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POST UTME BOWEN UNIVERSITY 2021 Economics | Objective

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Question 1

In a perfectly competitive market, if the demand for a commodity is inelastic, what will be the effect on the price and quantity supplied?

A. Price will decrease, quantity supplied will increase

Correct B. Price will increase, quantity supplied will decrease

C. Price will remain cons\tant, quantity supplied will increase

D. Price will decrease, quantity supplied will decrease

Correct Answer: B

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Question 2

A firm's total revenue is given by the equation TR = 100x - 2x^2, where x is the number of units sold. What is the price elasticity of demand when the quantity demanded is 20 units?

A. 0.5

B. 1

C. 2

Correct D. -1

Correct Answer: D

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Question 3

A consumer has the following indifference curves: IC1: 2x + 3y = 12, IC2: 3x + 2y = 15. What is the consumer's optimal bundle of x and y?

Correct A. (2, 3)

B. (3, 2)

C. (4, 1)

D. (1, 4)

Correct Answer: A

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Question 4

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm wants to produce 16 units of output, and the price of labor is ₦100 per unit, and the price of capital is ₦200 per unit, what is the minimum \cost of production?

A. ₦4000

Correct B. ₦5000

C. ₦6000

D. ₦8000

Correct Answer: B

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Question 5

A consumer has the following budget constraint: 2x + 3y = 12. If the price of x is ₦2 per unit, and the price of y is ₦3 per unit, what is the consumer's optimal bundle of x and y?

Correct A. (2, 3)

B. (3, 2)

C. (4, 1)

D. (1, 4)

Correct Answer: A

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Question 6

A firm's production function is given by Q = 2L^0.5H^0.5, where Q is output, L is labor and H is capital. If the firm's current input levels are L = 16 and H = 9, what is the marginal product of labor?

A. 1/4

Correct B. 1/2

C. 1

D. 2

Correct Answer: B

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Question 7

A government is considering a tax on a particular good. The demand for the good is given by Q = 100 - 2P, where Q is quantity demanded and P is price. The supply of the good is given by Q = 2P - 50. What is the deadweight loss of the tax?

A. 10

B. 20

Correct C. 30

D. 40

Correct Answer: C

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Question 8

A firm is considering two different production techno\logies: a traditional techno\logy that requires 2 units of labor to produce 1 unit of output, and a modern techno\logy that requires 1 unit of labor to produce 2 units of output. If the firm has 100 units of labor available, what is the maximum output it can produce u\sing the modern techno\logy?

A. 100

Correct B. 200

C. 300

D. 400

Correct Answer: B

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Question 9

A government is considering a policy to reduce the budget deficit. The current budget deficit is ₦100 billion, and the government wants to reduce it by 20% in the next year. What is the new budget deficit?

Correct A. ₦80 billion

B. ₦90 billion

C. ₦100 billion

D. ₦110 billion

Correct Answer: A

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Question 10

A firm's \cost function is given by C = 2L + 3H, where C is \cost, L is labor and H is capital. If the firm's current input levels are L = 10 and H = 5, what is the total \cost?

A. ₦50

B. ₦60

Correct C. ₦70

D. ₦80

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 -2, what is the percentage change in quantity demanded when the price increases by 10%?

Correct A. 20%

B. 30%

C. 40%

D. 50%

Correct Answer: A

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Question 12

A monopolist faces a demand curve given by Qd = 100 - 2P and a marginal \cost curve given by MC = 10 + 2Q. If the firm produces 20 units, what is the profit-maximizing price?

A. ₦50

Correct B. ₦60

C. ₦70

D. ₦80

Correct Answer: B

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Question 13

A country's GDP is given by the equation Y = C + I + G, where Y is the GDP, C is the consumption, I is the investment, and G is the government sp\ending. If the consumption is ₦100 billion, the investment is ₦20 billion, and the government sp\ending is ₦30 billion, what is the GDP?

