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POST UTME OAU 2020 Economics | Objective

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Question 1

A firm faces a downward-sloping demand curve for its product. If the firm increases its price, what will happen to its total revenue?

A. Total revenue will increase

Correct B. Total revenue will decrease

C. Total revenue will remain unchanged

D. Total revenue will increase at first and then decrease

Correct Answer: B

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Question 2

A perfectly competitive market has a supply curve that is upward-sloping. What is the shape of the demand curve for a firm in this market?

Correct A. Downward-sloping

B. Horizontal

C. Upward-sloping

D. Vertical

Correct Answer: A

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Question 3

A monopolist faces a downward-sloping demand curve for its product. If the firm increases its price, what will happen to its total revenue?

A. Total revenue will increase

B. Total revenue will decrease

C. Total revenue will remain unchanged

Correct D. Total revenue will increase at first and then decrease

Correct Answer: D

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Question 4

A firm is considering two different production processes. Process A has a fixed \cost of ₦100,000 and a variable \cost of ₦50 per unit. Process B has a fixed \cost of ₦150,000 and a variable \cost of ₦30 per unit. If the firm produces 10,000 units, what will be the total \cost of production for each process?

Correct A. Process A: ₦1,500,000; Process B: ₦1,200,000

B. Process A: ₦1,200,000; Process B: ₦1,500,000

C. Process A: ₦1,000,000; Process B: ₦1,400,000

D. Process A: ₦1,400,000; Process B: ₦1,000,000

Correct Answer: A

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Question 5

A firm is producing a product with a production function of Q = 2L^0.5K^0.5. If the firm increases the capital from 100 to 200, what will be the percentage change in output?

A. 25%

Correct B. 50%

C. 75%

D. 100%

Correct Answer: B

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Question 6

A country's GDP is $100 billion, and its population is 10 million. If the average annual income is $10,000, what is the GDP per capita?

A. $1,000

Correct B. $10,000

C. $100,000

D. $1,000,000

Correct Answer: B

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Question 7

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 labor increases by 20% and capital remains cons\tant, what is the percentage change in output?

A. -10%

B. 0%

Correct C. 10%

D. 20%

Correct Answer: C

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Question 8

A consumer's indifference curve is given by U = 2x + 3y, where x and y are the quantities of two goods. If the consumer's income is $100 and the prices of the two goods are $2 and $3 respectively, what is the consumer's optimal bundle?

Correct A. (20, 30)

B. (30, 20)

C. (40, 10)

D. (10, 40)

Correct Answer: A

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Question 9

A central bank sells $100 million worth of foreign exchange to the market. If the initial exchange rate is 1 USD = 150 Naira, what is the new exchange rate?

A. 1 USD = 160 Naira

Correct B. 1 USD = 140 Naira

C. 1 USD = 180 Naira

D. 1 USD = 200 Naira

Correct Answer: B

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Question 10

A firm's \cost function is given by C = 2L + 3K, where C is \cost, L is labor, and K is capital. If labor increases by 20% and capital remains cons\tant, what is the percentage change in \cost?

A. -10%

B. 0%

Correct C. 10%

D. 20%

Correct Answer: C

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Question 11

The concept of scarcity implies that the wants of an individual or society are unlimited, but the resources available to satisfy these wants are limited. This leads to the necessity of making choices. What is the opportunity \cost of choo\sing to sp\end more on education, rather than on entertainment?

A. The opportunity \cost is the amount of money that could have been spent on entertainment.

B. The opportunity \cost is the amount of time that could have been spent on entertainment.

Correct C. The opportunity \cost is the amount of money that could have been spent on other goods and services.

D. The opportunity \cost is the amount of time that could have been spent on other activities.

Correct Answer: C

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Question 12

A country's GDP is the sum of the value of all final goods and services produced within its borders. However, this measure does not account for income earned by its citizens from abroad. What is the name of the measure that includes income earned by citizens from abroad?

Correct A. Gross National Product (GNP)

B. Net National Product (NNP)

C. Gross Domestic Product (GDP)

D. Net Domestic Product (NDP)

Correct Answer: A

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Question 13

The elasticity of demand for a good is measured by the percentage change in the quantity demanded in response to a 1% change in the price of the good. If the demand for a good is elastic, what happens to the total revenue of the firm as the price of the good increases?

A. Total revenue increases.

Correct B. Total revenue decreases.

C. Total revenue remains cons\tant.

D. Total revenue becomes zero.

Correct Answer: B

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Question 14

A central bank uses monetary policy to control inflation by increa\sing the reserve requirement for commercial banks. This action will lead to a decrease in the money supply because banks will have to hold more reserves and l\end less. What is the effect of this action on the interest rate?

Correct A. The interest rate increases.

B. The interest rate decreases.

C. The interest rate remains cons\tant.

D. The interest rate becomes zero.

Correct Answer: A

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Question 15

A country's inflation rate is 5% per annum. If the nominal interest rate is 10% per annum, what is the real interest rate?

A. 5%

Correct B. 6%

C. 7%

D. 8%

Correct Answer: B

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Question 16

A firm's production function is given by Q = 2L^$ 1/2 $K^$ 1/2 $, where L is labor and K is capital. If the firm's current labor and capital inputs are L = 4 and K = 9, respectively, what is the firm's current output?

A. 6

Correct B. 12

C. 18

D. 24

Correct Answer: B

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Question 17

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

A. $20

B. $30

Correct C. $40

D. $50

Correct Answer: C

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Question 18

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's budget constraint is given by 2x + 3y = 12, what is the consumer's optimal bundle of goods?

Correct A. (2, 4)

B. (4, 2)

C. (6, 0)

D. (0, 6)

Correct Answer: A

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Question 19

A firm's \cost function is given by C = 100 + 2Q + 0.5Q^2, where Q is the firm's output. If the firm's current output is Q = 10, what is the firm's current \cost?

A. $250

B. $300

Correct C. $350

D. $400

Correct Answer: C

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Question 20

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

A. 20

B. 30

Correct C. 40

D. 50

Correct Answer: C

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Question 21

Consider a perfectly competitive market with two firms, A and B. Firm A has a \cost function C_A(x) = 10x + 100, while Firm B has a \cost function C_B(x) = 15x + 150. If the market demand is given by P = 100 - 2x, and the firms produce identical products, what is the socially optimal quantity of output?

A. 50

B. 75

Correct C. 100

D. 125

Correct Answer: C

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Question 22

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current inputs are L = 4 and K = 9, what is the marginal product of labor?

A. 1.5

Correct B. 2

C. 2.5

D. 3

Correct Answer: B

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Question 23

A country's balance of payments is given by the following equation: BOP = $ X - M $ + $ F - I $. If the country's exports are X = 100, imports are M = 80, foreign investment is F = 20, and domestic investment is I = 30, what is the country's balance of payments?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 24

A firm's demand function is given by Q = 100 - 2P. If the firm's current price is P = 50, what is the elasticity of demand?

A. 0.5

B. 1

Correct C. 2

D. 3

Correct Answer: C

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Question 25

A consumer's utility function is given by U = 2x + 3y. If the consumer's current budget is 100, and the prices of x and y are 20 and 30 respectively, what is the consumer's optimal bundle?

Correct A. x = 2, y = 3

B. x = 3, y = 2

C. x = 4, y = 1

D. x = 1, y = 4

Correct Answer: A

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