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WAEC Economics 2004 Question 11

Question 11

Theory of Costs and Revenue

An entrepreneur is likely to make more profits when

  1. A.expenditure is more than revenue
  2. B.competitors charge lower prices
  3. C.cost per unit output falls
  4. D.quantity of output reduces
Show the answer and explanation

Answer: C (cost per unit output falls)

Explanation

If cost per unit falls while price stays the same, profit per unit rises.