Neco 2020 Economics Question 34

Practice objective / multiple choice question 34 from the 2020 Neco Economics examination.

Neco 2020 Economics Objective / Multiple Choice Hard Difficulty
Question 34 NECO • 2020 • ECONOMICS • objective

A railway company plans to operate a 200 km service. The variable cost per passenger‑kilometre is \(\text{₦}0.05\) and the fixed cost of the service is \(\text{₦}2,000,000\) per year. The daily demand for seats is given by \(Q = 5000 - 20P\), where \(P\) is the fare per passenger (in Naira). Assuming the marginal cost per passenger equals the variable cost for the whole journey, find the fare that maximises daily profit and compute the maximum daily profit (in Naira), ignoring the fixed cost.

Answer Options

Correct Answer A. Fare = ₦130; maximum daily profit = ₦288,000
B. Fare = ₦135; maximum daily profit = ₦287,500
C. Fare = ₦127.5; maximum daily profit = ₦300,125
D. Fare = ₦125; maximum daily profit = ₦312,500
Correct Answer
A
Correct Option:
Fare = ₦130; maximum daily profit = ₦288,000

About This Question

This is Neco 2020 Economics Question 34. It is one of the objective questions from the 2020 Neco Economics examination.

Difficulty level: Hard .

View More Neco 2020 Economics Questions More Neco Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support