Neco 2018 Economics Question 5

Practice essay / theory question 5 from the 2018 Neco Economics examination. This question covers Cost and Revenue, Break‑even analysis, Marginal cost, Profit calculation .

Neco 2018 Economics Essay / Theory

Topics: Cost and Revenue Break‑even analysis Marginal cost Profit calculation

Question 5 NECO • 2018 • ECONOMICS • essay

A small manufacturing firm produces widgets. Its fixed cost is ₦200,000 per month. The variable cost per month is given by \(VC = 0.02Q^{2} + 5Q\), where \(Q\) is the number of widgets produced. The market price per widget is determined by the demand function \(P = 120 - 0.1Q\).

Question Parts

( a )

Derive the total cost (TC) and total revenue (TR) functions in terms of output \(Q\).

( b )

Determine the break‑even output level (the quantity at which profit is zero). Show all steps.

( c )

The firm plans to produce 400 units. Calculate:

( ) The profit (or loss) at \(Q = 400\).

( ) The marginal cost at \(Q = 400\).

( d )

If the fixed cost rises by 10 %:

( ) Explain qualitatively how the break‑even output will be affected.

( ) Calculate the new break‑even quantity.

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About This Question

This is Neco 2018 Economics Question 5. It is one of the essay questions from the 2018 Neco Economics examination.

The question covers Cost and Revenue, Break‑even analysis, Marginal cost, Profit calculation .

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