POST UTME PAN-ATLANTIC UNIVERSITY 2021 Economics | Objective

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Question 1
Consider a firm operating in a perfectly competitive market. If the firm's average total \cost (ATC) curve intersects the average revenue (AR) curve at a point where the firm is producing at its optimal level of output, what is the implication for the firm's profit-maximizing price?
Correct A. The firm's profit-maximizing price is equal to the market price.
B. The firm's profit-maximizing price is greater than the market price.
C. The firm's profit-maximizing price is less than the market price.
D. The firm's profit-maximizing price is zero.

Correct Answer: A

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Question 2
A country's GDP is $100 billion, and its GNP is $120 billion. What is the value of the country's net factor income from abroad?
A. $20 billion
Correct B. $30 billion
C. $40 billion
D. $50 billion

Correct Answer: B

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Question 3
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's labor and capital inputs are increased by 10% and 20%, respectively, what is the percentage change in the firm's output?
A. 10%
B. 20%
Correct C. 30%
D. 40%

Correct Answer: C

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Question 4
A consumer's demand for a good is given by Qd = 100 - 2P. If the price of the good increases by 20%, what is the percentage change in the consumer's quantity demanded?
A. -10%
Correct B. -20%
C. -30%
D. -40%

Correct Answer: B

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Question 5
A central bank increases the money supply by 10%. If the velocity of money is 2, what is the percentage change in the price level?
A. 5%
Correct B. 10%
C. 15%
D. 20%

Correct Answer: B

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Question 6
The demand for a product is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the price elasticity of demand is -2, what is the percentage change in quantity demanded when the price increases by 10%?
A. 20%
Correct B. 40%
C. 60%
D. 80%

Correct Answer: B

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Question 7
A central bank increases the reserve requirement for commercial banks. What is the likely effect on the money supply?
A. Increase in money supply
Correct B. Decrease in money supply
C. No change in money supply
D. Increase in interest rates

Correct Answer: B

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Question 8
A government imposes a tax on a good. What is the likely effect on the supply curve?
Correct A. Shift to the left
B. Shift to the right
C. No change
D. Increase in price

Correct Answer: A

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Question 9
A firm's production function is given by Q = 2L^0.5K^0.5, where Q is the output, L is the labor and K is the capital. If the firm wants to increase its output by 20%, what is the percentage change in labor required?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 10
A government wants to reduce inflation by reducing the money supply. What is the likely effect on the aggregate demand curve?
Correct A. Shift to the left
B. Shift to the right
C. No change
D. Increase in price

Correct Answer: A

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Question 11
The elasticity of demand for a commodity is measured by the percentage change in the quantity demanded in response to a 1% change in the price of the commodity. If the demand for a commodity is elastic, what can be inferred about the price elasticity of demand?
Correct A. The price elasticity of demand is greater than 1
B. The price elasticity of demand is less than 1
C. The price elasticity of demand is equal to 1
D. The price elasticity of demand is undefined

Correct Answer: A

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Question 12
A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 10Q + 100. What is the profit-maximizing 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 13
A country's GDP is ₦1,000,000,000,000 and its GNP is ₦1,100,000,000,000. What is the net factor income from abroad?
A. ₦100,000,000,000
Correct B. ₦200,000,000,000
C. ₦300,000,000,000
D. ₦400,000,000,000

Correct Answer: B

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Question 14
A firm is considering two different production processes. Process A \costs ₦100 per unit and Process B \costs ₦120 per unit. If the firm produces 100 units, what is the total \cost of production?
A. ₦10,000
B. ₦12,000
Correct C. ₦14,000
D. ₦16,000

Correct Answer: C

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Question 15
A country's balance of payments account shows a trade deficit of ₦500,000,000,000 and a current account deficit of ₦600,000,000,000. What is the capital account surplus?
A. ₦100,000,000,000
B. ₦200,000,000,000
Correct C. ₦300,000,000,000
D. ₦400,000,000,000

Correct Answer: C

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Question 16
A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. What is the profit-maximizing quantity of output?
A. 20
B. 30
Correct C. 40
D. 50

Correct Answer: C

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Question 17
A firm has a production function F(L, K) = L^0.4 K^0.6. If the wage rate is ₦100 per hour and the rental rate of capital is ₦200 per hour, what is the value of the marginal product of labor?
A. ₦80
Correct B. ₦120
C. ₦160
D. ₦200

Correct Answer: B

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Question 18
A country has a money supply of ₦100 billion and a velocity of circulation of 5. If the central bank wants to increase the money supply by 10%, what is the new money supply?
A. ₦110 billion
B. ₦120 billion
Correct C. ₦130 billion
D. ₦140 billion

Correct Answer: C

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Question 19
A government imposes a tax of ₦10 per unit on a good. If the supply curve is given by Q = 100 - 2P and the demand curve is given by Q = 200 - P, what is the new equilibrium price?
A. ₦10
B. ₦15
Correct C. ₦20
D. ₦25

Correct Answer: C

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Question 20
A firm has a production function F(L, K) = L^0.4 K^0.6. If the wage rate is ₦100 per hour and the rental rate of capital is ₦200 per hour, what is the value of the marginal product of capital?
A. ₦120
B. ₦160
Correct C. ₦200
D. ₦240

Correct Answer: C

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Question 21
A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. What is the profit-maximizing 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 22
A country's GDP is ₦10 trillion, its imports are ₦2 trillion, and its exports are ₦1.5 trillion. What is its balance of trade?
A. ₦0.5 trillion surplus
Correct B. ₦1 trillion deficit
C. ₦1.5 trillion surplus
D. ₦2 trillion deficit

Correct Answer: B

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Question 23
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 \cost-minimizing combination of labor and capital?
Correct A. L = 100, K = 50
B. L = 50, K = 100
C. L = 200, K = 50
D. L = 50, K = 200

Correct Answer: A

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Question 24
A country's GNP is ₦12 trillion, its GDP is ₦11 trillion, and its net factor income from abroad is ₦0.5 trillion. What is its national income?
Correct A. ₦12.5 trillion
B. ₦12 trillion
C. ₦11.5 trillion
D. ₦11 trillion

Correct Answer: A

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Question 25
A firm's supply function is given by Q = 2P + 10. If the price of the good is ₦50, what is the quantity supplied?
A. Q = 20
Correct B. Q = 30
C. Q = 40
D. Q = 50

Correct Answer: B

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