Gce Model Questions Vol1 2022 Economics Question 25

Practice objective / multiple choice question 25 from the 2022 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2022 Economics Objective / Multiple Choice Medium Difficulty
Question 25 GCE_MODEL_QUESTIONS_VOL1 • 2022 • ECONOMICS • objective

A firm produces output according to the Cobb‑Douglas production function \(Q = L^{0.5}K^{0.5}\). The price of labour is \(w_L = \$4\) per unit and the price of capital is \(w_K = \$6\) per unit. The firm wishes to produce \(Q = 100\) units at minimum cost. Determine the cost‑minimising quantities of labour and capital and compute the minimum total cost.

Answer Options

A. Labour ≈ 140 units, Capital ≈ 70 units, Minimum total cost ≈ $960
B. Labour ≈ 110 units, Capital ≈ 90 units, Minimum total cost ≈ $1020
C. Labour ≈ 100 units, Capital ≈ 100 units, Minimum total cost ≈ $1000
Correct Answer D. Labour ≈ 122.5 units, Capital ≈ 81.7 units, Minimum total cost ≈ $980
Correct Answer
D
Correct Option:
Labour ≈ 122.5 units, Capital ≈ 81.7 units, Minimum total cost ≈ $980

About This Question

This is Gce Model Questions Vol1 2022 Economics Question 25. It is one of the objective questions from the 2022 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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