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Agec 241: Production Economics Question Paper
Agec 241: Production Economics
Course:Bachelor Of Agribusiness Management, B.Sc (Agric. Econ), B.Sc (Agric. Education) & B.Sc (Animal Production)
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
SECOND YEAR EXAMINATION FOR THE AWARD OF DEGREE OF
BACHELOR OF AGRIBUSINESS MANAGEMENT, B.SC (AGRIC. ECON),
B.SC (AGRIC. EDUCATION) & B.SC (ANIMAL PRODUCTION)
AGEC 241: PRODUCTION ECONOMICS
STREAMS: - as above – (Y2S2) TIME: 2 HOURS
DAY/DATE: TUESDAY 7/8/2013 11.30 A.M. – 1.30 P.M.
INSTRUCTIONS:
Answer all questions.
Start each question on its own page.
Question 1
Briefly explain what production economics is concerned about and the key issues
of any production problem. [8 marks]
Distinguish between production and production function as used in economics. [2 marks]
Describe what you understand by shifting production function as a measure of
efficiency. [10 marks]
Question 2
Use the expressions below to answer the following questions:
Using the Total Differential method of production function Y=f(X_1,X_2), show
that?-dX?_2/?dX?_1 =?MPP?_x1/?MPP?_x1 [4 marks]
For each of the following production function, find the marginal productivities. output is denoted by z and the inputs are denoted by x and y.
z=25-?(1/x-?(1/y :)) at x = 1, and y = 1 [3 marks]
z=5xy-?2x?^2-?2y?^2: at x = 1 and y = 1 [3 marks]
Suppose that the production function is given by ??y=x?_1?^0.5 ?x_2?^0.333 find
The MPP of x_1 [2 marks]
The MPP of x_2 [2 marks]
The marginal rate of substitution of x_1 for x_2 [2 marks]
What are the reasons behind studying Product-Product Relationships?
[4 marks]
Question 3
Given the following information
Input
X Product
Y1 Product
Y2
0 0 0
1 10.5 18
2 19.5 33
3 27 45
4 33 54
5 37.5 60
6 40.5 63
7 42 64.5
8 40.5 63
9 37.5 60
Compute the combination of Y1 and Y2 that can be produced if the farmer is limited to 7 units of the variable input. [10 marks]
If the prices of Y1 and Y2 are KES 30 and 20 respectively, compute the profit maximizing outputs. [5 marks]
Assume you are given the following TVC function TVC=9y-0.?6y?^2+0.0?3y?^3
instead of the above information, at what point would the farmer maximize profits if the price of that commodity is equal to KES 54? [5 marks]
Question 4
Suppose that you are given the information on the table below and that the output sells for KES 5 and the input sells for KES 4. Use the relevant information to compute the following:
Value Marginal Product [5 marks]
Average Value Product [5 marks]
x
(input) y
(output)
0 0
10 50
25 75
40 80
50 85
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