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PPE611S - PRINCIPLES OF PRODUCTION - 2ND OPP - JUNE 2024 |
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nAm I Bl A un IVERS ITV
OF SCIEnCE Ano TECHnOLOGY
FACULTYOF HEALTH,NATURALRESOURCESAND APPLIEDSCIENCES
DEPARTMENT OF AGRICULTURALSCIENCESAND AGRIBUSINESS
QUALIFICATION: BACHELOROF SCIENCEIN AGRICULTURE
QUALIFICATION CODE:07BAGA
LEVEL: 7
COURSECODE: PPE611S
COURSENAME: PRINCIPLESOF PRODUCTION
ECONOMICS
SESSION:JULY2024
PAPER:2
DURATION: 3 HOURS
MARKS: 100
SECONDOPPORTUNITY/SUPPLEMENTARYEXAMINATION QUESTION PAPER
EXAMINER(S) DR DAVID UCHEZUBA
MODERATOR: DR THINAH MOYO
INSTRUCTIONS
1. This paper consists of three sections: Section A has 15 multiple-choice questions and 5
True or False questions. Section B is made up of four essay-type questions.
2. Answer ALL questions in blue or black ink.
3. Start each question on a new page in your answer booklet.
4. Questions relating to this paper may be raised in the initial 30 minutes after the start of
the examination. Thereafter, students must use their initiative to deal with any
perceived error or ambiguities & any assumption made should be clearly stated.
THIS QUESTION PAPERCONSISTSOF 9 PAGES(Including this front page)
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SECTION A: MULTIPLE CHOICE QUESTIONS
Question 1
Which of the following statements is correct?
A). The average physical product is above the marginal physical product in stage I
B). The marginal physical product is equal to the average physical product in stage I.
C). At the inflexion point, the TPP function changes from increasing at a decreasing rate
to increasing at a constant rate.
D). At the inflexion point, the TPP function changes from increasing at an increasing rate
to increasing at a decreasing rate.
Question 2
The function logy= log A+ b1 log x1 + b2 log x2 + b3x1 + b4x2 is an example of a
A). Cobb-Douglas function
B). Transcendental function
C). Quadratic function
D). Translog function
Question 3
Which of the following statements is incorrect about stage II of the neoclassical production
function?
A). The slope becomes flatter with each additional unit of the variable input.
B). The MPP curve intersects the horizontal quantity axis at the end of Stage II.
C). APP is positive and the APP has a positive slope.
D. The APP curve is at its maximum at the beginning of Stage II.
Question 4
Which of the following statements is incorrect about the stage Ill of the neoclassical
production function?
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A}. The TPP has not reached its peak and is heading down.
B). MPP is negative and the MPP curve has a negative slope.
C). The MPP curve intersects the horizontal axis and is moving down.
D}. APP remains positive but the APP curve has a negative slope.
Question 5
Which stage of the neoclassical production function is referred to as the economic region of
production
A}. Stage I
B). Stage Ill
C). Stages I & II
D}. Stage 11
Question 6
Which of the following statements is incorrect about the elasticity of production?
A). If Ep> 1: output responds strongly to a unit increase in input, use.
B}. If Ep= 1: output responds proportionately to a unit change in input.
C). If O< Ep< 1: output responds more than proportionately to a unit change in input.
D). If Ep< 0: Output declines as the level of input increases
Question 7
What is the meaning of the term technical efficiency?
A). A measure of the ability of the firm to maximize profit
B). A measure of the ability of the firm to produce a certain level of output with
maximum inputs.
C}. A measure of the ability of the firm to retain its competitive advantage.
D). A measure of the ability of the firm to produce a certain level of output with minimal
inputs.
Question 8
A firm has a technical efficiency of 93% and an allocative efficiency of 85.7%. What is the
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production efficiency of this firm?
A}. 93.1%
B}. 79.7 %
C}. 97.7%
D). 7.3%
Question 9
Suppose a production function is given as y = 12x- 2x 2 what is the input level that
maximizes output.
A). 8
B).2
C}.4
D).3
Question 10
The type of substitution represented by the lsoquant shown below is an example of
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A). No factor substitution
B). Perfect factor substitution
C). Imperfect factor substitution
D). Complementary Substitution
Question 11
Alternatively, the process of organizing production activities to determine how the various
levels of inputs (factors, resources etc.) and outputs are combined while leaving other factors
constant. The phrase leaving other factors constant implies.
