Economics Paper 2, May/June 2010

Questions:	1	2	3	4	5	6	7	8	9	10	11	12	Main

General Comments
Weakness/Remedies
Strength

Question 2

Table below represents the cost function of a poultry farm. The price of a crate of egg. is
$21. Use the information contained in the table to answer the questions that follow.

Quantity of eggs(in crates)	Total Cost
0	50
1	55
2	62
3	75
4	96
5	125
6	162
7	203
8	248

(a) What is the fixed cost ofthe farm?
(b) (i) Calculate the marginal cost at each level of output
(ii) What is the profit maximizing output of the farm?
(c) Draw the demand curve for the farm.

_____________________________________________________________________________________________________

Observation

Majority of the candidates who answered this question had no difficulty in providing the correct answers for the (a) and b(i) parts of the question. However, most of' them had difficulties in determining the profit maximizing output and drawing the demand curve of the farm as required in the b( ii) and (e) parts of the question. Candidates needed to present the following answers to score maximum marks for this question.

MC4 = 96-75 = 21 = 21
4-3 1

This where MC output is 4 crates of eggs