Gce Model Questions Vol1 2017 Economics Question 33

Practice objective / multiple choice question 33 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Hard Difficulty
Question 33 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

An agricultural firm uses the Cobb‑Douglas production function \(Q = 2 L^{0.6} K^{0.4}\). Initially it employs \(L = 1{,}000\) workers and \(K = 500\) units of capital. (a) If labour is increased by 20 % while capital remains unchanged, calculate the percentage change in output and the new level of output (rounded to the nearest unit). (b) Compute the marginal product of labour before and after the increase (rounded to two decimal places).

Answer Options

A. Output rises to 1 620 units (≈7.0 % increase); MPL before = 2.10, MPL after = 1.95
B. Output rises to 1 750 units (≈15.5 % increase); MPL before = 2.35, MPL after = 2.15
C. Output rises to 1 580 units (≈4.3 % increase); MPL before = 2.00, MPL after = 1.85
Correct Answer D. Output rises to 1 695 units (≈11.7 % increase); MPL before = 2.28, MPL after = 2.08
Correct Answer
D
Correct Option:
Output rises to 1 695 units (≈11.7 % increase); MPL before = 2.28, MPL after = 2.08

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 33. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Hard .

View More Gce Model Questions Vol1 2017 Economics Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support