Gce Model Questions Vol1 2023 Economics Question 35

Practice objective / multiple choice question 35 from the 2023 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2023 Economics Objective / Multiple Choice Medium Difficulty
Question 35 GCE_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • objective

A firm has fixed costs of \(5{,}000\) Naira. Its variable cost per unit is \(2\) Naira for the first \(1{,}000\) units and \(1.5\) Naira for each unit produced beyond \(1{,}000\) (reflecting economies of scale). The market price is determined by the linear demand curve \(P = 12 - 0.001Q\) where \(Q\) is the quantity sold.\n\n(a) Find the break‑even output level (the quantity at which total revenue equals total cost).\n(b) If the firm decides to produce \(2{,}000\) units, calculate the profit earned.

Answer Options

A. Break‑even ≈450 units; profit at 2,000 units = 12,000
B. Break‑even ≈600 units; profit at 2,000 units = 10,000
Correct Answer C. Break‑even ≈528 units; profit at 2,000 units = 11,500
D. Break‑even ≈530 units; profit at 2,000 units = 11,000
Correct Answer
C
Correct Option:
Break‑even ≈528 units; profit at 2,000 units = 11,500

About This Question

This is Gce Model Questions Vol1 2023 Economics Question 35. It is one of the objective questions from the 2023 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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