Neco Model Questions Vol1 2023 Economics Question 5

Practice essay / theory question 5 from the 2023 Neco Model Questions Vol1 Economics examination. This question covers Cost and Revenue .

Neco Model Questions Vol1 2023 Economics Essay / Theory

Topic: Cost and Revenue

Question 5 NECO_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • essay

A small manufacturing firm produces wooden chairs. The total cost (TC) of producing q chairs per month is TC = 150,000 + 45q + 0.05q² (₦). The market price per chair depends on the quantity sold according to the demand equation P = 800 – 0.2q (₦).

Question Parts

( a )

Derive the revenue function R(q) and the profit function \(\pi(q)\).

( b )

Using marginal analysis, determine the output level q that maximises profit. Show all steps.

( c )

Calculate the maximum profit and state whether the firm should continue production in the short run. Explain your reasoning.

( d )

If the government imposes a tax of ₦10 per chair, explain qualitatively how the profit‑maximising output and profit would be affected.

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About This Question

This is Neco Model Questions Vol1 2023 Economics Question 5. It is one of the essay questions from the 2023 Neco Model Questions Vol1 Economics examination.

The question covers Cost and Revenue .

View More Neco Model Questions Vol1 2023 Economics Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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