Neco Model Questions Vol1 2020 Economics Question 17

Practice objective / multiple choice question 17 from the 2020 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2020 Economics Objective / Multiple Choice Medium Difficulty
Question 17 NECO_MODEL_QUESTIONS_VOL1 • 2020 • ECONOMICS • objective

A firm uses labour (L) while capital is fixed. The total product (Q) obtained from successive units of labour is given below:\n\n\begin{tabular}{c|c}\nL & Q \\ \hline\n1 & 20\\\n2 & 45\\\n3 & 66\\\n4 & 82\\\n5 & 93\\n\end{tabular}\n\n(a) Compute the average product (AP) and marginal product (MP) of labour for each level of L.\n(b) Identify the range of labour where diminishing marginal returns set in.\n(c) If the firm wishes to maximise total product without entering the diminishing‑returns region, how many workers should it employ?

Answer Options

A. AP: 20, 22.5, 22.0, 20.5, 18.6; MP: -, 30, 20, 14, 9; diminishing returns start at L=2; employ 1 worker.
B. AP: 20, 22.5, 22.0, 21.0, 19.0; MP: -, 25, 21, 15, 12; diminishing returns start at L=4; employ 3 workers.
Correct Answer C. AP: 20, 22.5, 22.0, 20.5, 18.6; MP: -, 25, 21, 16, 11; diminishing returns start at L=3; employ 2 workers.
D. AP: 20, 22.5, 22.0, 20.5, 18.6; MP: -, 25, 22, 17, 13; diminishing returns start at L=5; employ 4 workers.
Correct Answer
C
Correct Option:
AP: 20, 22.5, 22.0, 20.5, 18.6; MP: -, 25, 21, 16, 11; diminishing returns start at L=3; employ 2 workers.

About This Question

This is Neco Model Questions Vol1 2020 Economics Question 17. It is one of the objective questions from the 2020 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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