POST UTME COAL CITY UNIVERSITY 2018 Economics | Objective

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Question 1
The concept of diminishing marginal utility is most closely related to which of the following economic theories?
A. Law of Diminishing Returns
B. Law of Increa\sing Opportunity Cost
Correct C. Law of Diminishing Marginal Utility
D. Law of Comparative Advantage

Correct Answer: C

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Question 2
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current labor and capital inputs are L = 4 and K = 9, respectively, what is the firm's current output?
A. 12
Correct B. 16
C. 20
D. 24

Correct Answer: B

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Question 3
The demand for a product is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the current price is P = 20, what is the quantity demanded?
A. 40
Correct B. 60
C. 80
D. 100

Correct Answer: B

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Question 4
A country's GDP is given by GDP = C + I + G + \( X - M \), where C is consumption, I is investment, G is government sp\ending, X is exports, and M is imports. If the country's current GDP is 100 billion naira, and the current values of C, I, G, X, and M are 30, 20, 15, 25, and 10 billion naira, respectively, what is the value of the country's net exports?
A. ₦5 billion
B. ₦10 billion
Correct C. ₦15 billion
D. ₦20 billion

Correct Answer: C

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Question 5
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current labor and capital inputs are L = 16 and K = 9, respectively, what is the firm's current output?
A. 24
B. 32
Correct C. 40
D. 48

Correct Answer: C

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Question 6
Determine the price elasticity of demand for a product with a price elasticity of -2 and a percentage change in quantity demanded of 5%.
Correct A. -1
B. -0.5
C. -1.5
D. -0.25

Correct Answer: A

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Question 7
A country's balance of payments is in equilibrium when the current account and capital account are equal. What is the name of this equilibrium?
A. Current Account Equilibrium
B. Capital Account Equilibrium
Correct C. Balance of Payments Equilibrium
D. Trade Balance Equilibrium

Correct Answer: C

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Question 8
A consumer's indifference curve is downward sloping and convex to the origin. What is the name of this type of indifference curve?
Correct A. Convex Indifference Curve
B. Concave Indifference Curve
C. Linear Indifference Curve
D. Downward Sloping Indifference Curve

Correct Answer: A

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Question 9
A firm's production function is given by Q = 2L^0.5K^0.5. What is the returns to scale of this production function?
Correct A. Increa\sing Returns to Scale
B. Decrea\sing Returns to Scale
C. Cons\tant Returns to Scale
D. Negative Returns to Scale

Correct Answer: A

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Question 10
A consumer is faced with a budget constraint of 100 units of currency and two goods, A and B. The prices of A and B are 5 and 10 units of currency respectively. What is the consumer's budget line equation?
A. 10X + 5Y = 100
Correct B. 5X + 10Y = 100
C. 10X - 5Y = 100
D. 5X - 10Y = 100

Correct Answer: B

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Question 11
The government of a country has decided to implement a policy of price control to reduce inflation. However, this policy may lead to a shortage of goods in the market. What is the opportunity \cost of this policy?
A. The opportunity \cost is the reduction in the quality of goods available in the market.
B. The opportunity \cost is the increase in the prices of goods in the market.
Correct C. The opportunity \cost is the reduction in the quantity of goods available in the market.
D. The opportunity \cost is the increase in the demand for goods in the market.

Correct Answer: C

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Question 12
A monopolistically competitive firm is producing a good with a demand curve that is downward sloping. What is the shape of the firm's marginal revenue curve?
A. The marginal revenue curve is upward sloping.
Correct B. The marginal revenue curve is downward sloping.
C. The marginal revenue curve is horizontal.
D. The marginal revenue curve is vertical.

Correct Answer: B

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Question 13
A firm is producing a good with a total revenue of ₦100,000 and a total \cost of ₦80,000. What is the profit of the firm?
Correct A. ₦20,000
B. ₦30,000
C. ₦40,000
D. ₦50,000

Correct Answer: A

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Question 14
A country is experiencing a recession due to a decrease in aggregate demand. What is the opportunity \cost of increa\sing government sp\ending to stimulate the economy?
A. The opportunity \cost is the reduction in the quality of goods and services available in the market.
B. The opportunity \cost is the increase in the prices of goods and services in the market.
Correct C. The opportunity \cost is the reduction in the quantity of goods and services available in the market.
D. The opportunity \cost is the increase in the demand for goods and services in the market.

Correct Answer: C

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Question 15
A firm is producing a good with a marginal \cost curve that is downward sloping. What is the shape of the firm's average \cost curve?
A. The average \cost curve is upward sloping.
Correct B. The average \cost curve is downward sloping.
C. The average \cost curve is horizontal.
D. The average \cost curve is vertical.

Correct Answer: B

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Question 16
A government imposes a tax on a commodity to reduce its consumption. If the demand for the commodity is inelastic, what will be the effect on the government's revenue?
A. The government's revenue will increase.
Correct B. The government's revenue will decrease.
C. The government's revenue will remain the same.
D. The effect on the government's revenue is uncertain.

Correct Answer: B

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Question 17
A firm's \cost function is given by C(x) = 2x^2 + 10x + 5. If the firm produces 10 units of the good, what is the total \cost?
A. ₦125
B. ₦250
Correct C. ₦375
D. ₦500

Correct Answer: C

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Question 18
A country's GDP is given by the equation Y = C + I + G + \( X - M \). If the country's consumption is ₦100 billion, investment is ₦50 billion, government sp\ending is ₦75 billion, exports are ₦200 billion, and imports are ₦150 billion, what is the country's GDP?
A. ₦425 billion
B. ₦450 billion
C. ₦475 billion
Correct D. ₦500 billion

Correct Answer: D

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Question 19
A firm's demand function is given by Q = 100 - 2P. If the firm's price is ₦20, how many units will it sell?
A. 10 units
Correct B. 20 units
C. 30 units
D. 40 units

Correct Answer: B

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Question 20
A government wants to reduce the price of a commodity by 10%. If the original price is ₦100, what will be the new price?
A. ₦90
Correct B. ₦95
C. ₦100
D. ₦105

Correct Answer: B

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Question 21
Consider a firm operating in a perfectly competitive market. If the firm's marginal revenue (MR) is greater than its marginal \cost (MC), what will be the effect on 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 enter or exit the market.

Correct Answer: A

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Question 22
A consumer's indifference curve is represented by the equation u(x,y) = 2x + 3y. If the consumer's income is ₦1000, and the prices of x and y are ₦5 and ₦3 respectively, what is the consumer's optimal bundle?
Correct A. (100, 50)
B. (50, 100)
C. (200, 0)
D. (0, 200)

Correct Answer: A

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Question 23
Consider a country with a GDP of ₦10 trillion and a GNP of ₦11 trillion. What is the country's net factor income?
Correct A. ₦1 trillion
B. ₦100 billion
C. ₦10 billion
D. ₦1 billion

Correct Answer: A

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Question 24
A government imposes a tax of ₦10 on every unit of a good. If the demand for the good is given by the equation Qd = 100 - 2P, and the supply of the good is given by the equation Qs = 2P - 10, what is the equilibrium price and quantity?
Correct A. P = ₦20, Q = 30
B. P = ₦30, Q = 20
C. P = ₦10, Q = 50
D. P = ₦50, Q = 10

Correct Answer: A

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Question 25
Consider a country with a population of 100 million people, and an average annual income of ₦500,000. What is the country's GDP?
A. ₦50 trillion
Correct B. ₦100 trillion
C. ₦500 trillion
D. ₦1 trillion

Correct Answer: B

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