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PPE611S - PRINCIPLES OF PRODUCTION ECONOMICS - 1st Opp - JUNE 2022 |
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nAmlBIA unlVERSITY
OF SCIEnCE Ano TECHn OLOGY
FACULTYOF HEALTH,APPLIEDSCIENCESAND NATURALRESOURCES
DEPARTMENTOF AGRICULTUREAND NATURALRESOURCESCIENCES
QUALIFICATION: BACHELOROF SCIENCEIN AGRICULTURE
QUALIFICATION CODE:07BAGA
LEVEL:7
COURSECODE: PPE611S
COURSENAME: PRINCIPLESOF PRODUCTION
ECONOMICS
SESSION:JUNE 2022
DURATION: 3 HOURS
SESSION:JUNE
MARKS: 100
FIRSTOPPORTUNITYEXAMINATION QUESTION PAPER
EXAMINER(S) DR DAVID UCHEZUBA
MODERATOR: DR THINAH MOYO
INSTRUCTIONS
1. This paper consists of two sections: Section 1 has five (5) multiple choice questions,
section 2 is made up of five essay type questions.
2. Answer ALL questions and 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 own initiative to deal with any
perceived error or ambiguities & any assumption made should be clearly stated.
THIS QUESTION PAPERCONSISTSOF 6 PAGES(Including this front page)
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Section 1
Question 1
Which of the following statements is correct?
A. Elasticity of production is greatest when the ratio of marginal and average physical products
is greatest?
B. Elasticity of production is greatest when the ratio of marginal and average physical products
is< 1?
C. Elasticity of production is greatest when the ratio of marginal and average physical products
is= 1?
D. Elasticity of production is greatest when the ratio of marginal and average physical products
is< O?
(1 mark)
Question 2
The concavity of the production function is associated with the following except one
A. Maximum total physical production
B. Zero elasticity of production
C. Zero marginal physical product
D. Zero average physical products
(1 mark)
Question 3
Which of the following functions is homogeneous?
A. y =b1x1 + b2x2
D. Q=3x 2/-0.2x 3y3
(1 mark)
Question 4
Consider a production function y = 4 + 3x. Which of the following statement is not correct?
A. The value of y gives the total physical product.
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B. The function shows a variable return to scale
C. The graph of this relationship is a straight line
D. The value of y gives the total output
E. As more inputs are used, more positive quantities of output are produced.
(1 mark)
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Question S
MPP
APP
A
APP
The graph shows the relationship between the Marginal Physical Product (MPP) and the
Average Physical Product (APP).Which of the following statement is incorrect about point A.
a. Point A corresponds to the point of inflection.
b. At point A, APP in maximum.
c. At point A, MPP = APP.
d. After point A, a declining MPP pulls APP down.
e Beyond point A, APP is decreasing but positive.
(1 mark)
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Section 2
Question 1
1.1. Mr Halward is a retired policeman who plans to invest his pension money in
agriculture. As an Agricultural Production Economics student explain the concept of
agricultural production to Mr Halward. Advise him on how to be successful in the farming
business.
(5 marks)
1.2. Measuring productivity is a dunting task. Explain why we use the following in
production economics.
a) Average physical productivity
(2 marks)
b) Marginal Physical Productivity
(2 marks)
c) Elasticity of production
(2 marks)
1.3. Assume a production function
q = 3 + 0.6v - 3v2 + 4v3
Give the value for the following functions at two units of the input
a) Average Physical Production
b) Marginal Physical Production
c) Elasticity of production
(3 marks)
(3 marks)
(3 marks)
Question 2
2.1. Assume cornflakes has a quadratic production function represented by
y = 6x+2x 2
And an inverse product price demand function of
p=I6-2y
Derive the function for the following physical products
a) Average physical product
b) Marginal physical product
(3 marks)
(3 marks)
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c) Total value product
d) Marginal value product
e) Value of marginal product
(3 marks)
(3 marks)
(3 marks)
2.2. Suppose a production function is given as
y = 10 + 8x - 2x 2
Find the input level that maximizes output
2.3. Is output maximum or minimum at this input level
(3 marks)
(2 marks)
Question 3
3.1. Consider the production function
y = 0.7x + 0.042x 2 -0.023x 3
a) Find the exact level of input that maximizes profit assuming output price is N$4 and input
cost is N$0.15
(5 marks)
b) Show that the profit is maximum or minimum
(2 marks)
c) Calculate total profit?
(1 mark)
3.2. Define the following
a) Partial elasticity of production
b) Function coefficient of production
mark)
(1 mark)
(1
3.3. For the two input production function
y = 2xtsxi·4
Find the function coefficient at input level of two units
(10 marks)
Question 4
4.1
a) Distinguish between the following concepts
b) Economies of size and economies of scale
(2
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'I
marks)
c) Economies of scale and diseconomies of scale
d) Constant return to scale and increasing return to scale
e) Return to scale and degree of homogeneity of a function
(2 marks)
(2 marks)
(2 marks)
4.2. Find the degree of homogeneity and returns to scalefor the following production functions
a) y = 2x1x2
b)
y
=
2x
2
1
+
3x1x 2
+
2xi
c) y = al! K 1-P
(2 marks)
(2 marks)
(2 marks)
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d) y = 2x +3y3
6x2 -2y2
(2 marks)
e) y = 2xo5y°·5
(2 marks)
4.3
a) All production functions are homogeneous, True or False
b) Cobb-Douglas function is a non-linear multiplicative function
(1 mark)
(1 mark)
Question 5
5.1. The total cost of producing an item is N$100. The cost of capital per unit of production is
N$25 and Labour cost per unit is N$25.
a) Determine the lso-cost equation
(5 marks)
b) Draw the lsocost line
(5 marks)
c) What is the unit of labour used when capital per unit was 3?
(5 marks)
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