POST UTME ABU 2017 Economics | Objective

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Question 1
Determine the equilibrium price and quantity of wheat in the market, given the demand function Qd = 100 - 2P and the supply function Qs = 2P - 10, where P is the price in naira.
Correct A. ₦15, 50 units
B. ₦20, 30 units
C. ₦25, 20 units
D. ₦30, 10 units

Correct Answer: A

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Question 2
A firm produces 100 units of a product u\sing 10 units of labor and 5 units of capital. If the wage rate is ₦50 per unit of labor and the rental rate is ₦20 per unit of capital, calculate the total \cost of production.
A. ₦500
Correct B. ₦600
C. ₦700
D. ₦800

Correct Answer: B

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Question 3
A consumer has the following utility function: U(x, y) = 2x + 3y. If the prices of x and y are ₦10 and ₦20 respectively, and the consumer has a budget of ₦100, determine the optimal consumption bundle.
A. (10, 20)
B. (20, 10)
Correct C. (15, 15)
D. (25, 5)

Correct Answer: C

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Question 4
A firm produces two products, A and B, u\sing two inputs, labor and capital. The production functions are Q_A = 2L - 3K and Q_B = 3L + 2K. If the firm has 10 units of labor and 5 units of capital, determine the optimal production plan.
A. Q_A = 10, Q_B = 5
Correct B. Q_A = 5, Q_B = 10
C. Q_A = 15, Q_B = 0
D. Q_A = 0, Q_B = 15

Correct Answer: B

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Question 5
A consumer has the following budget constraint: 2x + 3y = 100. If the prices of x and y are ₦10 and ₦20 respectively, determine the consumer's optimal consumption bundle.
A. (20, 10)
Correct B. (15, 15)
C. (10, 20)
D. (5, 25)

Correct Answer: B

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Question 6
Consider a consumer with a utility function U(x,y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, what is the optimal bundle of x and y?
Correct A. (20, 10)
B. (15, 5)
C. (10, 0)
D. (0, 0)

Correct Answer: A

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Question 7
A firm has a production function Q = 2L^0.5K^0.5. If the firm's output is 100 units and the price of labor is ₦10 per unit and the price of capital is ₦20 per unit, what is the optimal combination of labor and capital?
Correct A. (10, 5)
B. (5, 10)
C. (20, 2)
D. (15, 3)

Correct Answer: A

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Question 8
The demand function for a product is given by Q = 100 - 2P. If the price of the product is ₦20, what is the quantity demanded?
A. 50
Correct B. 60
C. 70
D. 80

Correct Answer: B

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Question 9
A farmer produces wheat and maize. The production function for wheat is Qw = 100L^0.5K^0.5 and for maize is Qm = 50L^0.5K^0.5. If the farmer has 100 units of labor and 50 units of capital, what is the optimal allocation of labor and capital between wheat and maize?
A. (50, 50)
Correct B. (75, 25)
C. (25, 75)
D. (100, 0)

Correct Answer: B

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Question 10
The money supply in an economy is given by M = 1000 + 0.5Y. If the money supply is ₦5000, what is the value of national income?
A. ₦5000
Correct B. ₦6000
C. ₦7000
D. ₦8000

Correct Answer: B

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Question 11
The elasticity of demand for a commodity is given by the formula \( eta = \frac{p}{x} \frac{dx}{dp} \). If the demand for a commodity is elastic, what can be concluded about the relationship between the price and quantity demanded?
Correct A. The price and quantity demanded are inversely related.
B. The price and quantity demanded are directly related.
C. The price and quantity demanded are unrelated.
D. The price and quantity demanded have an ambiguous relationship.

