POST UTME CALEB UNIVERSITY 2017 Economics | Objective

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Question 1
Suppose the demand for a product is given by the inverse demand function Q = 100 - P, where Q is the quantity demanded and P is the price. If the supply function is given by Q = 2P, what is the equilibrium price and quantity?
A. Equilibrium price = ₦50, Equilibrium quantity = 25 units
B. Equilibrium price = ₦75, Equilibrium quantity = 50 units
C. Equilibrium price = ₦100, Equilibrium quantity = 75 units
D. Equilibrium price = ₦125, Equilibrium quantity = 100 units
Question 2
A central bank increases the reserve requirement for commercial banks. What is the likely effect on the money supply?
A. Increase in money supply
B. Decrease in money supply
C. No change in money supply
D. Dep\endence on other factors
Question 3
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current input levels are L = 16 and K = 9, what is the marginal product of labor?
A. 1
B. 2
C. 3
D. 4
Question 4
Determine the equilibrium price and quantity of a commodity in a market where the demand function is given by Qd = 100 - 2P and the supply function is given by Qs = 2P - 10.
A. ₦50, 50 units
B. ₦75, 25 units
C. ₦100, 0 units
D. ₦125, 50 units
Question 5
The demand for a commodity is said to be elastic if the percentage change in the quantity demanded is greater than the percentage change in the price. Which of the following is a characteristic of an elastic demand?
A. The demand curve is steeper than the supply curve
B. The demand curve is flatter than the supply curve
C. The demand curve is vertical
D. The demand curve is horizontal
Question 6
A firm is considering two investment projects. Project A has a higher initial \cost but a higher expected return. Project B has a lower initial \cost but a lower expected return. Which project should the firm choose?
A. Project A
B. Project B
C. Dep\endence on other factors
D. Both projects are equally good
Question 7
A firm is operating under cons\tant returns to scale. If it increases its output by 10%, what will be the percentage change in its total \cost?
A. 0%
B. 5%
C. 10%
D. 15%
Question 8
A country is experiencing a trade deficit. The government decides to implement a trade policy to reduce the deficit. Which of the following trade policy tools is most likely to be used?
A. Implement a tariff to increase the price of imported goods.
B. Implement a quota to reduce the quantity of imported goods.
C. Implement a subsidy to reduce the price of exported goods.
D. Implement a price control policy to reduce prices.
Question 9
A perfectly competitive market has a demand curve given by P = 100 - 2Q. If the market supply curve is given by P = 20 + 3Q, what is the equilibrium price and quantity?
A. Price = 50, Quantity = 15
B. Price = 40, Quantity = 20
C. Price = 30, Quantity = 25
D. Price = 20, Quantity = 30
Question 10
Consider a firm that produces two goods, X and Y, u\sing two inputs, labor (L) and capital (K). The production function for good X is given by Q_X = 2L^0.5K^0.5, while the production function for good Y is given by Q_Y = 3L^0.7K^0.3. If the firm has 100 units of labor and 50 units of capital, what is the marginal rate of technical substitution (MRTS) between labor and capital for good X?
A. MRTS = 0.5
B. MRTS = 0.7
C. MRTS = 1
D. MRTS = 1.5
Question 11
A firm is experiencing a 10% increase in the price of its inputs. If the firm's production function is given by Q = 2L^0.5K^0.5, what is the percentage change in its output?
A. 5%
B. 10%
C. 15%
D. 20%
Question 12
A government wants to reduce the budget deficit by increa\sing taxes. However, the tax increase will lead to a decrease in consumer sp\ending. What is the likely effect on the economy?
A. Increase in GDP
B. Decrease in GDP
C. No change in GDP
D. Dep\endence on other factors
Question 13
A country's balance of payments is in equilibrium when the current account is equal to the capital account. Which of the following is a characteristic of a country with a balance of payments equilibrium?
A. The exchange rate is stable
B. The exchange rate is volatile
C. The trade balance is in surplus
D. The trade balance is in deficit
Question 14
A government wants to implement a tax on a firm's output. If the firm's supply curve is given by P = 10 + 2Q and the government wants to collect a tax of 5 units, what is the new supply curve?
A. P = 15 + 2Q
B. P = 20 + 2Q
C. P = 25 + 2Q
D. P = 30 + 2Q
Question 15
A firm is producing a good u\sing a production function of the form 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 likely outcome for the firm's profit?
A. The firm will experience a supernormal profit.
B. The firm will experience a normal profit.
C. The firm will experience a loss.
D. The firm will experience a loss, but the loss will be minimized.

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