POST UTME PAN-ATLANTIC UNIVERSITY 2020 Economics | Objective

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Question 1
In a perfectly competitive market, what is the relationship between the marginal revenue product (MRP) and the marginal factor \cost (MFC)?
A. MRP > MFC
B. MRP < MFC
Correct C. MRP = MFC
D. MRP is irrelevant to MFC

Correct Answer: C

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Question 2
A firm is considering investing in a new project with an initial \cost of ₦1,500,000 and expected annual profits of ₦250,000. What is the payback period of the project?
A. 5 years
Correct B. 6 years
C. 7 years
D. 8 years

Correct Answer: B

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Question 3
A monopolist faces a demand curve given by Q = 100 - 2P. The firm's marginal \cost (MC) is ₦50. What is the profit-maximizing price and quantity?
Correct A. P = ₦60, Q = 40
B. P = ₦70, Q = 30
C. P = ₦80, Q = 20
D. P = ₦90, Q = 10

Correct Answer: A

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Question 4
A firm is considering investing in a new project with an initial \cost of ₦1,000,000 and expected annual profits of ₦200,000. What is the net present value (NPV) of the project if the discount rate is 10%?
A. ₦100,000
B. ₦150,000
Correct C. ₦200,000
D. ₦250,000

Correct Answer: C

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Question 5
A firm is facing a production function given by Q = 2L^0.5K^0.5. The firm's \cost function is given by C = 100L + 200K. What is the firm's profit-maximizing level of labor and capital?
A. L = 100, K = 100
Correct B. L = 200, K = 200
C. L = 300, K = 300
D. L = 400, K = 400

Correct Answer: B

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Question 6
A firm's revenue function is given by R(x) = 100x - 2x^2. If the firm's marginal revenue is 50, find the value of x.
A. 20
B. 30
C. 40
Correct D. 50

Correct Answer: D

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Question 7
A consumer's utility function is given by U(x,y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, find the optimal bundle of x and y.
A. (100, 0)
B. (80, 20)
Correct C. (60, 40)
D. (40, 60)

Correct Answer: C

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Question 8
A firm is considering two production techno\logies: one that requires an investment of ₦100,000 and yields a profit of ₦150,000, and another that requires an investment of ₦200,000 and yields a profit of ₦300,000. If the firm's initial investment is ₦50,000, which techno\logy should it choose?
Correct A. Techno\logy 1
B. Techno\logy 2
C. Both techno\logies are equally profitable
D. Neither techno\logy is profitable

Correct Answer: A

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Question 9
A monopolist faces a demand curve given by Q = 100 - 2P. If the firm's marginal \cost is 10, find the optimal price and quantity.
A. P = 40, Q = 30
Correct B. P = 50, Q = 25
C. P = 60, Q = 20
D. P = 70, Q = 15

Correct Answer: B

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Question 10
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current output is 100 and the number of workers is 25, find the optimal capital.
A. 50
B. 75
Correct C. 100
D. 125

Correct Answer: C

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Question 11
The opportunity \cost of producing one more unit of a good is measured by the
Correct A. marginal \cost
B. marginal revenue
C. average \cost
D. average revenue

Correct Answer: A

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Question 12
The law of diminishing marginal utility states that as the consumption of a good increases, the marginal utility derived from each additional unit
A. increases
Correct B. decreases
C. remains cons\tant
D. becomes negative

Correct Answer: B

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Question 13
The balance of payments (BOP) accounts record all transactions between a country and the rest of the world, including
A. exports and imports of goods and services
B. foreign direct investment and portfolio investment
C. remit\tances and foreign aid
Correct D. all of the above

Correct Answer: D

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Question 14
The concept of comparative advantage suggests that a country should specialize in producing goods for which it has a
A. absolute advantage
Correct B. comparative advantage
C. opportunity \cost
D. marginal utility

Correct Answer: B

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Question 15
The agricultural sector in Nigeria contributes significantly to the country's GDP, but its growth has been hindered by
A. poor infrastructure and lack of access to credit
B. high population growth and urbanization
C. climate change and soil degradation
Correct D. all of the above

Correct Answer: D

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Question 16
A perfectly competitive market is characterized by a large number of firms producing a homogeneous product, and each firm has complete knowledge of market conditions. Which of the following is a consequence of this market structure?
A. Firms are price-makers
Correct B. Firms are price-takers
C. Firms produce differentiated products
D. Firms have complete control over the market

Correct Answer: B

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Question 17
The production function for a firm is given by Q = 2L^0.5K^0.5. If the firm's current inputs are L = 16 and K = 9, what is the marginal product of labor?
Correct A. 1
B. 2
C. 3
D. 4

Correct Answer: A

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Question 18
A country's balance of payments is in equilibrium when its current account is equal to its capital account. Which of the following is a consequence of this equilibrium?
Correct A. The exchange rate is stable
B. The trade deficit is reduced
C. The trade surplus is increased
D. The capital account is balanced

Correct Answer: A

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Question 19
A firm's production function is given by Q = 3L^0.5K^0.5. If the firm's current inputs are L = 25 and K = 16, what is the total product of labor?
A. 30
B. 40
Correct C. 50
D. 60

Correct Answer: C

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Question 20
A country's agricultural sector is characterized by a high degree of concentration, with a few large farms dominating the market. Which of the following is a consequence of this market structure?
A. Increased competition among farmers
B. Reduced prices for agricultural products
Correct C. Increased prices for agricultural products
D. Reduced productivity among farmers

Correct Answer: C

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Question 21
A firm's demand curve is given by the equation Q = 100 - 2P, where Q is the quantity demanded and P is the price. The firm's total revenue (TR) is given by TR = P * Q. Find the price at which the firm's total revenue is maximized.
A. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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Question 22
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 = ₦100. Find the consumer's optimal bundle of goods.
A. x = 20, y = 10
Correct B. x = 15, y = 20
C. x = 10, y = 30
D. x = 5, y = 40

Correct Answer: B

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Question 23
A government is considering a tax on a particular good. The supply curve of the good is given by Q = 100 + 2P, where Q is the quantity supplied and P is the price. The demand curve for the good is given by Q = 100 - 2P. Find the price at which the government should impose the tax.
A. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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Question 24
A firm's \cost function is given by C = 100 + 2Q, where C is the total \cost and Q is the quantity produced. The firm's revenue function is given by R = 200 - 2Q. Find the quantity at which the firm's profit is maximized.
A. 10
Correct B. 20
C. 30
D. 40

Correct Answer: B

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Question 25
A government is considering a policy to reduce poverty. The government's budget constraint is given by B = 1000 + 2P, where B is the budget and P is the price of a particular good. The government's objective function is given by U = 2P + 3Q, where Q is the quantity of the good purchased. Find the price at which the government should allocate its budget.
A. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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