Observation

 

This is the alternative data response question to question (1) and it attracted very few candidates. The question required candidates to calculate a farmer’s marginal revenue, determine the price of a bag of maize and identify the market structure he operates with explanation in the (a), (b), (c) parts of the questions respectively. Most of the candidates who attempted this question were not able to determine the price of a bag of maize but were able to calculate the farmer’s Marginal Revenue. Candidates performed slightly above average in this question.

The candidates were expected to provide the following answers to obtain the maximum marks.
(a)        MR =  ΔTR
                        ΔQ
           
            MR1 =  6– 0       =     6  = 6

                        1 – 0                1                                

Therefore the price of a bag of maize is $6.00.
(c)        The farmer operates in a perfectly competitive market. In perfect competition MR = AR.
Since from the calculation, MR = $6.00 and AR =$6.00, then the farmer operates in                perfect competition OR because price is fixed at $6.00 at all levels of output.