Neco 2020 Economics Question 4

Practice objective / multiple choice question 4 from the 2020 Neco Economics examination.

Neco 2020 Economics Objective / Multiple Choice Hard Difficulty

Question 4 NECO • 2020 • ECONOMICS • objective

A smallholder farmer produces maize. The market price is ₦120 per kg. The farmer's total‑cost function is \(TC = 20Q + 0.02Q^{2}\) where \(Q\) is output in kg. The government imposes a price ceiling of ₦100 per kg.\n\n(a) Determine the profit‑maximising output without the ceiling.\n(b) Under the ceiling, assuming the farmer will produce only if price covers average variable cost, find the output the farmer will actually supply.\n(c) The market demand for maize is linear: \(P = 200 - 0.5Q\). Using the outputs from (a) and (b), calculate the dead‑weight loss caused by the price ceiling.

Correct Answer A. Dead‑weight loss = ₦82,800

B. Dead‑weight loss = ₦78,600

C. Dead‑weight loss = ₦90,000

D. Dead‑weight loss = ₦83,200

Correct Answer

Correct Option:

Dead‑weight loss = ₦82,800

This is Neco 2020 Economics Question 4. It is one of the objective questions from the 2020 Neco Economics examination.

Difficulty level: Hard .

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