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JAMB Economics 2023 Paper

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Question : 11

Total: 79

If a business' total economic cost of producing 10,000 units of a product is N750,000 and this output is sold to consumers for N1,000,000, then the firm would earn

A normal profit of N750,000
An economic profit of N750,000
A normal profit o N1,750,000
An economic profit of N250,000

Solution:

Concept:

Economic profit is the difference between total revenue and total economic cost.

Explanation:

Total revenue from selling 10,000 units is

₦1,000,000

.

Total economic cost of producing the units is

₦750,000

.

Economic profit

= \text{Total revenue} - \text{Total economic cost}

.

Economic profit

= 1,000,000 - 750,000 = 250,000

.

Since the firm earns more than just enough to cover all costs, this is an economic (or abnormal) profit of

₦250,000

.

Answer:

D. An economic profit of

₦250,000

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