Neco 2020 Economics Question 12

Practice objective / multiple choice question 12 from the 2020 Neco Economics examination.

Neco 2020 Economics Objective / Multiple Choice Medium Difficulty
Question 12 NECO • 2020 • ECONOMICS • objective

Consider a market with inverse demand \(P = 100 - 2Q\) and total cost \(TC = 20Q + 0.5Q^{2}\). A monopolist maximizes profit by equating marginal revenue and marginal cost.\n\n(a) Determine the monopoly quantity \(Q_{m}\) and price \(P_{m}\).\n(b) Under perfect competition the price equals marginal cost. Find the competitive quantity \(Q_{c}\).\n(c) By what percentage is the monopoly output lower than the competitive output?

Answer Options

A. Qm = 18, Pm = 64; Qc = 85/3 (≈28.33); monopoly output is 36% lower than competitive output
B. Qm = 14, Pm = 72; Qc = 90/3 (≈30.00); monopoly output is 53% lower than competitive output
Correct Answer C. Qm = 16, Pm = 68; Qc = 80/3 (≈26.67); monopoly output is 40% lower than competitive output
D. Qm = 20, Pm = 60; Qc = 70/3 (≈23.33); monopoly output is 30% lower than competitive output
Correct Answer
C
Correct Option:
Qm = 16, Pm = 68; Qc = 80/3 (≈26.67); monopoly output is 40% lower than competitive output

About This Question

This is Neco 2020 Economics Question 12. It is one of the objective questions from the 2020 Neco Economics examination.

Difficulty level: Medium .

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