Neco Model Questions Vol1 2020 Economics Question 25
Practice objective / multiple choice question 25 from the 2020 Neco Model Questions Vol1 Economics examination.
A farmer's total cost (in \(\₦\)) for producing \(Q\) tonnes of maize is given by \(C(Q)=200{,}000 + 30{,}000Q + 2{,}000Q^{2}\). The market price per tonne follows the inverse demand function \(P(Q)=500 - 5Q\). The government introduces a per‑tonne subsidy of \(\₦80\) paid to the farmer, but to fund the subsidy it raises the price of fertilizer, increasing the linear cost term by \(20\%\) (so the term \(30{,}000Q\) becomes \(36{,}000Q\)). Assuming the farmer maximises profit, determine the new equilibrium quantity \(Q^{*}\) (in tonnes) after the subsidy and tax are implemented. Round your answer to two decimal places.
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About This Question
This is Neco Model Questions Vol1 2020 Economics Question 25. It is one of the objective questions from the 2020 Neco Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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