A). Certeris paribus.
B). Return to scale.
C). Partial elasticity of substitution
D). Homogeneity to degree zero
Question 12
Which of the following is not a factor of production?
A). Manager's family labour
B). Manager's herd of cattle
C). Manager's skill
D). Manager's produce
Question 13
At maximum, the slope of a total physical product is zero. This implies.
A). Diseconomies of scale
B). The average physical product is zero.
C). Marginal physical product is zero.
D). Elasticity of production is greater than one.
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Question 14
When all inputs are increased proportionally If output more than doubles.
A). Economies of scale exist.
B). Diseconomies of scale exist.
C). Both economies and diseconomies of scale exist.
D). Neither economies nor diseconomies of scale exist.
Question 15
A function linking output to input is called.
A).
Production function
B).
Demand function.
C). Aesthetic function
D).
Anaesthetic function
TRUEOR FALSEQUESTIONS
Indicate whether the question is True or False
Question 16 In short-run production all inputs are fixed. True or False?
Question 17 Production is monoperiodic if one out is produced per period. True or False?
Question 18 The highest profit will be achieved when the difference between TR and TC is
maximised. True or False?
Question 19. All production functions are homogeneous. True or False?
Question 20. If the elasticity of production is large this means the marginal physical
product is large relative to the average physical product. True or False?
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SECTIONB: ESSAY-TYPEQUESTIONS
Question 1
1.1. Assume a corn production function is given by the following functions.
y = 4 + 24x - 4x2
1.1.1. Find the input level that maximizes output.
{2 marks)
1.1.2. What is the maximum output (corn yield) at the calculated level of input? (2 marks)
1.2.3. Find the input level that maximizes the average physical product
{3 Marks)
1.2. Consider the following production function.
y=l0x 1 -10x 2 +x~ +x~
1.2.1. Find the input levels that satisfy the necessary and sufficient conditions for maximum
or minimum output.
(10 marks)
1.2.2. Confirm that output is a maximum or a minimum.
(3 marks)
Question 2
2.1. Define the following concepts.
2.1.1 Production efficiency
2.1.2. Technical efficiency
2.1.3. Allocative efficiency
2.1.4. Economics efficiency
(20 Marks}
(2 Mark)
(2 Mark)
{2 Mark)
{2 Mark)
2.2. The total cost of producing an item is N$250. The cost of capital per unit of production
is N$24 and Labour cost per unit is N$50.
2.2.1 Determine the Isa-cost equation.
(2 Marks)
2.2.2. Draw the lsocost line.
(2 Marks)
2.2.3. What is the unit of labour used when capital per unit was 3?
(2 Marks)
2.3. List the features of an lsoquant.
2.4. Give reasons why the lsoquant line cannot cross
(3 Marks)
(3 Marks)
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Question 3
3.1. Consider the production function.
y=x+4x 2 -0.2x 3
3.1.1 Derive the marginal physical production function.
3.1.2. Derive the average physical product function.
3.1.3. Find the value of the marginal physical product at 2 units of input.
3.1.4. Find the value of the average physical product at 2 units of input.
3.1.5. Find the input level that maximizes the marginal physical product.
3.1.6. Find the input level that maximizes the average physical product.
2.1.7. Find the output level at 2 units of input.
3.1.8. Find the input level that maximizes total output.
(20 Marks)
(2 Marks)
(2 Marks)
(2 Marks)
(2 Marks)
(2 Marks)
(2 Marks)
(2 Marks)
(6 Marks)
Question 4
{20 Marks)
4.1
(10 Marks)
The table below shows the relationship between Total Physical Product (TPP),Average Physical
Product (APP), Marginal Physical Product (MPP) and Marginal Value Product (MVP). If the price
of output is N$1 per unit of input, complete the table.
Input
TPP
0
0
10
75
20
245
30
435
40
560
50
648
APP
MPP
TVP
AVP
MVP
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'I
4.2.
{10 Marks}
A firm has the following cost function.
TC= 30 + 18Q-2.7Q 2 + 0.15Q3
Calculate the Total Cost (TC}, Total Variable Cost (TVC}, Average Total Cost (ATC}, Average
Variable Cost (AVC} and Marginal Cost (MC} if this firm is producing quantities of output that
vary from zero to 5 units. Tabulate your values.
END
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