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POST UTME OSUSTECH 2021 Economics | Objective

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Question 1

A firm's production function is given by Q = 2L^0.5H^0.5, where Q is output, L is labor and H is capital. If the firm increases labor from 4 to 9 units, and capital from 9 to 16 units, what is the percentage change in output?

A. 10%

B. 20%

Correct C. 30%

D. 40%

Correct Answer: C

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Question 2

A country's GDP is $100 billion, its imports are $20 billion and its exports are $25 billion. What is its balance of trade?

A. $5 billion surplus

Correct B. $5 billion deficit

C. $10 billion surplus

D. $10 billion deficit

Correct Answer: B

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Question 3

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods. If the consumer's budget is $100 and the prices of the two goods are $5 and $10 respectively, what is the consumer's optimal bundle?

A. x = 10, y = 20

B. x = 15, y = 15

Correct C. x = 20, y = 10

D. x = 25, y = 5

Correct Answer: C

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Question 4

A firm's demand function is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the firm increases its price from $10 to $15, what is the percentage change in quantity demanded?

A. 20%

Correct B. 30%

C. 40%

D. 50%

Correct Answer: B

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Question 5

A country's GDP is $200 billion, its GNP is $220 billion and its net factor income from abroad is $10 billion. What is its national income?

A. $230 billion

B. $240 billion

C. $250 billion

Correct D. $260 billion

Correct Answer: D

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Question 6

A government imposes a tax on a firm's profits. The tax rate is 20% of the profits. If the firm's profits are ₦1,000,000, what is the amount of tax the firm must pay?

Correct A. ₦200,000

B. ₦250,000

C. ₦300,000

D. ₦400,000

Correct Answer: A

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Question 7

A consumer has a budget of ₦10,000 to sp\end on two goods, X and Y. The price of good X is ₦5,000 and the price of good Y is ₦3,000. If the consumer sp\ends all of their budget, how many units of good X can they buy?

A. 1 unit

Correct B. 2 units

C. 3 units

D. 4 units

Correct Answer: B

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Question 8

A firm is considering two different production processes. Process A requires an initial investment of ₦1,000,000 and has a fixed \cost of ₦200,000 per unit produced. Process B requires an initial investment of ₦500,000 and has a fixed \cost of ₦150,000 per unit produced. If the firm produces 1,000 units, which process will result in lower total \costs?

A. Process A

Correct B. Process B

C. Both processes have the same total \costs

D. Neither process has lower total \costs

Correct Answer: B

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Question 9

A monopolist faces a demand curve given by the equation $ Q = 100 - 2P $. If the firm's marginal \cost is ₦50, what is the optimal price and quantity to produce?

A. Price: ₦50, Quantity: 25 units

Correct B. Price: ₦75, Quantity: 50 units

C. Price: ₦100, Quantity: 75 units

D. Price: ₦125, Quantity: 100 units

Correct Answer: B

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Question 10

A firm is considering investing in a new project. The project has a required rate of return of 15% and an expected return of 18%. If the firm's \cost of capital is 12%, what is the project's NPV?

Correct A. ₦100,000

B. ₦200,000

C. ₦300,000

D. ₦400,000

Correct Answer: A

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Question 11

Consider a country with a balance of payments deficit. Which of the following is a likely consequence of this situation?

A. Increased imports

Correct B. Decreased exports

C. Increased foreign investment

D. Increased domestic inflation

Correct Answer: B

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Question 12

A firm is producing a good with a total revenue function of TR = 100x - 2x^2 and a total \cost function of TC = 50 + 10x + 2x^2. What is the profit-maximizing level of output?

A. 20

Correct B. 30

C. 40

D. 50

Correct Answer: B

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Question 13

A country is experiencing a recession. Which of the following is a likely effect of this situation?

Correct A. Increased unemployment

B. Increased inflation

C. Increased foreign investment

D. Increased domestic savings

Correct Answer: A

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Question 14

A firm is producing a good with a production function of Q = 100K^0.5L^0.5. What is the returns to scale of this production function?

A. Increa\sing returns to scale

B. Decrea\sing returns to scale

Correct C. Cons\tant returns to scale

D. No returns to scale

Correct Answer: C

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Question 15

A country is experiencing a trade deficit. Which of the following is a likely effect of this situation?

A. Increased imports

Correct B. Decreased exports

C. Increased foreign investment

D. Increased domestic inflation

Correct Answer: B

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Question 16

The Nigerian government has implemented policies to promote agricultural industrialization. Which of the following is a likely consequence of this policy?

A. Increased food production

B. Reduced agricultural employment

Correct C. Increased agricultural exports

D. Decreased agricultural productivity

Correct Answer: C

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Question 17

A firm is operating in a perfectly competitive market. If the firm's marginal revenue (MR) is greater than its marginal \cost (MC), what will happen to the firm's output?

Correct A. The firm will increase its output

B. The firm will decrease its output

C. The firm's output will remain unchanged

D. The firm will exit the market

Correct Answer: A

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Question 18

A consumer is faced with the following utility function: U(x,y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦2 and ₦3 respectively, what is the consumer's optimal consumption bundle?

Correct A. x = 200, y = 150

B. x = 150, y = 200

C. x = 100, y = 300

D. x = 300, y = 100

Correct Answer: A

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Question 19

The Nigerian government has implemented a monetary policy to reduce inflation. Which of the following is a likely consequence of this policy?

A. Increased interest rates

Correct B. Reduced money supply

C. Increased inflation

D. Decreased economic growth

Correct Answer: B

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Question 20

A firm is operating in a monopoly market. If the firm's demand curve is given by Q = 100 - 2P and the firm's marginal \cost (MC) is ₦10, what is the firm's optimal price?

Correct A. ₦40

B. ₦50

C. ₦60

D. ₦70

Correct Answer: A

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Question 21

Consider a firm operating in a perfectly competitive market with a given demand curve. If the firm's marginal revenue (MR) curve intersects its average variable \cost (AVC) curve at a point where MR > AVC, what is the likely outcome for the firm's profit?

Correct A. The firm will increase production to maximize profit.

B. The firm will decrease production to minimize losses.

C. The firm will remain at the current level of production.

D. The firm will exit the market.

Correct Answer: A

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Question 22

A farmer in Nigeria is considering two different irrigation systems for her farm. System A \costs ₦100,000 upfront but saves ₦20,000 per year in water \costs. System B \costs ₦50,000 upfront but saves ₦15,000 per year in water \costs. If the farmer expects to use the irrigation system for 5 years, which system should she choose?

Correct A. System A

B. System B

C. Both systems are equally profitable

D. Neither system is profitable

Correct Answer: A

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Question 23

A country is experiencing a recession, and the government is considering implementing a fiscal policy to stimulate the economy. If the government increases government sp\ending by ₦10 billion, what is the likely effect on the aggregate demand curve?

A. The aggregate demand curve shifts to the left

Correct B. The aggregate demand curve shifts to the right

C. The aggregate demand curve remains unchanged

D. The aggregate demand curve shifts downward

Correct Answer: B

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Question 24

A firm is producing a good with a production function Q = 2L^0.5K^0.5, where L is labor and K is capital. If the firm is currently producing 100 units of output with 10 units of labor and 20 units of capital, what is the marginal product of labor?

A. 5

Correct B. 10

C. 20

D. 50

Correct Answer: B

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Question 25

A central bank is considering implementing a monetary policy to control inflation. If the central bank increases the reserve requirement for commercial banks, what is the likely effect on the money supply?

A. The money supply increases

Correct B. The money supply decreases

C. The money supply remains unchanged

D. The money supply increases in the short run but decreases in the long run

Correct Answer: B

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