Waec Model Questions Vol1 2017 Economics Question 5

Practice objective / multiple choice question 5 from the 2017 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 5 WAEC_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

A firm's production function is Q = 10 L^{0.5} K^{0.5}, where L is labour units and K is capital units. The firm currently employs L = 25 and K = 16. (a) Calculate the marginal product of labour (MP_L) and marginal product of capital (MP_K). (b) Determine the marginal rate of technical substitution (MRTS_{LK}) and compare it with the ratio of input prices given by a wage of ₦20 per unit of labour and a rental rate of capital of ₦40 per unit. State whether the firm is cost‑minimising at the current input mix.

Answer Options

A. MP_L=4, MP_K=6.25, MRTS=0.5 (=0.5), cost‑minimising
B. MP_L=3, MP_K=7, MRTS=0.43 (<0.5), not cost‑minimising
C. MP_L=5, MP_K=5, MRTS=1.0 (>0.5), not cost‑minimising
Correct Answer D. MP_L=4, MP_K=6.25, MRTS=0.64 (>0.5), not cost‑minimising
Correct Answer
D
Correct Option:
MP_L=4, MP_K=6.25, MRTS=0.64 (>0.5), not cost‑minimising

About This Question

This is Waec Model Questions Vol1 2017 Economics Question 5. It is one of the objective questions from the 2017 Waec Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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