Gce Model Questions Vol1 2024 Economics Question 24

Practice objective / multiple choice question 24 from the 2024 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2024 Economics Objective / Multiple Choice Medium Difficulty
Question 24 GCE_MODEL_QUESTIONS_VOL1 • 2024 • ECONOMICS • objective

A firm faces the demand curve \( P = 200 - 0.5Q \). Its total cost function is \( TC = 20Q + 0.02Q^{2} + 500 \).\n(a) Determine the output level that maximises profit and state the corresponding profit.\n(b) If the market price falls to \(\$80\), should the firm continue producing in the short run? Justify your answer.

Answer Options

A. a) Output ≈ 160.00 units, Profit ≈ 13,500.0. b) Shut down (price < minimum AVC).
Correct Answer B. a) Output ≈ 173.08 units, Profit ≈ 15,076.9. b) Continue producing (price > minimum AVC).
C. a) Output ≈ 180.00 units, Profit ≈ 16,500.0. b) Continue producing (price > minimum AVC).
D. a) Output ≈ 150.00 units, Profit ≈ 12,000.0. b) Shut down (price < minimum AVC).
Correct Answer
B
Correct Option:
a) Output ≈ 173.08 units, Profit ≈ 15,076.9. b) Continue producing (price > minimum AVC).

About This Question

This is Gce Model Questions Vol1 2024 Economics Question 24. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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