A. ₦150 billion

B. ₦160 billion

Correct C. ₦170 billion

D. ₦180 billion

Correct Answer: C

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Question 14

A firm's production function is given by Q = 10L^0.5K^0.5, where Q is the output, L is the labor, and K is the capital. If the firm uses 100 units of labor and 100 units of capital, what is the output?

A. 100 units

B. 200 units

Correct C. 300 units

D. 400 units

Correct Answer: C

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Question 15

A consumer's utility function is given by U = 2X + 3Y, where U is the utility, X is the quantity of good X, and Y is the quantity of good Y. If the consumer buys 5 units of good X and 10 units of good Y, what is the utility?

A. 20

B. 30

Correct C. 40

D. 50

Correct Answer: C

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Question 16

Consider a firm operating in a perfectly competitive market with a given production function Q = 2L^0.5K^0.5. If the firm's current input prices are w = 10 and r = 20, and the current output price is p = 30, calculate the firm's maximum profit.

Correct A. ₦600

B. ₦800

C. ₦1000

D. ₦1200

Correct Answer: A

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Question 17

A consumer's utility function is given by U(x,y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, find the consumer's optimal bundle of x and y.

Correct A. (200, 100)

B. (300, 50)

C. (400, 0)

D. (0, 100)

Correct Answer: A

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Question 18

A firm's production function is given by Q = 3L^0.5K^0.5. If the firm's current input prices are w = 15 and r = 25, and the current output price is p = 40, calculate the firm's maximum profit.

Correct A. ₦900

B. ₦1100

C. ₦1300

D. ₦1500

Correct Answer: A

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Question 19

A consumer's utility function is given by U(x,y) = 3x + 2y. If the consumer's income is ₦1200 and the prices of x and y are ₦8 and ₦12 respectively, find the consumer's optimal bundle of x and y.

Correct A. (300, 150)

B. (200, 200)

C. (400, 100)

D. (0, 300)

Correct Answer: A

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Question 20

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current input prices are w = 20 and r = 30, and the current output price is p = 50, calculate the firm's maximum profit.

Correct A. ₦1000

B. ₦1200

C. ₦1400

D. ₦1600

Correct Answer: A

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Question 21

Consider a firm operating in a perfectly competitive market. If the firm's marginal revenue (MR) curve intersects its marginal \cost (MC) curve at point E, and the firm's average revenue (AR) curve is downward sloping, which of the following statements is true?

Correct A. The firm is maximizing profits.

B. The firm is minimizing \costs.

C. The firm is producing at the point of diminishing marginal returns.

D. The firm is producing at the point of increa\sing marginal returns.

Correct Answer: A

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Question 22

A government imposes a tax on a firm's output. If the firm's supply curve shifts to the left, which of the following is a possible effect on the firm's output?

A. The firm's output increases.

Correct B. The firm's output decreases.

C. The firm's output remains unchanged.

D. The firm's output increases at a faster rate.

Correct Answer: B

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Question 23

A firm is producing at the point of diminishing marginal returns. If the firm's marginal \cost (MC) curve is upward sloping, which of the following statements is true?

A. The firm is minimizing \costs.

B. The firm is maximizing profits.

C. The firm is producing at the point of increa\sing marginal returns.

Correct D. The firm is producing at the point of diminishing marginal returns.

Correct Answer: D

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Question 24

A government imposes a tax on a firm's output. If the firm's supply curve shifts to the left, which of the following is a possible effect on the firm's revenue?

A. The firm's revenue increases.

Correct B. The firm's revenue decreases.

C. The firm's revenue remains unchanged.

D. The firm's revenue increases at a faster rate.

Correct Answer: B

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Question 25

A firm is producing at the point of increa\sing marginal returns. If the firm's marginal revenue (MR) curve intersects its marginal \cost (MC) curve at point E, and the firm's average revenue (AR) curve is upward sloping, which of the following statements is true?

A. The firm is maximizing profits.

B. The firm is minimizing \costs.

C. The firm is producing at the point of diminishing marginal returns.

Correct D. The firm is producing at the point of increa\sing marginal returns.

Correct Answer: D

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