POST UTME MADONNA UNIVERSITY 2017 Economics | Objective

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Question 1
In a perfectly competitive market, a firm's marginal revenue (MR) curve is downward-sloping. What is the relationship between the firm's marginal \cost (MC) and its average total \cost (ATC)?
A. MC > ATC
Correct B. MC = ATC
C. MC < ATC
D. MC is irrelevant to ATC

Correct Answer: B

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Question 2
A country's GDP is ₦100 billion, and its GNP is ₦120 billion. What is the value of net factor income from abroad?
Correct A. ₦20 billion
B. ₦10 billion
C. ₦5 billion
D. ₦15 billion

Correct Answer: A

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Question 3
A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \). If the firm's labor and capital inputs are increased by 10% and 20%, respectively, what is the percentage change in output?
A. 10%
B. 20%
Correct C. 30%
D. 40%

Correct Answer: C

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Question 4
A country's balance of payments is given by the following equation: BOP = X - M + \( F - I \). If the country's exports (X) are ₦100 billion, imports (M) are ₦80 billion, foreign investment (F) is ₦20 billion, and domestic investment (I) is ₦10 billion, what is the value of the balance of payments?
Correct A. ₦30 billion
B. ₦20 billion
C. ₦10 billion
D. ₦5 billion

Correct Answer: A

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Question 5
A monopolist's demand curve is given by Q = 100 - 2P. If the firm's marginal revenue (MR) is ₦50, what is the value of the firm's marginal \cost (MC)?
A. ₦25
Correct B. ₦50
C. ₦75
D. ₦100

Correct Answer: B

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Question 6
The Central Bank of Nigeria (CBN) has introduced a new monetary policy aimed at reducing inflation. The policy involves increa\sing the reserve requirement for commercial banks. Assuming the reserve requirement is increased from 10% to 15%, what will be the effect on the money supply in the short run?
A. The money supply will decrease
B. The money supply will increase
Correct C. The money supply will remain unchanged
D. The effect on the money supply is uncertain

Correct Answer: C

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Question 7
A firm is producing a good with a cons\tant elasticity of demand of 2. If the price of the good increases by 10%, what will be the percentage change in the quantity demanded?
Correct A. -20%
B. -10%
C. 0%
D. +10%

Correct Answer: A

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Question 8
A government is considering a tax on a particular good. The tax will be levied on the producer, and the revenue generated will be used to fund a public good. Assuming the tax is levied at a rate of 10% of the producer's revenue, what will be the effect on the equilibrium price and quantity of the good?
Correct A. The equilibrium price will increase, and the equilibrium quantity will decrease
B. The equilibrium price will decrease, and the equilibrium quantity will increase
C. The equilibrium price will remain unchanged, and the equilibrium quantity will increase
D. The equilibrium price will increase, and the equilibrium quantity will remain unchanged

Correct Answer: A

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Question 9
A firm is producing a good with a production function of Q = 2L^0.5K^0.5. If the firm's labor and capital inputs are increased by 20% and 15%, respectively, what will be the percentage change in the output?
Correct A. +25%
B. +20%
C. +15%
D. +10%

Correct Answer: A

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Question 10
A government is considering a policy to reduce poverty in a particular region. The policy involves providing a subsidy to farmers to increase agricultural production. Assuming the subsidy is provided at a rate of 20% of the farmer's revenue, what will be the effect on the equilibrium price and quantity of the good?
Correct A. The equilibrium price will decrease, and the equilibrium quantity will increase
B. The equilibrium price will increase, and the equilibrium quantity will decrease
C. The equilibrium price will remain unchanged, and the equilibrium quantity will increase
D. The equilibrium price will decrease, and the equilibrium quantity will remain unchanged

Correct Answer: A

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Question 11
A country's GDP is ₦1.5 trillion, its imports are ₦800 billion, and its exports are ₦600 billion. What is its balance of trade?
A. ₦200 billion surplus
Correct B. ₦300 billion deficit
C. ₦400 billion surplus
D. ₦500 billion deficit

Correct Answer: B

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Question 12
A firm's production function is given by Q = 2L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, what is the optimal level of labor and capital?
A. L = 100, K = 100
B. L = 200, K = 50
C. L = 50, K = 200
Correct D. L = 100, K = 50

Correct Answer: D

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Question 13
A government imposes a tax on a firm's output. The firm's supply curve shifts to the left. What is the effect on the firm's profit-maximizing output?
A. Increases
Correct B. Decreases
C. Remains the same
D. Increases then decreases

Correct Answer: B

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Question 14
A country's inflation rate is 5% per annum. If the nominal interest rate is 10% per annum, what is the real interest rate?
Correct A. 5%
B. 10%
C. 15%
D. 20%

Correct Answer: A

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Question 15
A firm's budget constraint is given by 2L + 3K = 100. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, what is the optimal level of labor and capital?
A. L = 50, K = 25
B. L = 25, K = 50
Correct C. L = 33, K = 33
D. L = 25, K = 25

Correct Answer: C

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Question 16
A monopolist's demand curve is downward sloping. What is the likely effect of an increase in the monopolist's fixed \costs on the quantity supplied?
A. Increase
Correct B. Decrease
C. No effect
D. Uncertain

Correct Answer: B

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Question 17
A firm's production function is given by Q = 2L^0.5K^0.5. If the price of labor increases by 20%, and the price of capital increases by 15%, what is the likely effect on the firm's output?
A. Increase
Correct B. Decrease
C. No effect
D. Uncertain

Correct Answer: B

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Question 18
A country's GDP is 100 billion naira. Its GNP is 110 billion naira. What is the likely reason for the difference?
Correct A. Foreign investment
B. Domestic savings
C. Government sp\ending
D. Trade deficit

Correct Answer: A

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Question 19
A consumer's indifference curve is given by U = 2x^0.5y^0.5. If the price of good x increases by 10%, and the price of good y decreases by 5%, what is the likely effect on the consumer's budget line?
A. Increase
Correct B. Decrease
C. No effect
D. Uncertain

Correct Answer: B

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Question 20
A country's balance of payments is given by BOP = \( X - M \) + \( F - I \). If the country's exports increase by 15%, and its imports decrease by 10%, what is the likely effect on the balance of payments?
Correct A. Increase
B. Decrease
C. No effect
D. Uncertain

Correct Answer: A

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Question 21
The Central Bank of Nigeria (CBN) uses the monetary policy instrument of Open Market Operations (OMO) to increase the money supply in the economy. What is the effect of this action on the interest rate?
A. The interest rate increases
Correct B. The interest rate decreases
C. The interest rate remains unchanged
D. The interest rate becomes negative

Correct Answer: B

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Question 22
A firm is producing a good with a total revenue of ₦1,500 and a total \cost of ₦1,200. What is the profit of the firm?
Correct A. ₦300
B. ₦400
C. ₦500
D. ₦600

Correct Answer: A

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Question 23
A consumer is faced with the following budget constraint: 2x + 3y = 12. If the consumer's income is ₦12 and the price of x is ₦2, what is the maximum amount the consumer can sp\end on y?
A. ₦4
Correct B. ₦6
C. ₦8
D. ₦10

Correct Answer: B

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Question 24
The following diagram shows the demand and supply curves for a good. What is the equilibrium price of the good?
A. ₦10
Correct B. ₦15
C. ₦20
D. ₦25

Correct Answer: B

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Question 25
A firm is producing a good with a total revenue of ₦1,500 and a total \cost of ₦1,200. What is the profit of the firm?
Correct A. ₦300
B. ₦400
C. ₦500
D. ₦600

Correct Answer: A

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