Gce Model Questions Vol1 2019 Economics Question 4

Practice essay / theory question 4 from the 2019 Gce Model Questions Vol1 Economics examination. This question covers Production, Short‑run production function, Marginal product, Average product, Law of diminishing returns, Cost implications .

Gce Model Questions Vol1 2019 Economics Essay / Theory
Topics: Production Short‑run production function Marginal product Average product Law of diminishing returns Cost implications
Question 4 GCE_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • essay

A small manufacturing firm produces wooden chairs. The table below records the weekly output (units) when varying the number of workers employed while keeping other inputs constant.

Question Parts

( a )
Using the data provided, compute the marginal product (MP) and average product (AP) of labour for each additional worker hired.
( b )
Identify the range of labour input over which the law of diminishing marginal returns operates. Explain how you reached this conclusion using your calculations from part (a).
( c )
Assume the firm pays each worker ₦15 000 per week and the fixed cost of the factory is ₦200 000 per week. Using the AP figures from part (a), estimate the average variable cost (AVC) and average total cost (ATC) for the level of output when 5 workers are employed. Comment on whether the firm is likely to be operating at an efficient scale at this point.

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About This Question

This is Gce Model Questions Vol1 2019 Economics Question 4. It is one of the essay questions from the 2019 Gce Model Questions Vol1 Economics examination.

The question covers Production, Short‑run production function, Marginal product, Average product, Law of diminishing returns, Cost implications .

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