Post Utme Summit University 2017 Economics Question 32

Practice objective / multiple choice question 32 from the 2017 Post Utme Summit University Economics examination.

Post Utme Summit University 2017 Economics Objective / Multiple Choice
Question 32 POST_UTME_SUMMIT_UNIVERSITY • 2017 • ECONOMICS • objective

A firm is producing a good u\sing a production function of the form Q = 2L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, and the firm is currently producing 100 units of output, what is the likely effect of a 10% increase in the price of labor on the firm's output in the short run?

Answer Options

A. The output will increase by 10%
Correct Answer B. The output will decrease by 10%
C. The output will remain unchanged
D. The output will increase by 5%
Correct Answer
B
Correct Option:
The output will decrease by 10%

About This Question

This is Post Utme Summit University 2017 Economics Question 32. It is one of the objective questions from the 2017 Post Utme Summit University Economics examination.

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