POST UTME BABCOCK UNIVERSITY 2024 Economics | Objective

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Question 1
A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \), where Q is output, L is labor, and K is capital. If the firm's labor and capital are increased by 20% and 15% respectively, what is the percentage change in output?
A. 10%
Correct B. 12%
C. 15%
D. 18%

Correct Answer: B

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Question 2
A consumer's budget constraint is given by P1Q1 + P2Q2 = I, where P1 and P2 are prices, Q1 and Q2 are quantities, and I is income. If the consumer's income increases by 10% and the prices of goods 1 and 2 increase by 5% and 8% respectively, what is the new budget constraint equation?
Correct A. P1Q1 + 1.08P2Q2 = 1.1I
B. P1Q1 + 1.05P2Q2 = 1.1I
C. P1Q1 + 1.08P2Q2 = 1.05I
D. P1Q1 + 1.05P2Q2 = 1.08I

Correct Answer: A

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Question 3
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 increased by 20% and 15% respectively, what is the new \cost function equation?
Correct A. C = 100 + 2.4L + 3.45K
B. C = 100 + 2.4L + 3.15K
C. C = 100 + 2.2L + 3.45K
D. C = 100 + 2.2L + 3.15K

Correct Answer: A

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Question 4
A consumer's indifference curve is given by U = 2X + 3Y, where U is utility, X is quantity of good 1, and Y is quantity of good 2. If the consumer's income increases by 10% and the prices of goods 1 and 2 increase by 5% and 8% respectively, what is the new indifference curve equation?
Correct A. U = 2.2X + 3.24Y
B. U = 2.2X + 3.12Y
C. U = 2X + 3.24Y
D. U = 2X + 3.12Y

Correct Answer: A

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Question 5
A firm's revenue function is given by R = 100Q - 2Q^2, where R is revenue and Q is quantity. If the firm increases its price by 10% and the quantity sold increases by 20%, what is the new revenue function equation?
Correct A. R = 110Q - 2.4Q^2
B. R = 110Q - 2.2Q^2
C. R = 100Q - 2.4Q^2
D. R = 100Q - 2.2Q^2

Correct Answer: A

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Question 6
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current output is 16 units and the number of workers (L) is 4, find the number of machines (K) required.
A. 4
B. 6
Correct C. 8
D. 10

Correct Answer: C

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Question 7
A consumer's utility function is given by U = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, find the optimal quantities of x and y.
Correct A. x = 40, y = 20
B. x = 30, y = 30
C. x = 20, y = 40
D. x = 10, y = 50

Correct Answer: A

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Question 8
A firm's \cost function is given by C = 2L + 3K. If the firm's current \cost is ₦1500 and the number of workers (L) is 3, find the number of machines (K) required.
A. 4
Correct B. 6
C. 8
D. 10

Correct Answer: B

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Question 9
A consumer's budget constraint is given by 2x + 3y = 1000. If the consumer's utility function is U = 2x + 3y, find the optimal quantities of x and y.
Correct A. x = 200, y = 200
B. x = 150, y = 250
C. x = 100, y = 300
D. x = 50, y = 350

Correct Answer: A

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Question 10
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current output is 16 units and the number of workers (L) is 4, find the number of machines (K) required.
A. 4
B. 6
Correct C. 8
D. 10

Correct Answer: C

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Question 11
Consider a firm operating in a perfectly competitive market with a downward-sloping demand curve. If the firm's marginal revenue (MR) is greater than its marginal \cost (MC), what will happen to the firm's output?
Correct A. The firm will increase its output.
B. The firm will decrease its output.
C. The firm's output will remain unchanged.
D. The firm will exit the market.

Correct Answer: A

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Question 12
A country's balance of payments (BOP) accounts can be in equilibrium even if its current account is not in equilibrium. Explain.
A. The country is experiencing a trade deficit.
B. The country is experiencing a trade surplus.
Correct C. The country's capital account is offsetting the current account deficit.
D. The country's current account is in equilibrium.

