POST UTME PAN-ATLANTIC UNIVERSITY 2024 Economics | Objective

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Question 1
A firm's demand for raw materials is elastic with respect to price. If the price of raw materials increases by 10%, what will be the percentage change in the quantity demanded?
A. 5%
Correct B. 10%
C. 15%
D. 20%

Correct Answer: B

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Question 2
A central bank increases the reserve requirement for commercial banks. What will be the effect on the money supply?
A. Increase
Correct B. Decrease
C. No change
D. Neutral

Correct Answer: B

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Question 3
A consumer has a budget of ₦1000 and faces the following prices for two goods: Good X \costs ₦200 and Good Y \costs ₦300. If the consumer buys 2 units of Good X, how many units of Good Y can the consumer buy?
A. 2 units
Correct B. 3 units
C. 4 units
D. 5 units

Correct Answer: B

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Question 4
A monopolist faces a demand curve given by Q = 100 - 2P. If the firm's marginal \cost is MC = 20, what is the optimal price?
A. ₦40
B. ₦50
Correct C. ₦60
D. ₦70

Correct Answer: C

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Question 5
A consumer has a utility function given by U = 2X + 3Y, where X and Y are the quantities of two goods. If the consumer's income is ₦1000 and the prices of the two goods are ₦200 and ₦300 respectively, what is the optimal bundle?
A. (2, 1)
Correct B. (4, 2)
C. (6, 3)
D. (8, 4)

Correct Answer: B

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Question 6
The production function for a firm 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 increases labor from 100 to 121 units and capital from 100 to 121 units, what is the percentage change in output?
A. 10%
B. 15%
Correct C. 20%
D. 25%

Correct Answer: C

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Question 7
A country's balance of payments is given by the following equation: BOP = \( X - M \) + \( F - I \), where X is the exports, M is the imports, F is the foreign investment and I is the domestic investment. If the country's exports increase by 10%, imports decrease by 5%, foreign investment increases by 15% and domestic investment decreases by 10%, what is the percentage change in the balance of payments?
A. 2%
B. 5%
Correct C. 8%
D. 12%

Correct Answer: C

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Question 8
A firm's \cost function is given by C = 2L + 3K, where C is the \cost, L is the labor and K is the capital. If the firm increases labor from 100 to 121 units and capital from 100 to 121 units, what is the percentage change in \cost?
A. 10%
B. 15%
Correct C. 20%
D. 25%

Correct Answer: C

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Question 9
A country's inflation rate is given by the following equation: inflation rate = \( P - P0 \) / P0, where P is the current price level and P0 is the base price level. If the current price level increases by 10% and the base price level is 100, what is the inflation rate?
A. 5%
Correct B. 10%
C. 15%
D. 20%

Correct Answer: B

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Question 10
A firm's revenue function is given by R = 2Q - 3Q^2, where R is the revenue and Q is the output. If the firm increases output from 100 to 121 units, what is the percentage change in revenue?
A. 10%
B. 15%
Correct C. 20%
D. 25%

Correct Answer: C

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Question 11
A firm's production function is given by Q = 100K^\( 1/2 \)L^\( 1/2 \), where Q is output, K is capital, and L is labor. If the firm's capital is increased by 20% and labor is increased by 15%, what is the percentage change in output?
A. 10%
B. 12%
Correct C. 15%
D. 18%

Correct Answer: C

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Question 12
A monopolistically competitive firm faces a demand curve given by P = 100 - 2Q. If the firm's marginal \cost is MC = 20 + 2Q, what is the profit-maximizing quantity of output?
A. 20
Correct B. 30
C. 40
D. 50

Correct Answer: B

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Question 13
A country's money supply is given by M = 1000 + 0.5Y, where M is the money supply and Y is the GDP. If the GDP increases by 10%, what is the percentage change in the money supply?
A. 5%
Correct B. 7.5%
C. 10%
D. 12.5%

Correct Answer: B

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Question 14
A firm's revenue function is given by R = 100Q - 2Q^2, where R is revenue and Q is output. If the firm's marginal revenue is MR = 100 - 4Q, what is the profit-maximizing quantity of output?
A. 10
Correct B. 20
C. 30
D. 40

Correct Answer: B

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Question 15
A country's inflation rate is given by π = \( M/P \) - 1, where π is the inflation rate, M is the money supply, and P is the price level. If the money supply increases by 10% and the price level increases by 5%, what is the new inflation rate?
A. 0.05
B. 0.10
Correct C. 0.15
D. 0.20

Correct Answer: C

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Question 16
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 0.5, what is the percentage change in quantity demanded when the price increases by 10%?
Correct A. 5%
B. 10%
C. 15%
D. 20%

Correct Answer: A

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Question 17
A firm's \cost function is given by C(x) = 2x^2 + 10x + 5, where C(x) is the total \cost and x is the number of units produced. If the firm produces 20 units, what is the marginal \cost?
A. 10
B. 15
Correct C. 20
D. 25

Correct Answer: C

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Question 18
The government of a country wants to reduce inflation by increa\sing the interest rate. If the initial interest rate is 5% and the inflation rate is 10%, what is the new interest rate if the central bank increases the interest rate by 2%?
A. 7%
Correct B. 8%
C. 9%
D. 10%

Correct Answer: B

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Question 19
A consumer has a budget of ₦1000 and wants to buy two goods, A and B. The prices of the goods are ₦200 and ₦300 respectively. If the consumer sp\ends all the budget, what is the opportunity \cost of buying one more unit of good A?
A. ₦50
Correct B. ₦100
C. ₦150
D. ₦200

Correct Answer: B

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Question 20
The GDP of a country is given by the equation GDP = C + I + G + \( X - M \), where C is the consumption, I is the investment, G is the government sp\ending, X is the exports, and M is the imports. If the consumption is ₦500, the investment is ₦200, the government sp\ending is ₦300, the exports are ₦400, and the imports are ₦200, what is the GDP?
A. ₦1200
B. ₦1500
Correct C. ₦1800
D. ₦2000

Correct Answer: C

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Question 21
A country's government decides to implement a value-added tax (VAT) to increase revenue. If the VAT rate is 10% and the price of a product is ₦1000, what is the amount of VAT paid by the consumer?
A. ₦100
Correct B. ₦120
C. ₦150
D. ₦200

Correct Answer: B

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Question 22
A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. If the firm produces 5 units of output, what is the total \cost?
A. ₦135
B. ₦150
Correct C. ₦165
D. ₦180

Correct Answer: C

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Question 23
A country's GDP is ₦10 trillion, and its GNP is ₦11 trillion. What is the net factor income from abroad?
A. ₦100 billion
B. ₦200 billion
Correct C. ₦300 billion
D. ₦400 billion

Correct Answer: C

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Question 24
A monopolistically competitive firm faces a demand curve given by P = 100 - 2q. If the firm produces 20 units of output, what is the price elasticity of demand?
A. 0.5
B. 1
Correct C. 2
D. 3

Correct Answer: C

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Question 25
A firm's revenue function is given by R(q) = 100q - 2q^2. If the firm produces 10 units of output, what is the marginal revenue?
A. ₦80
B. ₦90
Correct C. ₦100
D. ₦110

Correct Answer: C

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