Gce Model Questions Vol1 2024 Economics Question 37

Practice objective / multiple choice question 37 from the 2024 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2024 Economics Objective / Multiple Choice Hard Difficulty
Question 37 GCE_MODEL_QUESTIONS_VOL1 • 2024 • ECONOMICS • objective

A firm in a perfectly competitive industry has total cost (in thousand Naira) given by \(TC = 0.02Q^{3} - 0.3Q^{2} + 15Q + 50\), where \(Q\) is output in thousand units. The market price is \(20\) Naira per unit. The government imposes a specific tax of \(5\) Naira per unit on the firm. Determine the profit‑maximising output level and state whether the firm will continue to produce in the short run.

Answer Options

Correct Answer A. Profit‑maximising output = 10 000 units; the firm will keep producing in the short run (price > AVC).
B. Profit‑maximising output = 10 000 units; the firm will shut down in the short run (price < AVC).
C. Profit‑maximising output = 8 000 units; the firm will keep producing in the short run (price > AVC).
D. Profit‑maximising output = 12 000 units; the firm will shut down in the short run (price < AVC).
Correct Answer
A
Correct Option:
Profit‑maximising output = 10 000 units; the firm will keep producing in the short run (price > AVC).

About This Question

This is Gce Model Questions Vol1 2024 Economics Question 37. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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