Neco 2017 Economics Question 17

A firm produces output according to the Cobb‑Douglas production function \(Q = 100 L^{0.5} K^{0.5}\). The market price of output is \(\text{₦}1{,}500\) per unit, the wage rate is \(\text{₦}200\) per unit of labour and the rental rate of capital is \(\text{₦}500\) per unit of capital. Currently the firm employs \(L = 16\) units of labour and \(K = 9\) units of capital.\n(a) Compute the marginal product of labour (MPL).\n(b) Compute the marginal revenue product of labour (MRP\_L).\n(c) Should the firm increase labour by one unit? Justify using marginal analysis.\n(d) What is the change in profit if labour is increased from 16 to 17 units while capital remains unchanged?