Gce Model Questions Vol1 2023 Economics Question 14

Practice objective / multiple choice question 14 from the 2023 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2023 Economics Objective / Multiple Choice Hard Difficulty
Question 14 GCE_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • objective

A crop's yield per hectare (in tons) depends on the amount of fertilizer applied (\(F\) kg per hectare) according to \( Y = 50 + 8F - 0.1F^{2} \). The market price of the crop is \(\text{₦}30\) per ton, the cost of fertilizer is \(\text{₦}20\) per kg, and other fixed costs are \(\text{₦}500\) per hectare.\n(a) Determine the quantity of fertilizer that maximises profit per hectare.\n(b) Compute the maximum profit per hectare.\n(c) At this optimal fertilizer level, calculate the marginal product (MP) and average product (AP) of fertilizer.\n(d) State whether the farm is operating in the region of increasing or diminishing returns to fertilizer at the optimum.

Answer Options

A. Optimal fertilizer ≈ 30.0 kg/ha; maximum profit ≈ ₦4,200 per ha; MP ≈ 0.80 t/kg, AP ≈ 6.00 t/kg; increasing returns
B. Optimal fertilizer ≈ 36.7 kg/ha; maximum profit ≈ ₦4,800 per ha; MP ≈ 0.60 t/kg, AP ≈ 5.70 t/kg; diminishing returns
C. Optimal fertilizer ≈ 42.5 kg/ha; maximum profit ≈ ₦5,500 per ha; MP ≈ 0.55 t/kg, AP ≈ 5.20 t/kg; diminishing returns
Correct Answer D. Optimal fertilizer ≈ 36.7 kg/ha; maximum profit ≈ ₦5,033 per ha; MP ≈ 0.67 t/kg, AP ≈ 5.70 t/kg; diminishing returns
Correct Answer
D
Correct Option:
Optimal fertilizer ≈ 36.7 kg/ha; maximum profit ≈ ₦5,033 per ha; MP ≈ 0.67 t/kg, AP ≈ 5.70 t/kg; diminishing returns

About This Question

This is Gce Model Questions Vol1 2023 Economics Question 14. It is one of the objective questions from the 2023 Gce Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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