Neco Model Questions Vol1 2019 Economics Question 20

Practice objective / multiple choice question 20 from the 2019 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2019 Economics Objective / Multiple Choice Hard Difficulty
Question 20 NECO_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • objective

A firm produces output \(Q\) according to the Cobb‑Douglas function \(Q = 0.5\,L^{0.6}K^{0.4}\), where \(L\) is labour (workers) and \(K\) is capital (machines). The daily wage rate is \(\text{₦}120\) per worker and the rental rate of capital is \(\text{₦}200\) per machine. The firm wishes to produce \(Q = 1{,}000\) units per day at minimum cost. Determine the cost‑minimising quantities of labour and capital (allow fractional units, round to two decimal places) and the corresponding minimum daily cost (rounded to the nearest naira).

Answer Options

Correct Answer A. Labour = 2886.00 workers, Capital = 1154.40 machines, Minimum cost = ₦577,200
B. Labour = 3000.00 workers, Capital = 1000.00 machines, Minimum cost = ₦580,000
C. Labour = 2500.00 workers, Capital = 1300.00 machines, Minimum cost = ₦590,000
D. Labour = 2800.00 workers, Capital = 1200.00 machines, Minimum cost = ₦575,000
Correct Answer
A
Correct Option:
Labour = 2886.00 workers, Capital = 1154.40 machines, Minimum cost = ₦577,200

About This Question

This is Neco Model Questions Vol1 2019 Economics Question 20. It is one of the objective questions from the 2019 Neco Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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