Neco Model Questions Vol1 2017 Economics Question 5

Practice essay / theory question 5 from the 2017 Neco Model Questions Vol1 Economics examination. This question covers Cost and Revenue .

Neco Model Questions Vol1 2017 Economics Essay / Theory

Topic: Cost and Revenue

Question 5 NECO_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • essay

A manufacturing firm incurs a fixed cost of ₦200,000 per month. The total cost (TC) at various output levels is given in the table below. | Output (units) | Total Cost (₦) | |----------------|----------------| | 0 | 200,000 | | 500 | 350,000 | | 1,000 | 460,000 | | 1,500 | 540,000 | | 2,000 | 600,000 | The market price of the product is constant at ₦350 per unit. Answer the following questions:

Question Parts

( a )

Calculate the average cost (AC) at each output level and state at which output the firm is most technically efficient.

( b )

Determine the marginal cost (MC) between each successive output level.

( c )

Using the market price, explain whether the firm should increase output beyond 2,000 units.

( d )

Identify the output level at which profit is maximised. Show all necessary calculations.

( e )

State the profit (or loss) at the profit‑maximising output and advise whether the firm should continue operating in the short run.

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About This Question

This is Neco Model Questions Vol1 2017 Economics Question 5. It is one of the essay questions from the 2017 Neco Model Questions Vol1 Economics examination.

The question covers Cost and Revenue .

View More Neco Model Questions Vol1 2017 Economics Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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