Gce Model Questions Vol1 2023 Economics Question 12

Practice objective / multiple choice question 12 from the 2023 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2023 Economics Objective / Multiple Choice Medium Difficulty
Question 12 GCE_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • objective

A firm in a monopolistic market faces the demand curve \( P = 120 - 2Q \). Its marginal cost is constant at \( MC = 20 \) and fixed costs are \( FC = 200 \). The market price of the product is \( \£30 \) per unit.\n(a) Determine the profit‑maximising output and price for the monopoly.\n(b) Compute the monopoly's profit.\n(c) Calculate the total surplus under monopoly and under perfect competition (where price equals marginal cost).\n(d) Find the dead‑weight loss caused by the monopoly.

Answer Options

Correct Answer A. Profit‑maximising output = 25 units, price = £70; profit = £1,050; total surplus monopoly = £1,875; total surplus perfect competition = £2,500; dead‑weight loss = £625
B. Profit‑maximising output = 20 units, price = £80; profit = £1,200; total surplus monopoly = £1,600; total surplus perfect competition = £2,400; dead‑weight loss = £800
C. Profit‑maximising output = 25 units, price = £65; profit = £950; total surplus monopoly = £1,800; total surplus perfect competition = £2,450; dead‑weight loss = £650
D. Profit‑maximising output = 30 units, price = £60; profit = £900; total surplus monopoly = £2,000; total surplus perfect competition = £2,600; dead‑weight loss = £600
Correct Answer
A
Correct Option:
Profit‑maximising output = 25 units, price = £70; profit = £1,050; total surplus monopoly = £1,875; total surplus perfect competition = £2,500; dead‑weight loss = £625

About This Question

This is Gce Model Questions Vol1 2023 Economics Question 12. It is one of the objective questions from the 2023 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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