Gce Model Questions Vol1 2025 Economics Question 5

Practice essay / theory question 5 from the 2025 Gce Model Questions Vol1 Economics examination. This question covers Cost and Revenue .

Gce Model Questions Vol1 2025 Economics Essay / Theory

Topic: Cost and Revenue

Question 5 GCE_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • essay

A manufacturing firm produces widgets. The following information is given for a typical month: - Fixed costs are ₦120,000. - Variable cost per unit is ₦45. - The firm sells each widget at a price that varies with quantity sold according to the demand schedule below: | Quantity (units) | Price per unit (₦) | |------------------|--------------------| | 2,000 | 80 | | 3,000 | 70 | | 4,000 | 62 | | 5,000 | 55 | The firm is considering whether to increase production to 5,000 units.

Question Parts

( a )

Calculate total cost and total revenue at each quantity level and state whether the firm makes a profit or incurs a loss.

( b )

Using the data, determine the approximate output level at which the firm breaks even. Explain the method you used.

( c )

Discuss two non‑price factors that could influence the firm’s decision to produce 5,000 units even if the break‑even analysis suggests a small loss.

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About This Question

This is Gce Model Questions Vol1 2025 Economics Question 5. It is one of the essay questions from the 2025 Gce Model Questions Vol1 Economics examination.

The question covers Cost and Revenue .

View More Gce Model Questions Vol1 2025 Economics Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

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