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POST UTME LEAD CITY UNIVERSITY 2020 Economics | Objective

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Question 1

A monopolistically competitive firm faces a demand curve with a cons\tant elasticity of -2. If the firm's marginal revenue (MR) is 100, and its marginal \cost (MC) is 80, what is the firm's optimal output level?

A. 200 units

Correct B. 250 units

C. 300 units

D. 350 units

Correct Answer: B

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Question 2

A firm is producing a good with a production function Q = 2L^0.5K^0.5. If the firm's current inputs are L = 16 and K = 9, what is the firm's current output level?

A. 24

B. 32

Correct C. 40

D. 48

Correct Answer: C

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Question 3

A central bank is considering an open market operation to increase the money supply in the economy. If the central bank buys $100 million worth of government securities from commercial banks, what is the expected increase in the money supply?

A. $50 million

B. $75 million

Correct C. $100 million

D. $125 million

Correct Answer: C

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Question 4

A firm is considering investing in a new project with a net present value (NPV) of $100,000. If the firm's \cost of capital is 10%, what is the present value of the project's expected cash flows?

A. $90,000

Correct B. $90,909

C. $91,000

D. $92,000

Correct Answer: B

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Question 5

A country is experiencing a recession with a GDP growth rate of -2%. If the country's inflation rate is 4%, what is the expected change in the real interest rate?

A. 0.04

Correct B. 0.06

C. 0.08

D. 0.10

Correct Answer: B

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Question 6

A firm's revenue function is given by R(x) = 2x^2 + 5x + 1, where x is the number of units produced. If the firm's marginal revenue function is MR(x) = 4x + 5, find the value of x that maximizes revenue.

A. 1

B. 2

Correct C. 3

D. 4

Correct Answer: C

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Question 7

The demand function for a product is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the supply function is given by Q = 2P + 10, find the equilibrium price and quantity.

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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Question 8

A consumer has a budget of ₦1000 and faces the following prices: Q1 = ₦200, Q2 = ₦300, Q3 = ₦400. If the consumer's utility function is given by U = 2x1 + 3x2 + 4x3, find the optimal bundle of goods that maximizes utility.

Correct A. x1 = 2, x2 = 1, x3 = 1

B. x1 = 1, x2 = 2, x3 = 1

C. x1 = 1, x2 = 1, x3 = 2

D. x1 = 2, x2 = 2, x3 = 0

Correct Answer: A

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Question 9

A firm's \cost function is given by C(x) = 2x^2 + 5x + 1, where x is the number of units produced. If the firm's revenue function is R(x) = 3x^2 + 2x + 1, find the profit-maximizing level of production.

A. x = 1

B. x = 2

Correct C. x = 3

D. x = 4

Correct Answer: C

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Question 10

A country's balance of payments account is given by: Current Account = 100, Capital Account = 50, Financial Account = 20. If the country's exchange rate is 1 USD = 100 Naira, find the value of the current account in Naira.

Correct A. ₦10000

B. ₦20000

C. ₦30000

D. ₦40000

Correct Answer: A

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Question 11

A perfectly competitive firm's supply curve is upward-sloping because of the law of increa\sing

Correct A. diminishing returns

B. marginal \cost

C. marginal revenue

D. substitutes

Correct Answer: A

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Question 12

A country's balance of payments account is in equilibrium when its current account is equal to its capital account

Correct A. true

B. false

C. only when the exchange rate is fixed

D. only when the exchange rate is floating

Correct Answer: A

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Question 13

The money multiplier is the reciprocal of the reserve requirement

Correct A. true

B. false

C. only when the central bank is indep\endent

D. only when the banking system is \fractional

Correct Answer: A

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Question 14

A firm's production function is characterized by cons\tant returns to scale when the output increases proportionally with the input

Correct A. true

B. false

C. only when the production function is linear

D. only when the production function is quadratic

Correct Answer: A

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Question 15

A country's exchange rate is determined by the supply and demand for foreign currency in the foreign exchange market

Correct A. true

B. false

C. only when the exchange rate is fixed

D. only when the exchange rate is floating

Correct Answer: A

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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, calculate the percentage change in quantity demanded when the price increases by 10%.

Correct A. 5%

B. 10%

C. 15%

D. 20%

Correct Answer: A

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Question 17

A government imposes a tax of ₦10 per unit on a product. The supply curve is given by Qs = 2P. If the demand curve is Qd = 100 - 2P, calculate the new equilibrium price and quantity.

A. ₦20, Q = 40

Correct B. ₦30, Q = 60

C. ₦40, Q = 80

D. ₦50, Q = 100

Correct Answer: B

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Question 18

A firm has a total revenue function given by TR = 100Q - 2Q^2. If the firm's total \cost function is TC = 50Q + 10Q^2, calculate the profit-maximizing quantity and price.

A. Q = 10, P = ₦50

Correct B. Q = 20, P = ₦100

C. Q = 30, P = ₦150

D. Q = 40, P = ₦200

Correct Answer: B

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Question 19

A consumer has a budget of ₦100 and faces a price of ₦20 per unit of a product. If the consumer's indifference curves are given by U = 2x + y, where x is the quantity consumed and y is the price, calculate the optimal quantity and price.

Correct A. x = 2, y = ₦20

B. x = 3, y = ₦30

C. x = 4, y = ₦40

D. x = 5, y = ₦50

Correct Answer: A

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Question 20

A firm has a production function given by Q = 2L + 3K, where L is labor and K is capital. If the firm's \cost function is C = 10L + 20K, calculate the marginal product of labor and the marginal product of capital.

Correct A. MPL = 2, MPK = 3

B. MPL = 3, MPK = 2

C. MPL = 4, MPK = 1

D. MPL = 1, MPK = 4

Correct Answer: A

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Question 21

The Central Bank of Nigeria (CBN) uses monetary policy tools to control inflation. Which of the following is NOT a monetary policy tool used by the CBN?

A. Open Market Operations (OMO)

B. Reserve Requirements

Correct C. Fiscal Policy

D. Quantitative Ea\sing

Correct Answer: C

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Question 22

The demand for a commodity is said to be inelastic if a change in the price of the commodity leads to a

A. large increase in the quantity demanded

B. small increase in the quantity demanded

Correct C. large decrease in the quantity demanded

D. small decrease in the quantity demanded

Correct Answer: C

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Question 23

The diagram below shows the supply and demand curves for a commodity. If the price of the commodity is P1, what is the equilibrium quantity?

A. Q1

Correct B. Q2

C. Q3

D. Q4

Correct Answer: B

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Question 24

The Central Bank of Nigeria (CBN) uses the following instruments to implement monetary policy:

Correct A. Open Market Operations (OMO), Reserve Requirements, and Discount Rate

B. Open Market Operations (OMO), Reserve Requirements, and Quantitative Ea\sing

C. Reserve Requirements, Discount Rate, and Quantitative Ea\sing

D. Open Market Operations (OMO), Discount Rate, and Fiscal Policy

Correct Answer: A

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Question 25

The diagram below shows the production possibilities frontier (PPF) for a country. If the country is currently producing at point A, what is the opportunity \cost of producing one more unit of good X?

A. 1 unit of good Y

Correct B. 2 units of good Y

C. 3 units of good Y

D. 4 units of good Y

Correct Answer: B

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