Neco Model Questions Vol1 2018 Economics Question 40

Practice objective / multiple choice question 40 from the 2018 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2018 Economics Objective / Multiple Choice Medium Difficulty
Question 40 NECO_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • objective

In a market the demand curve is \(P = 500 - 2Q\). Two firms operate in the market, each having a constant marginal cost of \(\text{₦}100\). The firms collude and act as a monopoly.\n(a) Determine the monopoly output, price and total profit.\n(b) Assuming the two firms split the monopoly output equally, state each firm's profit.\n(c) Under perfect competition (price equals marginal cost), find the competitive output and compute the consumer surplus in both the monopoly and the perfectly competitive outcomes.

Answer Options

Correct Answer A. Monopoly: Q=100, P=₦300, profit=₦20,000; each firm profit=₦10,000; CS monopoly=₦10,000, CS competition=₦40,000
B. Monopoly: Q=80, P=₦340, profit=₦18,000; each firm profit=₦9,000; CS monopoly=₦12,000, CS competition=₦38,000
C. Monopoly: Q=100, P=₦280, profit=₦18,000; each firm profit=₦9,000; CS monopoly=₦9,000, CS competition=₦42,000
D. Monopoly: Q=120, P=₦260, profit=₦15,600; each firm profit=₦7,800; CS monopoly=₦8,000, CS competition=₦45,000
Correct Answer
A
Correct Option:
Monopoly: Q=100, P=₦300, profit=₦20,000; each firm profit=₦10,000; CS monopoly=₦10,000, CS competition=₦40,000

About This Question

This is Neco Model Questions Vol1 2018 Economics Question 40. It is one of the objective questions from the 2018 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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