POST UTME JOSEPH AYO BABALOLA UNIVERSITY 2017 Economics | Objective

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Question 1
The law of diminishing returns states that as the quantity of a variable input increases, while the quantity of a fixed input remains cons\tant, the marginal product of the variable input will eventually decrease. Which of the following best describes the law of diminishing returns?
A. The law of diminishing returns states that as the quantity of a variable input increases, the marginal product of the variable input will increase.
Correct B. The law of diminishing returns states that as the quantity of a variable input increases, the marginal product of the variable input will eventually decrease.
C. The law of diminishing returns states that as the quantity of a variable input increases, the marginal product of the variable input will remain cons\tant.
D. The law of diminishing returns states that as the quantity of a variable input increases, the marginal product of the variable input will increase at a decrea\sing rate.

Correct Answer: B

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Question 2
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 correct statement about the balance of payments?
A. The balance of payments is in equilibrium when the current account is greater than the capital account.
Correct B. The balance of payments is in equilibrium when the current account is equal to the capital account.
C. The balance of payments is in equilibrium when the current account is less than the capital account.
D. The balance of payments is in equilibrium when the current account is equal to the trade account.

Correct Answer: B

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Question 3
A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \), where Q is the quantity of output, L is the quantity of labor, and K is the quantity of capital. If the firm is currently u\sing 16 units of labor and 25 units of capital, what is the marginal product of labor?
A. 1/4
B. 1/2
Correct C. 3/4
D. 1

Correct Answer: C

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Question 4
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 is currently $10, what is the quantity demanded?
A. 40
Correct B. 50
C. 60
D. 70

Correct Answer: B

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Question 5
A country's money supply is given by the equation M = 1000 + 0.5Y, where M is the money supply and Y is the income. If the income is currently $10000, what is the money supply?
A. 5000
Correct B. 6000
C. 7000
D. 8000

Correct Answer: B

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Question 6
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 7
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output is 16 units, and the number of workers (L) is 4, what is the value of the capital stock (K)?
A. 4
B. 6
Correct C. 8
D. 10

Correct Answer: C

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Question 8
A consumer has a utility function given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's income is ₦1000, and the prices of the two goods are ₦2 and ₦3 respectively, what is the consumer's optimal bundle of goods?
A. (10, 0)
Correct B. (5, 5)
C. (0, 10)
D. (0, 0)

Correct Answer: B

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Question 9
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output is 16 units, and the number of workers (L) is 4, what is the value of the capital stock (K)?
A. 4
B. 6
Correct C. 8
D. 10

Correct Answer: C

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Question 10
A consumer has a utility function given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's income is ₦1000, and the prices of the two goods are ₦2 and ₦3 respectively, what is the consumer's optimal bundle of goods?
A. (10, 0)
Correct B. (5, 5)
C. (0, 10)
D. (0, 0)

Correct Answer: B

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Question 11
A firm's production function is given by Q = 100L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, and if the firm's budget constraint is given by 100L + 200K = ₦100,000, what is the firm's optimal level of output?
A. 100 units
Correct B. 200 units
C. 300 units
D. 400 units

Correct Answer: B

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Question 12
The demand function for a product is given by Q = 100 - 2P. If the price elasticity of demand is measured at a point where the quantity demanded is 50 units, what is the price elasticity of demand?
Correct A. 0.5
B. 1
C. 2
D. 3

Correct Answer: A

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Question 13
A country's GDP is given by the equation Y = C + I + G + \( X - M \). If the country's consumption function is C = 500 + 0.8Y, the investment function is I = 200 + 0.2Y, the government exp\enditure function is G = 1000, the export function is X = 5000, and the import function is M = 2000, what is the country's GDP?
A. ₦10,000
B. ₦12,000
Correct C. ₦15,000
D. ₦18,000

Correct Answer: C

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Question 14
A firm's production function is given by Q = 100L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, and if the firm's budget constraint is given by 100L + 200K = ₦100,000, what is the firm's optimal level of labor?
A. 100 units
Correct B. 200 units
C. 300 units
D. 400 units

Correct Answer: B

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Question 15
The demand function for a product is given by Q = 100 - 2P. If the price elasticity of demand is measured at a point where the quantity demanded is 50 units, what is the price elasticity of demand?
Correct A. 0.5
B. 1
C. 2
D. 3

Correct Answer: A

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Question 16
The government of a country decides to implement a policy to reduce the price of a commodity by 20%. If the initial price is ₦100, what is the new price of the commodity?
Correct A. ₦80
B. ₦90
C. ₦120
D. ₦140

Correct Answer: A

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Question 17
A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. Find the profit-maximizing price and quantity.
Correct A. P = 40, Q = 30
B. P = 50, Q = 25
C. P = 60, Q = 20
D. P = 70, Q = 15

Correct Answer: A

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Question 18
A firm faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. Find the equilibrium price and quantity.
Correct A. P = 40, Q = 30
B. P = 50, Q = 25
C. P = 60, Q = 20
D. P = 70, Q = 15

Correct Answer: A

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Question 19
A consumer has a budget of ₦100 and faces a price of ₦20 for a commodity. If the consumer's indifference curve is given by U = 2x + 3y, find the optimal quantity of the commodity.
Correct A. x = 2
B. x = 3
C. x = 4
D. x = 5

Correct Answer: A

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Question 20
A firm has a production function given by Q = 2L + 3K and a \cost function C(L, K) = 10L + 20K. Find the profit-maximizing values of L and K.
Correct A. L = 5, K = 10
B. L = 10, K = 5
C. L = 15, K = 20
D. L = 20, K = 15

Correct Answer: A

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Question 21
A consumer's indifference curve is downward sloping and convex to the origin. What is the implication of this shape on the consumer's marginal rate of substitution (MRS)?
A. The MRS is cons\tant
B. The MRS is increa\sing
Correct C. The MRS is decrea\sing
D. The MRS is zero

Correct Answer: C

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Question 22
A country's balance of payments is in surplus. What is the likely effect on its exchange rate?
Correct A. The exchange rate will appreciate
B. The exchange rate will depreciate
C. The exchange rate will remain unchanged
D. The exchange rate will fluctuate

Correct Answer: A

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Question 23
A firm's \cost function is given by C(q) = 2q^2 + 5q + 10. What is the marginal \cost (MC) when q = 5?
A. 10
Correct B. 15
C. 20
D. 25

Correct Answer: B

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Question 24
A consumer's budget constraint is given by 2x + 3y = 12. What is the opportunity \cost of an additional unit of x?
A. -1/3
Correct B. 1/3
C. -1
D. 1

Correct Answer: B

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Question 25
A country's inflation rate is 5% per annum. What is the effect on the purcha\sing power of a consumer?
A. The purcha\sing power increases
Correct B. The purcha\sing power decreases
C. The purcha\sing power remains unchanged
D. The purcha\sing power fluctuates

Correct Answer: B

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