POST UTME CRAWFORD UNIVERSITY 2020 Economics | Objective

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Question 1
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 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 exit the market.

Correct Answer: A

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Question 2
A country's balance of payments (BOP) accounts can be classified into three main categories: current account, capital account, and financial account. Which of the following is NOT a component of the current account?
A. Exports
B. Imports
Correct C. Foreign Direct Investment (FDI)
D. Income from abroad

Correct Answer: C

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Question 3
A firm's \cost function is given by C(x) = 2x^2 + 5x + 10. If the firm's revenue function is R(x) = 20x - 2x^2, what is the firm's profit function?
Correct A. P(x) = 18x - 2x^2
B. P(x) = 18x + 2x^2
C. P(x) = 20x - 2x^2
D. P(x) = 20x + 2x^2

Correct Answer: A

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Question 4
A country's economic growth can be measured u\sing the following indicators: GDP, GNP, GDP per capita, and GNP per capita. Which of the following is NOT an indicator of economic growth?
A. GDP
B. GNP
C. GDP per capita
Correct D. Inflation rate

Correct Answer: D

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Question 5
A firm's supply curve is given by Q = 2P + 5. If the price of the good is $10, what is the quantity supplied?
A. 5
Correct B. 10
C. 15
D. 20

Correct Answer: B

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Question 6
A government may use a combination of the following methods to finance its budget: taxation, public borrowing, and seigniorage. Which of the following is NOT a method of financing a government's budget?
Correct A. Privatization
B. Public borrowing
C. Taxation
D. Seigniorage

Correct Answer: A

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Question 7
The following diagram shows the production possibilities frontier (PPF) for a country. Which of the following statements is NOT true?
A. The PPF shows the maximum possible output of a country
B. The PPF is a graphical representation of the trade-off between two goods
Correct C. The PPF is a straight line
D. The PPF is a curved line

Correct Answer: C

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Question 8
A consumer's indifference curve is a graphical representation of the various combinations of two goods that the consumer is equally willing to consume. Which of the following statements is NOT true?
A. The indifference curve is a downward-sloping curve
B. The indifference curve is a graphical representation of the consumer's preferences
Correct C. The indifference curve is a straight line
D. The indifference curve is a curved line

Correct Answer: C

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Question 9
The following table shows the national income accounts for a country. Which of the following is NOT a component of the national income?
A. Consumption
B. Investment
C. Government sp\ending
Correct D. Net exports

Correct Answer: D

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Question 10
A country's economic growth can be measured u\sing the following indicators: GDP, GNP, and HDI. Which of the following is NOT a measure of economic growth?
A. GDP
B. GNP
C. HDI
Correct D. Inflation rate

Correct Answer: D

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Question 11
A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. Find the profit-maximizing quantity and price.
A. Q = 20, P = 40
B. Q = 30, P = 50
Correct C. Q = 40, P = 60
D. Q = 50, P = 70

Correct Answer: C

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Question 12
A consumer's utility function is given by U(x, y) = 2x + 3y. The budget constraint is 2x + 3y = 12. Find the consumer's optimal bundle of x and y.
Correct A. x = 2, y = 4
B. x = 3, y = 3
C. x = 4, y = 2
D. x = 5, y = 1

Correct Answer: A

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Question 13
A firm's production function is given by Q = 2L^2 + 3K. The firm's \cost function is C(L, K) = 2L + 3K. Find the firm's profit-maximizing values of L and K.
Correct A. L = 2, K = 3
B. L = 3, K = 2
C. L = 4, K = 1
D. L = 1, K = 4

Correct Answer: A

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Question 14
A government imposes a tax of ₦10 on a good. The demand curve for the good is given by Q = 100 - 2P. Find the new equilibrium price and quantity.
A. P = 40, Q = 20
B. P = 50, Q = 30
Correct C. P = 60, Q = 40
D. P = 70, Q = 50

Correct Answer: C

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Question 15
A central bank increases the money supply by 10%. What is the effect on the price level?
Correct A. Price level increases by 10%
B. Price level decreases by 10%
C. Price level remains unchanged
D. Price level increases by 20%

Correct Answer: A

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Question 16
Consider a small open economy with a fixed exchange rate. The government imposes a tariff of 15% on imported goods. U\sing the Marshall-Lerner condition, determine whether the tariff will lead to a trade surplus or deficit.
A. Trade surplus
Correct B. Trade deficit
C. No effect on trade balance
D. Uncertain effect on trade balance

Correct Answer: B

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Question 17
A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. U\sing the concept of marginal \cost, determine the profit-maximizing quantity of output.
A. q = 2
Correct B. q = 5
C. q = 10
D. q = 15

Correct Answer: B

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Question 18
A consumer's utility function is given by U(x,y) = 2x + 3y. The consumer's budget constraint is given by 2x + 3y = 12. U\sing the concept of indifference curves, determine the consumer's optimal consumption bundle.
Correct A. (x,y) = (2,4)
B. (x,y) = (3,3)
C. (x,y) = (4,2)
D. (x,y) = (6,0)

Correct Answer: A

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Question 19
A firm's demand function is given by Q = 100 - 2P. U\sing the concept of elasticity of demand, determine the price elasticity of demand at P = 20.
A. Elastic
Correct B. Inelastic
C. Unit elastic
D. Uncertain

Correct Answer: B

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Question 20
A central bank increases the money supply by 10%. U\sing the concept of the money multiplier, determine the percentage change in the money supply.
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 21
A firm operating in a perfectly competitive market is considering an increase in production. If the marginal revenue (MR) curve is downward-sloping, what will be the effect on the firm's profit-maximizing output?
A. The firm will increase production to the point where MR = MC.
Correct B. The firm will decrease production to the point where MR = MC.
C. The firm will not change production.
D. The firm will increase production indefinitely.

Correct Answer: B

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Question 22
A country's GDP is calculated as the sum of all final goods and services produced within its borders. If a firm imports raw materials worth ₦100,000, but exports finished goods worth ₦150,000, what is the net contribution to the country's GDP?
Correct A. ₦50,000
B. ₦0
C. ₦100,000
D. ₦150,000

Correct Answer: A

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Question 23
A monopolist faces a demand curve with the following equation: Q = 100 - 2P. If the firm's marginal \cost (MC) is ₦20, what is the profit-maximizing price?
A. ₦40
Correct B. ₦50
C. ₦60
D. ₦70

Correct Answer: B

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Question 24
A government is considering a tax on a particular good. If the tax increases the price of the good by 20%, and the demand curve is inelastic, what will be the effect on the government's revenue?
Correct A. The government's revenue will increase.
B. The government's revenue will decrease.
C. The government's revenue will remain the same.
D. The government's revenue will increase by 20%.

Correct Answer: A

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Question 25
A firm is considering an investment in a new project. If the project has a net present value (NPV) of ₦100,000, and the \cost of capital is 10%, what is the internal rate of return (IRR) of the project?
A. 10%
Correct B. 12%
C. 15%
D. 18%

Correct Answer: B

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