POST UTME COVENANT UNIVERSITY 2021 Economics | Objective

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Question 1
In a perfectly competitive market, if the demand for a good increases, what happens to the equilibrium price?
A. The equilibrium price increases
B. The equilibrium price decreases
Correct C. The equilibrium price remains unchanged
D. The equilibrium price becomes negative

Correct Answer: C

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Question 2
A monopolist faces a demand curve with the following equation: \( Q = 100 - 2P \). If the monopolist's marginal revenue is \( MR = 200 - 4Q \), what is the profit-maximizing quantity?
A. 20
Correct B. 30
C. 40
D. 50

Correct Answer: B

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Question 3
A consumer has the following utility function: \( U = 2x + 3y \). If the prices of x and y are $2 and $3 respectively, and the consumer's income is $10, what is the optimal bundle of x and y?
Correct A. x = 2, y = 2
B. x = 3, y = 1
C. x = 4, y = 0
D. x = 0, y = 4

Correct Answer: A

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Question 4
A country's GDP is $100 billion, its imports are $20 billion, and its exports are $15 billion. What is the country's GNP?
A. $95 billion
Correct B. $105 billion
C. $115 billion
D. $125 billion

Correct Answer: B

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Question 5
A firm's production function is given by \( Q = 2L^2 + 3K \). If the firm's \cost function is \( C = 10L + 20K \), what is the profit-maximizing level of labor?
A. 5
Correct B. 10
C. 15
D. 20

Correct Answer: B

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Question 6
A consumer's indifference curve is given 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, find the optimal bundle of x and y.
Correct A. (100, 150)
B. (120, 100)
C. (150, 80)
D. (180, 60)

Correct Answer: A

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Question 7
The GDP of a country is ₦10 trillion. If the country's population is 200 million, calculate the per capita GDP.
Correct A. ₦50,000
B. ₦50,500
C. ₦50,000
D. ₦50,500

Correct Answer: A

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Question 8
A firm's demand function is given by \( Q = 100 - 2P \). If the firm's marginal revenue is ₦50, calculate the optimal price.
A. ₦20
Correct B. ₦30
C. ₦40
D. ₦50

Correct Answer: B

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Question 9
A country's GNP is ₦15 trillion. If the country's GDP is ₦10 trillion, calculate the net factor income.
Correct A. ₦5 trillion
B. ₦5.5 trillion
C. ₦5 trillion
D. ₦5.5 trillion

Correct Answer: A

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Question 10
A consumer's budget constraint is given by \( 2x + 3y = 12 \). If the consumer's indifference curve is given by ( u(x,y) = x + 2y ), find the optimal bundle of x and y.
Correct A. (2, 2)
B. (3, 1)
C. (4, 0)
D. \( 5, -1 \)

Correct Answer: A

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Question 11
The Marshall-Lerner condition states that if the sum of the elasticities of demand for imports and exports is greater than 1, then a devaluation of the currency will lead to an improvement in the balance of payments. Which of the following statements is a correct interpretation of the Marshall-Lerner condition?
A. A devaluation of the currency will lead to a decrease in imports and an increase in exports.
B. A devaluation of the currency will lead to an increase in imports and a decrease in exports.
Correct C. A devaluation of the currency will lead to an improvement in the balance of payments if the sum of the elasticities of demand for imports and exports is greater than 1.
D. A devaluation of the currency will lead to a decrease in exports and an increase in imports.

Correct Answer: C

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Question 12
A government imposes a tax on a good that is perfectly inelastic. What will be the effect on the supply curve?
A. The supply curve will shift to the left.
B. The supply curve will shift to the right.
C. The supply curve will remain unchanged.
Correct D. The supply curve will shift upwards.

Correct Answer: D

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Question 13
A consumer has a budget of ₦1000 and faces the following prices for two goods: good X \costs ₦200 and good Y \costs ₦300. If the consumer's utility function is given by U = 2X + 3Y, what is the optimal bundle of goods that the consumer will choose?
Correct A. X = 2, Y = 1
B. X = 1, Y = 2
C. X = 3, Y = 0
D. X = 0, Y = 3

Correct Answer: A

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Question 14
A firm faces the following demand curve: Q = 100 - 2P. If the firm's marginal \cost is cons\tant at ₦50, what is the optimal price that the firm should charge?
A. ₦25
Correct B. ₦50
C. ₦75
D. ₦100

Correct Answer: B

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Question 15
A country's balance of payments is given by the following equation: BOP = X - M + \( F - I \). If the country's exports (X) are ₦1000, imports (M) are ₦800, foreign investment (F) is ₦500, and domestic investment (I) is ₦200, what is the balance of payments?
A. ₦300
B. ₦400
Correct C. ₦500
D. ₦600

Correct Answer: C

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Question 16
A monopolistically competitive firm faces a downward-sloping demand curve. If the firm increases its price, what will happen to its total revenue?
A. Total revenue will increase
Correct B. Total revenue will decrease
C. Total revenue will remain the same
D. Total revenue will increase at first, then decrease

Correct Answer: B

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Question 17
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. x = 40, y = 20
B. x = 60, y = 10
C. x = 80, y = 5
D. x = 100, y = 0

Correct Answer: A

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Question 18
A government imposes a tax on a good, cau\sing the supply curve to shift to the left. What will happen to the equilibrium price and quantity of the good?
Correct A. Equilibrium price will increase, equilibrium quantity will decrease
B. Equilibrium price will decrease, equilibrium quantity will increase
C. Equilibrium price will remain the same, equilibrium quantity will decrease
D. Equilibrium price will increase, equilibrium quantity will increase

Correct Answer: A

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Question 19
A firm's marginal revenue product (MRP) is given by the equation MRP = 2Q + 5. If the firm's marginal \cost (MC) is ₦10, what is the firm's optimal output?
A. Q = 5
Correct B. Q = 10
C. Q = 15
D. Q = 20

Correct Answer: B

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Question 20
A consumer's utility function is given by the equation u(x, y) = x^2 + 2y. 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. x = 40, y = 20
B. x = 60, y = 10
C. x = 80, y = 5
D. x = 100, y = 0

Correct Answer: A

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Question 21
A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \), where L is labor and K is capital. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?
A. 5%
Correct B. 10%
C. 15%
D. 20%

Correct Answer: B

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Question 22
A country's GDP is ₦100 billion, its imports are ₦20 billion, and its exports are ₦25 billion. What is its balance of trade?
A. ₦5 billion surplus
Correct B. ₦5 billion deficit
C. ₦10 billion surplus
D. ₦10 billion deficit

Correct Answer: B

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Question 23
A firm's demand function is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the price is increased by 20%, what is the new quantity demanded?
A. 80
B. 90
C. 100
Correct D. 110

Correct Answer: D

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Question 24
A country's government budget is given by G = 20% of GDP, where G is government exp\enditure and GDP is gross domestic product. If GDP is ₦100 billion, what is the government's exp\enditure?
Correct A. ₦20 billion
B. ₦25 billion
C. ₦30 billion
D. ₦35 billion

Correct Answer: A

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Question 25
A firm's production function is given by Q = 3L^\( 2/3 \)K^\( 1/3 \), where L is labor and K is capital. If the firm's labor and capital inputs are increased by 25% and 20% respectively, what is the percentage change in output?
A. 10%
B. 15%
Correct C. 20%
D. 25%

Correct Answer: C

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