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POST UTME ACHIEVERS UNIVERSITY 2018 Economics | Objective

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Question 1

Consider a firm operating in a perfectly competitive market with a production function Q = 2L^0.5K^0.5. If the price of the good is $10 and the wage rate is $5 per unit of labor, what is the optimal level of labor to hire?

A. 10 units

Correct B. 20 units

C. 30 units

D. 40 units

Correct Answer: B

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Question 2

A central bank is considering a monetary policy to reduce inflation. If the current inflation rate is 5% and the central bank wants to reduce it to 3% within the next 2 years, what is the required annual rate of inflation reduction?

A. 2%

Correct B. 3%

C. 4%

D. 5%

Correct Answer: B

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Question 3

A government is considering a tax on a particular good to raise revenue. If the tax rate is 10% and the demand for the good is given by Q = 100 - 2P, what is the optimal tax revenue?

A. ₦1000

B. ₦2000

Correct C. ₦3000

D. ₦4000

Correct Answer: C

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Question 4

A consumer is faced with the following utility function: U = 2x + 3y. If the prices of the two goods are $5 and $10 respectively, and the consumer has a budget of $50, what is the 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 5

A firm is considering a new investment project with the following cash flows: -₦1000 in year 1, ₦2000 in year 2, and ₦3000 in year 3. If the discount rate is 10%, what is the present value of the project?

A. ₦1000

Correct B. ₦2000

C. ₦3000

D. ₦4000

Correct Answer: B

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Question 6

A firm's production function is given by Q = 100L^0.5K^0.5, where Q is output, L is labor, and K is capital. If the firm's labor and capital are fixed at 100 units each, calculate the marginal product of labor (MPL) and marginal product of capital (MPK).

A. 25

Correct B. 50

C. 75

D. 100

Correct Answer: B

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Question 7

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's budget constraint is 10x + 5y = 50, find the consumer's optimal consumption bundle.

Correct A. x = 2, y = 4

B. x = 3, y = 3

C. x = 4, y = 2

D. x = 5, y = 1

Correct Answer: A

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Question 8

A firm's \cost function is given by C = 100 + 2L + 3K, where C is \cost, L is labor, and K is capital. If the firm's labor and capital are fixed at 100 units each, calculate the marginal \cost (MC) and average \cost (AC).

Correct A. 2

B. 3

C. 4

D. 5

Correct Answer: A

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Question 9

A consumer's demand function for a good is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the consumer's income is 100, calculate the consumer's demand for the good at a price of 20.

A. 40

Correct B. 50

C. 60

D. 70

Correct Answer: B

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Question 10

A firm's revenue function is given by R = 100Q - 2Q^2, where R is revenue and Q is quantity sold. If the firm sells 20 units, calculate the firm's marginal revenue (MR) and average revenue (AR).

A. 80

B. 90

Correct C. 100

D. 110

Correct Answer: C

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Question 11

The demand for a product is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the price elasticity of demand is 0.5, what is the percentage change in quantity demanded when the price increases by 10%?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 12

A firm is producing a product with a production function F(x) = 2x^2 + 3x. If the firm's \cost function is C(x) = 10x + 20, what is the marginal \cost when the output is 5 units?

A. 15

B. 20

Correct C. 25

D. 30

Correct Answer: C

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Question 13

A monopoly firm is producing a product with a demand function P = 100 - 2Q. If the firm's marginal \cost is 20, what is the profit-maximizing quantity?

A. 20

B. 30

Correct C. 40

D. 50

Correct Answer: C

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Question 14

A country is experiencing a recession with a GDP of $100 billion. If the government wants to implement a fiscal policy to stimulate the economy, what is the multiplier effect of a $10 billion increase in government sp\ending?

A. 1.5

Correct B. 2

C. 2.5

D. 3

Correct Answer: B

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Question 15

A firm is producing a product with a production function F(x) = 3x^2 + 2x. If the firm's \cost function is C(x) = 20x + 30, what is the average \cost when the output is 4 units?

A. 20

B. 25

Correct C. 30

D. 35

Correct Answer: C

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Question 16

The demand for a product is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the price elasticity of demand is -2, what is the percentage change in quantity demanded when the price increases by 10%?

Correct A. 20%

B. 40%

C. 60%

D. 80%

Correct Answer: A

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Question 17

A government imposes a tax on a good, cau\sing the supply curve to shift to the left. If the initial equilibrium price is ₦100 and the initial equilibrium quantity is 100 units, and the tax causes the supply curve to shift to the left by 20 units, what is the new equilibrium price?

A. ₦120

Correct B. ₦140

C. ₦160

D. ₦180

Correct Answer: B

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Question 18

A firm has a production function Q = 2L + 3K, where Q is the quantity produced, L is the labor input, and K is the capital input. If the firm's budget constraint is 10L + 20K = 100, and the firm wants to maximize profits, what is the optimal level of labor input?

A. 5

Correct B. 10

C. 15

D. 20

Correct Answer: B

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Question 19

A country's balance of payments is given by the equation BOP = X - M, where BOP is the balance of payments, X is the exports, and M is the imports. If the country's exports are ₦100 billion and the imports are ₦120 billion, what is the balance of payments?

Correct A. ₦20 billion

B. ₦40 billion

C. ₦60 billion

D. ₦80 billion

Correct Answer: A

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Question 20

A firm's revenue function is given by the equation R = 2Q^2 - 10Q + 20, where R is the revenue and Q is the quantity sold. If the firm wants to maximize revenue, what is the optimal level of quantity sold?

A. 2

B. 4

Correct C. 6

D. 8

Correct Answer: C

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Question 21

The concept of scarcity in economics implies that the production of one good is limited by the availability of resources that could be used to produce another good. Which of the following is a correct example of scarcity?

A. A farmer has 100 acres of land to plant wheat or corn.

Correct B. A company has a limited budget to invest in either research and development or marketing.

C. A country has an abundance of natural resources.

D. A consumer has a wide range of products to choose from.

Correct Answer: B

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Question 22

The demand for a product is said to be elastic if a small change in price leads to a large change in the quantity demanded. Which of the following is a correct example of an elastic demand?

A. A 10% increase in the price of a luxury item leads to a 5% decrease in demand.

Correct B. A 10% increase in the price of a necessity leads to a 20% decrease in demand.

C. A 10% increase in the price of a substitute good leads to a 5% decrease in demand.

D. A 10% increase in the price of a complementary good leads to a 5% decrease in demand.

Correct Answer: B

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Question 23

The concept of opportunity \cost is closely related to the concept of scarcity. Which of the following is a correct example of opportunity \cost?

A. The \cost of producing a good is the price of the resources used to produce it.

B. The \cost of producing a good is the price of the good itself.

Correct C. The \cost of producing a good is the next best alternative that could have been produced with the same resources.

D. The \cost of producing a good is the \cost of the resources used to produce it plus the \cost of the good itself.

Correct Answer: C

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Question 24

The concept of national income accounting is used to measure the total value of goods and services produced within a country. Which of the following is a correct example of a component of national income?

Correct A. The value of goods and services produced within a country.

B. The value of goods and services imported into a country.

C. The value of goods and services exported from a country.

D. The value of goods and services produced in a foreign country.

Correct Answer: A

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Question 25

The concept of international trade is closely related to the concept of comparative advantage. Which of the following is a correct example of comparative advantage?

Correct A. A country has a lower opportunity \cost of producing a good than another country.

B. A country has a higher opportunity \cost of producing a good than another country.

C. A country has a lower price of producing a good than another country.

D. A country has a higher price of producing a good than another country.

Correct Answer: A

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