Gce Model Questions Vol1 2024 Economics Question 45

Practice objective / multiple choice question 45 from the 2024 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2024 Economics Objective / Multiple Choice Medium Difficulty
Question 45 GCE_MODEL_QUESTIONS_VOL1 • 2024 • ECONOMICS • objective

In a perfectly competitive market the short‑run total cost of a firm is \(TC = 50 + 5Q + 0.5Q^{2}\), where \(Q\) is output. The market price is \$20 per unit.\n(a) Find the profit‑maximising output level.\n(b) Compute the firm's profit (or loss) at this output.\n(c) Should the firm continue production in the short run? Justify using the relationship between price and average variable cost.

Answer Options

A. Output 10 units; profit $-25; stop production (price below AVC)
Correct Answer B. Output 15 units; profit $62.5; continue production (price exceeds AVC)
C. Output 20 units; profit $125; continue production (price exceeds AVC)
D. Output 15 units; profit $0; continue production (price equals AVC)
Correct Answer
B
Correct Option:
Output 15 units; profit $62.5; continue production (price exceeds AVC)

About This Question

This is Gce Model Questions Vol1 2024 Economics Question 45. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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