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POST UTME REDEEMERS UNIVERSITY 2019 Economics | Objective

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Question 1

Consider a perfectly competitive market with n firms, each producing a homogeneous product. If the market demand curve is downward sloping and the firms are price takers, what is the relationship between the market supply curve and the individual firm's supply curve?

A. The market supply curve is steeper than the individual firm's supply curve.

B. The market supply curve is flatter than the individual firm's supply curve.

Correct C. The market supply curve is identical to the individual firm's supply curve.

D. The market supply curve is vertical while the individual firm's supply curve is horizontal.

Correct Answer: C

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Question 2

A firm is producing a good with a total revenue of ₦100,000 and a total \cost of ₦80,000. If the firm's average revenue is ₦50, and the average \cost is ₦40, what is the firm's profit?

Correct A. ₦20,000

B. ₦30,000

C. ₦40,000

D. ₦50,000

Correct Answer: A

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Question 3

A monopolist is facing a demand curve given by Q = 100 - 2P. If the firm's marginal revenue is ₦50, and the marginal \cost is ₦30, what is the firm's optimal price?

A. ₦25

Correct B. ₦30

C. ₦35

D. ₦40

Correct Answer: B

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Question 4

A consumer is faced with the following budget constraint: 2x + 3y = 100. If the consumer's indifference curve is given by u = 2x + 3y, and the consumer is currently at the point (20, 15), what is the consumer's optimal bundle?

Correct A. (30, 10)

B. (20, 15)

C. (15, 20)

D. (10, 30)

Correct Answer: A

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Question 5

A firm is producing a good with a production function given by Q = 2L^0.5K^0.5. If the firm's current inputs are L = 4 and K = 9, what is the firm's current output?

A. 6

B. 8

Correct C. 10

D. 12

Correct Answer: C

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Question 6

A government imposes a tax on imported goods to raise revenue and protect domestic industries. This tax is an example of a(n)

Correct A. Tariff

B. Quota

C. Subsidy

D. Export Tax

Correct Answer: A

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Question 7

A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. If the firm produces 5 units of output, what is its total \cost?

A. ₦75

Correct B. ₦85

C. ₦95

D. ₦105

Correct Answer: B

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Question 8

A monopolist faces a demand curve given by p = 100 - 2q. If the firm's marginal \cost is MC(q) = 10, 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 9

A country's GDP is given by the equation Y = C + I + G + $ X - M $. If the country's consumption is ₦100 billion, investment is ₦20 billion, government sp\ending is ₦30 billion, exports are ₦50 billion, and imports are ₦20 billion, what is the country's GDP?

A. ₦150 billion

B. ₦160 billion

C. ₦170 billion

Correct D. ₦180 billion

Correct Answer: D

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Question 10

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm wants to produce 100 units of output, and the wage rate is ₦10 per hour, what is the minimum \cost of labor?

A. ₦500

B. ₦750

C. ₦1000

Correct D. ₦1250

Correct Answer: D

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Question 11

Consider a firm operating in a perfectly competitive market with a production function Q = 2L^0.5K^0.5. If the price of the good is $10 and the wage rate is $5 per unit of labor, while the rental rate of capital is $2 per unit, what is the optimal level of labor (L) and capital (K) for the firm to produce?

Correct A. $ L = 4, K = 4 $

B. $ L = 16, K = 1 $

C. $ L = 1, K = 16 $

D. $ L = 2, K = 2 $

Correct Answer: A

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Question 12

A country's balance of payments (BOP) is in equilibrium when the current account (CA) equals the capital account (KA). If the CA is $100 million and the KA is $150 million, what is the net capital outflow (NCO) in the BOP?

A. $50 million

Correct B. $100 million

C. $150 million

D. $200 million

Correct Answer: B

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Question 13

A firm's demand for labor (L) is given by the equation L = 100 - 2P, where P is the price of the good. If the price of the good is $5, what is the firm's demand for labor?

