Neco Model Questions Vol1 2018 Economics Question 49

A farmer grows maize with fixed costs of \(\text{₦}150,000\) per season and a variable cost of \(\text{₦}30,000\) per tonne. The expected output is 10 tonnes. The government offers a price‑support scheme in which the farmer must sell 60 % of his output to the government at a guaranteed price of \(\text{₦}45,000\) per tonne, while the remaining 40 % can be sold at the prevailing market price of \(\text{₦}55,000\) per tonne. (a) Compute the farmer's total revenue, total cost and profit under the scheme. (b) If the farmer sold all 10 tonnes at the market price, what would his profit be? (c) Determine the market price per tonne (if the farmer sold all output at that price) that would make him indifferent between participating in the scheme and selling all output at the market price.