Waec Model Questions Vol1 2021 Economics Question 44

Practice objective / multiple choice question 44 from the 2021 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2021 Economics Objective / Multiple Choice Hard Difficulty
Question 44 WAEC_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

A maize farmer incurs fixed costs of ₦150,000 per season. The variable cost is ₦50,000 per hectare. Each hectare normally yields 2.5 tonnes of maize, which sells for ₦200,000 per tonne. The government offers a subsidy of ₦30,000 per tonne on the first 5 tonnes produced by any farmer. The farmer currently cultivates 2 hectares. If the farmer expands to 3 hectares, the marginal yield per additional hectare falls by 10% because of diminishing returns, while the market price and the subsidy conditions remain unchanged, should the farmer expand? Show the profit calculation for both the 2‑hectare and 3‑hectare scenarios.

Answer Options

A. Yes; profit rises from ₦800,000 (2 ha) to ₦1,200,000 (3 ha), so the farmer should expand.
B. Yes; profit rises from ₦900,000 (2 ha) to ₦1,050,000 (3 ha), so the farmer should expand.
Correct Answer C. Yes; profit rises from ₦900,000 (2 ha) to ₦1,200,000 (3 ha), so the farmer should expand.
D. No; profit falls from ₦900,000 (2 ha) to ₦850,000 (3 ha), so the farmer should not expand.
Correct Answer
C
Correct Option:
Yes; profit rises from ₦900,000 (2 ha) to ₦1,200,000 (3 ha), so the farmer should expand.

About This Question

This is Waec Model Questions Vol1 2021 Economics Question 44. It is one of the objective questions from the 2021 Waec Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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