Neco 2017 Economics Question 3

Practice objective / multiple choice question 3 from the 2017 Neco Economics examination.

Neco 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 3 NECO • 2017 • ECONOMICS • objective

A firm uses labour L (workers) and capital K (machines) to produce output according to the Cobb‑Douglas function \( Q = 5 L^{0.5} K^{0.5} \). The price of labour is ₦100 per worker per day and the price of capital is ₦200 per machine per day. The firm must produce at least 500 units per day and wishes to minimise total daily cost. Determine the optimal numbers of workers and machines and the minimum total cost (in Naira).

Answer Options

A. Labour ≈ 100 workers, Capital ≈ 100 machines; minimum daily cost ≈ ₦30,000
B. Labour ≈ 200 workers, Capital ≈ 50 machines; minimum daily cost ≈ ₦35,000
Correct Answer C. Labour ≈ 141 workers, Capital ≈ 71 machines; minimum daily cost ≈ ₦28,284
D. Labour ≈ 120 workers, Capital ≈ 80 machines; minimum daily cost ≈ ₦29,600
Correct Answer
C
Correct Option:
Labour ≈ 141 workers, Capital ≈ 71 machines; minimum daily cost ≈ ₦28,284

About This Question

This is Neco 2017 Economics Question 3. It is one of the objective questions from the 2017 Neco Economics examination.

Difficulty level: Medium .

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