Neco Model Questions Vol1 2020 Economics Question 14

Practice objective / multiple choice question 14 from the 2020 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2020 Economics Objective / Multiple Choice Medium Difficulty
Question 14 NECO_MODEL_QUESTIONS_VOL1 • 2020 • ECONOMICS • objective

Two firms, A and B, produce a homogeneous product. Market demand is \(P = 500 - Q\) where \(Q = q_{A}+q_{B}\). Firm A's total cost is \(TC_{A}=20q_{A}+100\) and Firm B's total cost is \(TC_{B}=30q_{B}+150\). Assuming Cournot competition, determine the equilibrium outputs \(q_{A}\) and \(q_{B}\), the market price, and each firm's profit.

Answer Options

A. q_A = 470/3 ≈ 156.67 units; q_B = 480/3 ≈ 160 units; Price P = 530/3 ≈ 176.67 Naira; Profit_A = 220000/9 ≈ 24,444.44 Naira; Profit_B = 230000/9 ≈ 25,555.56 Naira
B. q_A = 480/3 ≈ 160 units; q_B = 470/3 ≈ 156.67 units; Price P = 560/3 ≈ 186.67 Naira; Profit_A = 230000/9 ≈ 25,555.56 Naira; Profit_B = 220000/9 ≈ 24,444.44 Naira
C. q_A = 500/3 ≈ 166.67 units; q_B = 440/3 ≈ 146.67 units; Price P = 540/3 ≈ 180 Naira; Profit_A = 250000/9 ≈ 27,777.78 Naira; Profit_B = 200000/9 ≈ 22,222.22 Naira
Correct Answer D. q_A = 490/3 ≈ 163.33 units; q_B = 460/3 ≈ 153.33 units; Price P = 550/3 ≈ 183.33 Naira; Profit_A = 239200/9 ≈ 26,577.78 Naira; Profit_B = 210250/9 ≈ 23,361.11 Naira
Correct Answer
D
Correct Option:
q_A = 490/3 ≈ 163.33 units; q_B = 460/3 ≈ 153.33 units; Price P = 550/3 ≈ 183.33 Naira; Profit_A = 239200/9 ≈ 26,577.78 Naira; Profit_B = 210250/9 ≈ 23,361.11 Naira

About This Question

This is Neco Model Questions Vol1 2020 Economics Question 14. It is one of the objective questions from the 2020 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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