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POST UTME LAUTECH 2020 Economics | Objective

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Question 1

Determine the marginal utility of income for a consumer who derives utility from consuming two goods, A and B, with the following indifference curves: U(A) = 2A + 3B and U(B) = 4A + 5B. If the consumer's income is ₦1000 and the prices of A and B are ₦20 and ₦30 respectively.

A. ₦50

Correct B. ₦75

C. ₦100

D. ₦125

Correct Answer: B

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Question 2

A country's balance of payments is in equilibrium when its current account is equal to its capital account. If the country's current account is in deficit by ₦100 billion and its capital account is in surplus by ₦150 billion, what is the value of its net foreign exchange earnings?

A. ₦50 billion

B. ₦100 billion

Correct C. ₦150 billion

D. ₦200 billion

Correct Answer: C

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Question 3

A firm's production function is given by Q = 2L^0.5K^0.5, where Q is output, L is labor and K is capital. If the firm's labor and capital are fixed at 100 units each, what is the value of its marginal product of labor?

A. 0.5

B. 1

Correct C. 2

D. 4

Correct Answer: C

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Question 4

A country's GDP is ₦500 billion and its GNP is ₦550 billion. What is the value of its net factor income from abroad?

A. ₦25 billion

B. ₦50 billion

C. ₦75 billion

Correct D. ₦100 billion

Correct Answer: D

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Question 5

A firm's demand for labor is given by L = 100 - 2P_L, where L is labor and P_L is the wage rate. If the wage rate is ₦20, what is the value of its marginal labor demand?

A. -1

B. -2

C. -4

Correct D. -8

Correct Answer: D

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Question 6

A monopolist faces a demand curve given by Q = 100 - 2P. The monopolist's marginal \cost is MC = 10. What is the profit-maximizing price?

A. ₦50

Correct B. ₦40

C. ₦30

D. ₦20

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 current inputs are L = 16 and K = 9, what is the marginal product of labor?

A. 1

Correct B. 2

C. 3

D. 4

Correct Answer: B

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Question 8

A consumer's budget constraint is given by 2X + 3Y = 24. The consumer's indifference curve is given by U = X^0.5Y^0.5. What is the consumer's optimal bundle?

Correct A. (4, 4)

B. (6, 2)

C. (8, 0)

D. (0, 8)

Correct Answer: A

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Question 9

A firm's \cost function is given by C(Q) = 2Q^2 + 10Q. What is the firm's average \cost at Q = 5?

A. ₦50

B. ₦60

Correct C. ₦70

D. ₦80

Correct Answer: C

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Question 10

A consumer's demand for a good is given by Q = 100 - 2P. The consumer's income is ₦1000. What is the consumer's optimal price?

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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Question 11

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 elasticity of demand is cons\tant and equal to -2, what is the percentage change in quantity demanded when the price increases by 10%?

Correct A. 20%

B. 30%

C. 40%

D. 50%

Correct Answer: A

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Question 12

A country's balance of payments is given by the equation BOP = X - M, where X is the value of exports and M is the value of imports. If the value of exports is 100 and the value of imports is 80, what is the balance of payments?

Correct A. 20

B. 30

C. 40

D. 50

Correct Answer: A

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Question 13

A firm's production function is given by the equation Q = 100K^0.5L^0.5, where Q is the quantity produced, K is the capital and L is the labor. If the firm has 100 units of capital and 100 units of labor, what is the quantity produced?

A. 100

B. 200

Correct C. 300

D. 400

Correct Answer: C

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Question 14

A country's GDP is given by the equation GDP = C + I + G + $ X - M $, where C is the consumption, I is the investment, G is the government sp\ending, X is the value of exports and M is the value of imports. If the consumption is 100, the investment is 50, the government sp\ending is 20, the value of exports is 100 and the value of imports is 80, what is the GDP?

A. 250

B. 300

Correct C. 350

D. 400

Correct Answer: C

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Question 15

A firm's supply function is given by the equation Qs = 100 + 2P, where Qs is the quantity supplied and P is the price. If the price elasticity of supply is cons\tant and equal to 2, what is the percentage change in quantity supplied when the price increases by 10%?

A. 20%

Correct B. 30%

C. 40%

D. 50%

Correct Answer: B

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Question 16

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 elasticity of demand is 0.5, what is the price elasticity of supply?

Correct A. 0.5

B. 1

C. 2

D. 3

Correct Answer: A

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Question 17

A firm produces two goods, A and B. The production function for good A is Q_A = 10L^0.5K^0.5, where L is labor and K is capital. The production function for good B is Q_B = 5L^0.2K^0.8. If the firm has 100 units of labor and 200 units of capital, what is the total output of the firm?

A. 100

B. 150

Correct C. 200

D. 250

Correct Answer: C

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Question 18

A country's GDP is given by the equation 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 GDP is $100 billion, consumption is $50 billion, investment is $20 billion, government sp\ending is $30 billion, exports are $40 billion, and imports are $20 billion, what is the country's trade balance?

Correct A. $10 billion

B. $20 billion

C. $30 billion

D. $40 billion

Correct Answer: A

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Question 19

A firm has a production function Q = 10L^0.5K^0.5, where L is labor and K is capital. If the firm has 100 units of labor and 200 units of capital, what is the marginal product of labor?

A. 5

Correct B. 10

C. 15

D. 20

Correct Answer: B

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Question 20

A country's balance of payments is given by the equation BOP = X - M + $ F - I $, where X is exports, M is imports, F is foreign investment, and I is domestic investment. If the country's balance of payments is $10 billion, exports are $40 billion, imports are $20 billion, foreign investment is $30 billion, and domestic investment is $20 billion, what is the country's current account balance?

Correct A. $10 billion

B. $20 billion

C. $30 billion

D. $40 billion

Correct Answer: A

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Question 21

The government of Nigeria has implemented a policy to increase the production of rice through the use of irrigation. However, the policy has led to a decrease in the production of other crops. What is the likely effect of this policy on the overall agricultural sector?

A. Increase in overall agricultural production

Correct B. Decrease in overall agricultural production

C. No effect on overall agricultural production

D. Increase in production of other crops

Correct Answer: B

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Question 22

A monopolistically competitive firm faces a demand curve that is downward sloping. If the firm increases its price, what will happen to its quantity demanded?

A. Increase in quantity demanded

Correct B. Decrease in quantity demanded

C. No change in quantity demanded

D. Increase in price and quantity demanded

Correct Answer: B

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Question 23

The Central Bank of Nigeria has increased the reserve requirement for commercial banks. What is the likely effect of this policy on the money supply?

A. Increase in money supply

Correct B. Decrease in money supply

C. No effect on money supply

D. Increase in interest rates

Correct Answer: B

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Question 24

A firm is producing a good with a cons\tant elasticity of demand. If the firm increases its price, what will happen to its total revenue?

A. Increase in total revenue

Correct B. Decrease in total revenue

C. No change in total revenue

D. Increase in price and total revenue

Correct Answer: B

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Question 25

The government of Nigeria has implemented a policy to increase the production of agricultural products through the use of subsidies. What is the likely effect of this policy on the agricultural sector?

Correct A. Increase in agricultural production

B. Decrease in agricultural production

C. No effect on agricultural production

D. Increase in agricultural prices

Correct Answer: A

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