POST UTME PAN-ATLANTIC UNIVERSITY 2019 Economics | Objective

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Question 1
The concept of returns to scale in production theory refers to the change in the quantity of output that occurs when all inputs are increased by the same proportion. Which of the following statements best describes the law of diminishing returns?
Correct A. As the quantity of labor increases, the marginal product of labor decreases.
B. As the quantity of capital increases, the marginal product of capital increases.
C. As the quantity of output increases, the average product of labor decreases.
D. As the quantity of inputs increases, the total product of labor increases.

Correct Answer: A

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Question 2
A monopolistically competitive firm faces a downward-sloping demand curve. If the firm increases its price, what will happen to its quantity demanded?
A. The quantity demanded will increase.
Correct B. The quantity demanded will decrease.
C. The quantity demanded will remain the same.
D. There will be no change in the quantity demanded.

Correct Answer: B

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Question 3
A country's GDP can be calculated u\sing the following formula: GDP = C + I + G + \( X - M \). What does the letter 'C' represent in this formula?
Correct A. Consumption
B. Investment
C. Government sp\ending
D. Net exports

Correct Answer: A

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Question 4
A firm is producing a good u\sing a production function of the form Q = 2L^0.5K^0.5. If the firm increases its labor input from 4 units to 9 units, and its capital input from 9 units to 16 units, what will be the percentage change in output?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 5
A country is experiencing a recession, and its government is considering implementing a fiscal policy to stimulate economic growth. Which of the following fiscal policy tools would be most effective in this situation?
Correct A. Increase government sp\ending
B. Decrease taxes
C. Increase interest rates
D. Decrease government sp\ending

Correct Answer: A

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Question 6
A consumer's indifference curve is given by the equation u(x, y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦3 respectively, what is the consumer's optimal bundle of x and y?
Correct A. x = 80, y = 60
B. x = 60, y = 80
C. x = 40, y = 120
D. x = 120, y = 40

Correct Answer: A

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Question 7
A government imposes a tax of ₦10 on every unit of a good. The demand for the good is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the supply of the good is given by the equation Qs = 2P, what is the equilibrium price and quantity?
A. P = 20, Q = 40
Correct B. P = 30, Q = 50
C. P = 40, Q = 60
D. P = 50, Q = 70

Correct Answer: B

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Question 8
A country's GDP is ₦100 billion, its GNP is ₦120 billion, and its net factor income from abroad is ₦10 billion. What is the country's national income?
Correct A. ₦130 billion
B. ₦140 billion
C. ₦150 billion
D. ₦160 billion

Correct Answer: A

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Question 9
A government plans to invest ₦50 billion in a new project. The project has a payback period of 5 years and a net present value of ₦20 billion. What is the project's internal rate of return?
A. 20%
B. 25%
Correct C. 30%
D. 35%

Correct Answer: C

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Question 10
A country's population is 100 million, its GDP per capita is ₦50,000, and its inflation rate is 10%. What is the country's nominal GDP?
A. ₦5 trillion
Correct B. ₦6 trillion
C. ₦7 trillion
D. ₦8 trillion

Correct Answer: B

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Question 11
The following diagram shows the production possibilities frontier (PPF) of a country. If the country decides to produce 100 units of good X and 50 units of good Y, what will be the opportunity \cost of producing one more unit of good X?
A. 20 units of good Y
Correct B. 30 units of good Y
C. 40 units of good Y
D. 50 units of good Y

Correct Answer: B

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Question 12
A monopolistically competitive firm faces a demand curve given by Q = 100 - 2P. If the firm's marginal revenue (MR) is given by MR = 50 - 2Q, what is the firm's optimal price?
Correct A. ₦50
B. ₦60
C. ₦70
D. ₦80

Correct Answer: A

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Question 13
A consumer has the following utility function: 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 = ₦100, what is the consumer's optimal bundle of goods?
A. X = 20, Y = 10
Correct B. X = 15, Y = 15
C. X = 10, Y = 20
D. X = 5, Y = 25

Correct Answer: B

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Question 14
The following table shows the demand and supply schedules for a particular good.
A. ₦50
Correct B. ₦60
C. ₦70
D. ₦80

Correct Answer: B

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Question 15
A country's GDP is given by the equation: GDP = C + I + G + \( X - M \). If the country's consumption (C) is ₦100 billion, investment (I) is ₦50 billion, government sp\ending (G) is ₦20 billion, exports (X) are ₦30 billion, and imports (M) are ₦10 billion, what is the country's GDP?
A. ₦200 billion
B. ₦250 billion
Correct C. ₦300 billion
D. ₦350 billion

Correct Answer: C

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Question 16
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's current labor and capital inputs are L = 4 and H = 9, respectively, what is the marginal product of labor (MPL) when H = 9?
Correct A. 1/2
B. 1
C. 2
D. 3

Correct Answer: A

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Question 17
A monopolist faces a demand curve given by P = 100 - 2Q. The monopolist's marginal \cost (MC) is given by MC = 10 + 2Q. What is the profit-maximizing quantity of output \( Q* \)?
A. 20
Correct B. 30
C. 40
D. 50

Correct Answer: B

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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. The consumer's budget constraint is given by 2x + 3y = 12. What is the consumer's optimal bundle of goods \( x*, y* \)?
A. x* = 2, y* = 4
Correct B. x* = 3, y* = 3
C. x* = 4, y* = 2
D. x* = 6, y* = 0

Correct Answer: B

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Question 19
A firm's production function is given by Q = 3L^0.5H^0.5, where Q is output, L is labor, and H is capital. If the firm's current labor and capital inputs are L = 9 and H = 4, respectively, what is the marginal product of capital (MPH) when L = 9?
A. 1/2
B. 1
Correct C. 2
D. 3

Correct Answer: C

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Question 20
A monopolist faces a demand curve given by P = 150 - 3Q. The monopolist's marginal \cost (MC) is given by MC = 15 + 3Q. What is the profit-maximizing quantity of output \( Q* \)?
A. 20
Correct B. 30
C. 40
D. 50

Correct Answer: B

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Question 21
A consumer's indifference curve is given by the equation u(x, y) = 2x + 3y. If the consumer's initial \endowment is (x0, y0) = (4, 6), and the price of good x is ₦5, while the price of good y is ₦3, what is the consumer's optimal bundle?
A. x = 2, y = 4
B. x = 3, y = 5
Correct C. x = 4, y = 6
D. x = 5, y = 7

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 = 16 and K = 9, what is the firm's current output?
A. 24
Correct B. 32
C. 40
D. 48

Correct Answer: B

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Question 23
A firm's total revenue is given by TR = 100x - 2x^2. If the firm's current output is x = 10, what is the firm's current total revenue?
A. ₦800
B. ₦900
Correct C. ₦1000
D. ₦1100

Correct Answer: C

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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 = 20, what is the firm's current quantity demanded?
A. 60
Correct B. 70
C. 80
D. 90

Correct Answer: B

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Question 25
A country's balance of payments is given by BOP = X - M. If the country's current exports are X = ₦1000 and its current imports are M = ₦800, what is the country's current balance of payments?
A. ₦200
B. ₦300
Correct C. ₦400
D. ₦500

Correct Answer: C

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