Correct Answer: C

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Question 13
A firm's demand curve is given by Q = 100 - 2P. If the firm's marginal revenue (MR) is 20, what is its marginal \cost (MC)?
A. 10
Correct B. 20
C. 30
D. 40

Correct Answer: B

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Question 14
A country's GDP is 100 billion naira. If its government sp\ends 20 billion naira on infrastructure, what is its GNP?
Correct A. 120 billion naira
B. 110 billion naira
C. 100 billion naira
D. 90 billion naira

Correct Answer: A

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Question 15
A firm's elasticity of demand is 0.5. If the price of its product increases by 10%, what will happen to its revenue?
A. Increase by 5%
Correct B. Decrease by 5%
C. Increase by 10%
D. Decrease by 10%

Correct Answer: B

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Question 16
A firm is operating in a perfectly competitive market with a demand curve given by Qd = 100 - 2P and a supply curve given by Qs = 2P. Find the equilibrium price and quantity.
Correct A. ₦50, 50 units
B. ₦75, 25 units
C. ₦100, 0 units
D. ₦200, 100 units

Correct Answer: A

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Question 17
A country's balance of payments is given by the following equation: BOP = X - M - \( I - S \). If the country's exports (X) are ₦100 billion, imports (M) are ₦80 billion, and the difference between investment (I) and saving (S) is ₦20 billion, what is the balance of payments?
Correct A. ₦20 billion surplus
B. ₦20 billion deficit
C. ₦40 billion surplus
D. ₦40 billion deficit

Correct Answer: A

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Question 18
A monopolist faces a demand curve given by Qd = 100 - 2P and a marginal revenue curve given by MR = 2P. Find the price and quantity at which the monopolist maximizes profit.
Correct A. ₦75, 25 units
B. ₦50, 50 units
C. ₦25, 75 units
D. ₦0, 100 units

Correct Answer: A

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Question 19
A firm's demand curve is given by Qd = 100 - 2P and its supply curve is given by Qs = 2P. If the firm's elasticity of demand is 2 and the price is ₦50, what is the quantity demanded?
Correct A. 50 units
B. 25 units
C. 75 units
D. 100 units

Correct Answer: A

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Question 20
A country's GDP is ₦100 billion, its imports are ₦80 billion, and its exports are ₦60 billion. What is its balance of trade?
Correct A. ₦20 billion deficit
B. ₦20 billion surplus
C. ₦40 billion deficit
D. ₦40 billion surplus

Correct Answer: A

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Question 21
A firm's demand curve is given by Qd = 100 - 2P and its supply curve is given by Qs = 2P. If the firm's elasticity of supply is 2 and the price is ₦50, what is the quantity supplied?
Correct A. 50 units
B. 25 units
C. 75 units
D. 100 units

Correct Answer: A

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Question 22
A country's GNP is ₦120 billion, its imports are ₦80 billion, and its exports are ₦60 billion. What is its balance of trade?
Correct A. ₦20 billion deficit
B. ₦20 billion surplus
C. ₦40 billion deficit
D. ₦40 billion surplus

Correct Answer: A

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Question 23
A firm's demand curve is given by Qd = 100 - 2P and its supply curve is given by Qs = 2P. If the firm's elasticity of demand is 2 and the price is ₦75, what is the quantity demanded?
Correct A. 25 units
B. 50 units
C. 75 units
D. 100 units

Correct Answer: A

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Question 24
A country's GDP is ₦100 billion, its imports are ₦80 billion, and its exports are ₦60 billion. What is its balance of trade?
Correct A. ₦20 billion deficit
B. ₦20 billion surplus
C. ₦40 billion deficit
D. ₦40 billion surplus

Correct Answer: A

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Question 25
A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. What is the profit-maximizing price and quantity?
A. P = 50, Q = 25
Correct B. P = 40, Q = 30
C. P = 60, Q = 20
D. P = 70, Q = 15

Correct Answer: B

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