Neco Model Questions Vol1 2017 Economics Question 4

Practice essay / theory question 4 from the 2017 Neco Model Questions Vol1 Economics examination. This question covers Production .

Neco Model Questions Vol1 2017 Economics Essay / Theory

Topic: Production

Question 4 NECO_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • essay

A small bakery uses two ovens (fixed capital) to bake loaves of bread. The table shows the total product (TP) of loaves produced per day when varying the number of workers (labour, L) employed. | Labour (L) | Total Product (TP) – loaves per day | |------------|--------------------------------------| | 1 | 120 | | 2 | 280 | | 3 | 420 | | 4 | 520 | | 5 | 580 | | 6 | 610 | | 7 | 620 | Answer the following:

Question Parts

( a )

Calculate the marginal product of labour (MP) and the average product of labour (AP) for each additional worker from the second worker onward.

( b )

From the data, identify the stage of production at which diminishing marginal returns set in and explain the economic reasoning behind it.

( c )

The bakery wishes to increase its daily output by 30 loaves. Discuss the most cost‑effective way to achieve this increase, considering the concepts of returns to scale, marginal product, and the possibility of adding another oven.

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About This Question

This is Neco Model Questions Vol1 2017 Economics Question 4. It is one of the essay questions from the 2017 Neco Model Questions Vol1 Economics examination.

The question covers Production .

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