Neco 2023 Economics Question 4

Practice essay / theory question 4 from the 2023 Neco Economics examination. This question covers Production .

Neco 2023 Economics Essay / Theory

Topic: Production

Question 4 NECO • 2023 • ECONOMICS • essay

A firm operates in the short run with a fixed amount of capital and labour as the only variable input. The table below shows the total product (TP) obtained from different numbers of workers employed. | Labour (workers) | Total Product (units) | |-------------------|-----------------------| | 0 | 0 | | 1 | 20 | | 2 | 45 | | 3 | 65 | | 4 | 80 | | 5 | 90 | | 6 | 95 | | 7 | 97 | Answer the following questions:

Question Parts

( a )

Calculate the marginal product (MP) and average product (AP) of labour for each additional worker up to the seventh worker.

( b )

Identify the range of labour input over which the law of diminishing marginal returns sets in and explain your conclusion using the values obtained in part (a).

( c )

Assume the firm can sell each unit of output at a constant price of ₦50 and each worker is paid a wage of ₦400 per period. Determine the level of labour that maximizes the firm’s profit in the short run, showing all calculations.

( d )

Discuss two possible reasons why the firm might still incur a loss even at the profit‑maximising level of output.

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About This Question

This is Neco 2023 Economics Question 4. It is one of the essay questions from the 2023 Neco Economics examination.

The question covers Production .

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