Neco 2019 Economics Question 8
Practice objective / multiple choice question 8 from the 2019 Neco Economics examination.
A firm produces output according to the Cobb‑Douglas production function \(Q = 50 L^{0.6} K^{0.4}\), where \(L\) is labour units and \(K\) is capital units. The market price of output is \(P = \text{₦}200\) per unit. The wage rate is \(w = \text{₦}500\) per labour unit and the rental rate of capital is \(r = \text{₦}800\) per capital unit. Currently the firm employs \(L = 64\) units of labour and \(K = 16\) units of capital. Determine whether the firm is using a profit‑maximising combination of inputs. If not, state the direction (increase or decrease) in which each input should be adjusted, assuming the other input is held constant.
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About This Question
This is Neco 2019 Economics Question 8. It is one of the objective questions from the 2019 Neco Economics examination.
Difficulty level: Hard .
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