Neco Model Questions Vol1 2018 Economics Question 15

Practice objective / multiple choice question 15 from the 2018 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2018 Economics Objective / Multiple Choice Medium Difficulty
Question 15 NECO_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • objective

A firm's total cost function is \( TC = 0.5Q^{2} + 30Q + 200 \) and its total revenue function is \( TR = 80Q - Q^{2} \).\n\n(a) Find the profit‑maximising output level and the corresponding profit.\n(b) If the market price falls to \(\text{₦}50\), should the firm continue producing in the short run? Justify your answer.

Answer Options

A. Yes, because price (₦50) > AVC (₦40) at Q=10, so the firm should continue producing.
Correct Answer B. Yes, because price (₦50) > AVC (₦40) at Q=20, so the firm should continue producing.
C. No, because price (₦50) equals AVC (₦50) at Q=20, so the firm is indifferent and should shut down.
D. No, because price (₦50) < AVC (₦55) at Q=20, so the firm should shut down.
Correct Answer
B
Correct Option:
Yes, because price (₦50) > AVC (₦40) at Q=20, so the firm should continue producing.

About This Question

This is Neco Model Questions Vol1 2018 Economics Question 15. It is one of the objective questions from the 2018 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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