit=₦1,500; Perfect competition: Q=40, profit=₦720; the former produces less, charges more and earns higher profit.
D. Monopolistic‑competition: Q=25, P=100, profit=₦1,250; Perfect competition: Q=45, profit=₦800; the former produces less, charges more and earns higher profit.
Correct Answer
A
Correct Option:
Monopolistic‑competition: Q=20, P=120, profit=₦1,800; Perfect competition: Q=36, profit=₦648; the former produces less, charges more and earns higher profit.

About This Question

This is Gce Model Questions Vol1 2021 Economics Question 47. 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