Correct Answer: A

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Question 12
A country's GDP is given by the formula \( GDP = C + I + G + \( X - M \ \) ). If the country's GDP is $100 billion and the government exp\enditure is $20 billion, what is the value of the net exports?
A. $10 billion
B. $20 billion
Correct C. $30 billion
D. $40 billion

Correct Answer: C

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Question 13
A firm's production function is given by the formula \( Q = 2L^{1/2}K^{1/2} \). If the firm's output is 100 units and the capital stock is 16 units, what is the value of the labor input?
A. 4 units
Correct B. 8 units
C. 16 units
D. 32 units

Correct Answer: B

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Question 14
A consumer's budget constraint is given by the equation \( 2x + 3y = 12 \). If the consumer's income is $12 and the price of good x is $2, what is the value of the quantity of good y?
A. 2 units
B. 4 units
Correct C. 6 units
D. 8 units

Correct Answer: C

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Question 15
A firm's \cost function is given by the equation \( C = 2L + 3K \). If the firm's labor input is 4 units and the capital stock is 2 units, what is the value of the total \cost?
A. $10
B. $12
Correct C. $14
D. $16

Correct Answer: C

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Question 16
The government of Nigeria has introduced a new policy to increase agricultural production. The policy includes providing subsidies to farmers, improving irrigation systems, and increa\sing access to credit. However, the policy also includes a provision to increase the price of fertilizers by 20%. Assuming that the demand for fertilizers is elastic, what is the likely effect of the price increase on the quantity of fertilizers demanded?
A. The quantity of fertilizers demanded will decrease by 10%.
Correct B. The quantity of fertilizers demanded will decrease by 20%.
C. The quantity of fertilizers demanded will increase by 10%.
D. The quantity of fertilizers demanded will increase by 20%.

Correct Answer: B

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Question 17
A firm is producing a good with the following \cost function: C(q) = 2q^2 + 10q + 100. The firm is currently producing 10 units of the good. What is the marginal \cost of producing the 11th unit?
A. ₦20
Correct B. ₦30
C. ₦40
D. ₦50

Correct Answer: B

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Question 18
A consumer has the following utility function: U(x, y) = 2x + 3y. The consumer's budget constraint is 100. The price of good x is ₦10 and the price of good y is ₦20. What is the consumer's optimal bundle of goods?
A. (10, 0)
Correct B. (5, 5)
C. (0, 10)
D. (0, 0)

Correct Answer: B

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Question 19
The government of Nigeria has introduced a new tax policy to increase revenue. The policy includes a 10% increase in the value-added tax (VAT) rate. Assuming that the demand for goods is inelastic, what is the likely effect of the tax increase on the quantity of goods sold?
Correct A. The quantity of goods sold will decrease by 10%.
B. The quantity of goods sold will decrease by 20%.
C. The quantity of goods sold will increase by 10%.
D. The quantity of goods sold will increase by 20%.

Correct Answer: A

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Question 20
A firm is producing a good with the following production function: Q = 2L^0.5 + 3K^0.5. The firm is currently producing 10 units of the good. What is the marginal product of labor?
A. 2
Correct B. 3
C. 4
D. 5

Correct Answer: B

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Question 21
A firm's production function is given by Q = 100L^0.5K^0.5. If the price of labor (L) increases by 20% and the price of capital (K) remains cons\tant, what is the new value of the marginal product of labor (MPL)?
A. 10
Correct B. 20
C. 30
D. 40

Correct Answer: B

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Question 22
A government budget is given by B = T + I + G. If the tax revenue (T) increases by 15% and the government sp\ending (G) remains cons\tant, what is the new value of the budget deficit (BD)?
A. 10
Correct B. 20
C. 30
D. 40

Correct Answer: B

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Question 23
A central bank increases the money supply (M) by 10%. What is the new value of the inflation rate (π)?
A. 5
Correct B. 10
C. 15
D. 20

Correct Answer: B

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Question 24
A firm's demand function is given by Q = 100 - 2P. If the price of the good (P) increases by 20%, what is the new value of the elasticity of demand (ED)?
A. 0.5
Correct B. 1
C. 2
D. 3

Correct Answer: B

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Question 25
A firm's supply function is given by Q = 50 + 2P. If the price of the good (P) increases by 20%, what is the new value of the elasticity of supply (ES)?
A. 0.5
Correct B. 1
C. 2
D. 3

Correct Answer: B

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