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JAMB Economics 1989 Question 19

Question 19

Theory of Costs and Revenue

Q(ton) | TC(₦) | TR(₦)
400 | 16000 | 20000
500 | 18000 | 22500
600 | 19800 | 24000
700 | 21000 | 24500
800 | 24000 | 25000
900 | 31500 | 18000
1000 | 40000 | 15000
The table above gives the various levels of output (Q) and its corresponding total cost of production (TC) and total revenue (TR) for a firm. Which output level Q results in maximum profit?

  1. A.400
  2. B.500
  3. C.600
  4. D.700
Show the answer and explanation

Answer: B (500)

Explanation

Profit = TR − TC: 4,000 at 400; 4,500 at 500; 4,200 at 600; 3,500 at 700. The largest is at 500 tons.