Question 13
NECO
•
2024
•
ECONOMICS
•
objective
A firm's total‑cost function is \(TC = 5\,000 + 20Q + 0.05Q^{2}\), where \(Q\) is output in units. \( (a)\) Determine the output level that minimises average total cost (ATC) and compute that minimum ATC. \( (b)\) Find the marginal cost (MC) at this output. \( (c)\) If the market price is \(\₦150\) per unit, should the firm produce at the output found in part (a)?
Answer Options
A.
The ATC is minimised at Q \approx 316 units, giving a minimum ATC of about \₦70.0. MC at this output is also \₦70.0. Because the market price (\₦150) exceeds ATC, the firm should produce.
B.
The ATC is minimised at Q \approx 200 units, giving a minimum ATC of about \₦60.0. MC at this output is also \₦60.0. Because the market price (\₦150) exceeds ATC, the firm should produce.
Correct Answer
C.
The ATC is minimised at Q \approx 316 units, giving a minimum ATC of about \₦51.6. MC at this output is also \₦51.6. Because the market price (\₦150) exceeds ATC, the firm should produce.
D.
The ATC is minimised at Q \approx 316 units, giving a minimum ATC of about \₦51.6. MC at this output is also \₦51.6. Because the market price (\₦150) is below ATC, the firm should not produce.
Correct Answer
C
Correct Option:
The ATC is minimised at Q \approx 316 units, giving a minimum ATC of about \₦51.6. MC at this output is also \₦51.6. Because the market price (\₦150) exceeds ATC, the firm should produce.
About This Question
This is
Neco
2024
Economics
Question 13.
It is one of the
objective
questions from the
2024
Neco
Economics
examination.
Difficulty level:
Medium
.