A. 50 units

Correct B. 75 units

C. 100 units

D. 125 units

Correct Answer: B

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Question 14

A country's money supply (M) is given by the equation M = 1000 + 0.5Y, where Y is the country's GDP. If the country's GDP is $10 billion, what is the country's money supply?

A. $5000 million

Correct B. $5500 million

C. $6000 million

D. $6500 million

Correct Answer: B

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Question 15

A firm's total revenue (TR) is given by the equation TR = 100P - 0.5P^2, where P is the price of the good. If the price of the good is $10, what is the firm's total revenue?

A. $900

B. $950

Correct C. $1000

D. $1050

Correct Answer: C

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Question 16

The concept of opportunity \cost is most closely related to which of the following economic principles?

A. Law of Diminishing Marginal Utility

Correct B. Law of Increa\sing Opportunity Cost

C. Law of Diminishing Returns

D. Law of Comparative Advantage

Correct Answer: B

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Question 17

A country's balance of payments account can be in equilibrium even if its current account is in deficit, if its capital account is in surplus. What is the name of this phenomenon?

A. Capital Flight

B. Capital Inflow

C. Capital Account Deficit

Correct D. Capital Account Surplus

Correct Answer: D

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Question 18

A firm's production function is given by Q = 2L^0.5K^0.5. If the price of labor is $10 per unit and the price of capital is $20 per unit, and if the firm wants to maximize its profits, what is the optimal combination of labor and capital?

Correct A. L = 100, K = 50

B. L = 50, K = 100

C. L = 200, K = 100

D. L = 100, K = 200

Correct Answer: A

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Question 19

A consumer's indifference curve is given by the equation U = 2x + 3y. If the consumer's budget constraint is given by the equation 2x + 3y = 12, and if the consumer wants to maximize his utility, what is the optimal combination of x and y?

Correct A. x = 2, y = 4

B. x = 4, y = 2

C. x = 6, y = 0

D. x = 0, y = 6

Correct Answer: A

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Question 20

A country's GDP is given by the equation GDP = C + I + G + $ X - M $. If the country's consumption is $100 billion, its investment is $50 billion, its government sp\ending is $20 billion, its exports are $80 billion, and its imports are $40 billion, what is the country's GDP?

Correct A. $150 billion

B. $200 billion

C. $250 billion

D. $300 billion

Correct Answer: A

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Question 21

Consider a perfectly competitive market with n firms, each producing a homogeneous product. If the market demand curve is downward sloping and the firms are price takers, what is the likely effect on the market supply curve if the government imposes a tax on the firms?

A. The market supply curve will shift to the left.

Correct B. The market supply curve will shift to the right.

C. The market supply curve will remain unchanged.

D. The market supply curve will become vertical.

Correct Answer: B

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Question 22

A firm is considering two alternative production processes for producing a certain good. Process A requires an initial investment of ₦100,000 and has a variable \cost of ₦50 per unit. Process B requires an initial investment of ₦150,000 and has a variable \cost of ₦30 per unit. If the firm expects to produce 10,000 units, which process should it choose?

A. Process A

Correct B. Process B

C. Both processes are equally profitable

D. Neither process is profitable

Correct Answer: B

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Question 23

A country's balance of payments account shows a trade deficit of ₦100 billion and a capital account surplus of ₦50 billion. What is the likely effect on the country's exchange rate?

A. The exchange rate will appreciate

Correct B. The exchange rate will depreciate

C. The exchange rate will remain unchanged

D. The exchange rate will become fixed

Correct Answer: B

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Question 24

A firm is considering investing in a new project that has a net present value (NPV) of ₦500,000. If the firm's \cost of capital is 10%, what is the internal rate of return (IRR) of the project?

Correct A. 10%

B. 12%

C. 15%

D. 18%

Correct Answer: A

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Question 25

A monopolistically competitive firm faces a demand curve that is downward sloping and a supply curve that is upward sloping. If the firm's marginal revenue (MR) is ₦100 and its marginal \cost (MC) is ₦80, what is the likely effect on the firm's price?

Correct A. The price will increase

B. The price will decrease

C. The price will remain unchanged

D. The price will become fixed

Correct Answer: A

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