Neco Model Questions Vol1 2019 Economics Question 34

Practice objective / multiple choice question 34 from the 2019 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2019 Economics Objective / Multiple Choice Medium Difficulty
Question 34 NECO_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • objective

A firm in a monopolistically competitive market faces the demand curve \(P = 200 - 2Q\). Its total cost function is \(TC = 50 + 20Q + Q^{2}\).\nDetermine the profit‑maximising output and price, compute the profit, then find the output and profit the firm would obtain if it produced where price equals marginal cost (the competitive outcome). State whether the firm earns a supernormal profit in each case.

Answer Options

A. Monopoly: Q=32, P=136 ₦, profit=2700 ₦ (supernormal). Competitive output: Q=42, P=116 ₦, profit=2000 ₦ (still positive).
Correct Answer B. Monopoly: Q=30, P=140 ₦, profit=2650 ₦ (supernormal). Competitive output: Q=45, P=110 ₦, profit=1975 ₦ (still positive).
C. Monopoly: Q=30, P=138 ₦, profit=2600 ₦ (supernormal). Competitive output: Q=45, P=108 ₦, profit=1950 ₦ (still positive).
D. Monopoly: Q=28, P=144 ₦, profit=2600 ₦ (supernormal). Competitive output: Q=48, P=104 ₦, profit=1900 ₦ (still positive).
Correct Answer
B
Correct Option:
Monopoly: Q=30, P=140 ₦, profit=2650 ₦ (supernormal). Competitive output: Q=45, P=110 ₦, profit=1975 ₦ (still positive).

About This Question

This is Neco Model Questions Vol1 2019 Economics Question 34. It is one of the objective questions from the 2019 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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