Gce Model Questions Vol1 2025 Economics Question 1

Practice objective / multiple choice question 1 from the 2025 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2025 Economics Objective / Multiple Choice Hard Difficulty
Question 1 GCE_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • objective

A firm in the manufacturing sector has total cost \(TC = 0.5Q^{2} + 20Q + 500\), where \(Q\) is output in units. The market demand is given by the inverse demand function \(P = 200 - Q\).\n\n(a) Determine the profit‑maximising output and the corresponding profit.\n(b) The government introduces a per‑unit tax of ₦5 on the firm's output. Assuming the tax is paid by the firm, find the new profit‑maximising output and the profit after the tax.

Answer Options

Correct Answer A. Before tax: output = 60 units, profit = ₦4,900. After tax: output = 58.33 units (≈175/3), profit = ₦4,604.17 (≈82875/18).
B. Before tax: output = 60 units, profit = ₦5,000. After tax: output = 58 units (≈174/3), profit = ₦4,700 (≈84600/18).
C. Before tax: output = 65 units, profit = ₦5,200. After tax: output = 60 units (≈180/3), profit = ₦4,800 (≈86400/18).
D. Before tax: output = 55 units, profit = ₦4,500. After tax: output = 57 units (≈171/3), profit = ₦4,350 (≈78300/18).
Correct Answer
A
Correct Option:
Before tax: output = 60 units, profit = ₦4,900. After tax: output = 58.33 units (≈175/3), profit = ₦4,604.17 (≈82875/18).

About This Question

This is Gce Model Questions Vol1 2025 Economics Question 1. It is one of the objective questions from the 2025 Gce Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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