Gce Model Questions Vol1 2024 Economics Question 8

Practice objective / multiple choice question 8 from the 2024 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2024 Economics Objective / Multiple Choice Medium Difficulty
Question 8 GCE_MODEL_QUESTIONS_VOL1 • 2024 • ECONOMICS • objective

The demand for a product is given by \( Q = 200 - 4P \), where \(P\) is the price (₦) and \(Q\) the quantity demanded. (a) Compute the price elasticity of demand at \(P = 30\). (b) If the price is increased to ₦35, will total revenue rise or fall? Explain using the elasticity result. (c) Determine the price that maximises total revenue.

Answer Options

Correct Answer A. Elasticity = -1.5; revenue will fall; revenue‑maximising price = 25 ₦.
B. Elasticity = -1.5; revenue will rise; revenue‑maximising price = 25 ₦.
C. Elasticity = -0.8; revenue will rise; revenue‑maximising price = 30 ₦.
D. Elasticity = -2.3; revenue will fall; revenue‑maximising price = 20 ₦.
Correct Answer
A
Correct Option:
Elasticity = -1.5; revenue will fall; revenue‑maximising price = 25 ₦.

About This Question

This is Gce Model Questions Vol1 2024 Economics Question 8. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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