Neco Model Questions Vol1 2021 Economics Question 4

Practice essay / theory question 4 from the 2021 Neco Model Questions Vol1 Economics examination. This question covers Production theory, Costs and revenue, Profit maximisation .

Neco Model Questions Vol1 2021 Economics Essay / Theory
Topics: Production theory Costs and revenue Profit maximisation
Question 4 NECO_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • essay

A small manufacturing firm produces wooden chairs. The following data show the firm's total product (TP) and total cost (TC) for different levels of output during a month.

Question Parts

( a )
Using the data below, compute for each output level the (i) average product (AP), (ii) marginal product (MP), (iii) average cost (AC) and (iv) marginal cost (MC). Present your results in a table.
( b )
If the market price of a chair is N500, determine the level of output at which the firm should produce to maximise profit. Show your working.
( c )
Explain why producing beyond the profit‑maximising output would reduce the firm’s profit, referring to the law of diminishing marginal returns.
( d )
Suggest two practical measures the firm could adopt to improve its production efficiency.

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About This Question

This is Neco Model Questions Vol1 2021 Economics Question 4. It is one of the essay questions from the 2021 Neco Model Questions Vol1 Economics examination.

The question covers Production theory, Costs and revenue, Profit maximisation .

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