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POST UTME RSU 2023 Economics | Objective

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Question 1

Determine the optimal tax rate for a country with a mixed economy, given that the government aims to maximize revenue while minimizing the deadweight loss.

A. 0% tax rate

B. 10% tax rate

Correct C. 20% tax rate

D. 30% tax rate

Correct Answer: C

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Question 2

A monopolist faces a demand curve given by Q = 100 - 2P. The monopolist's marginal \cost is MC = 10. Determine the monopolist's optimal price and quantity.

A. P = 40, Q = 30

B. P = 50, Q = 25

Correct C. P = 60, Q = 20

D. P = 70, Q = 15

Correct Answer: C

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Question 3

A country is considering a policy of agricultural subsidies to increase food production. U\sing the concept of opportunity \cost, explain the potential drawbacks of this policy.

A. Increased food production will lead to higher prices

Correct B. Subsidies will lead to overproduction and waste

C. Subsidies will lead to underproduction and shortages

D. Subsidies will lead to increased employment in agriculture

Correct Answer: B

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Question 4

A consumer has a utility function given by U = 2x + 3y. The consumer's budget constraint is given by 2x + 3y = 12. Determine the consumer's optimal consumption bundle.

A. x = 2, y = 4

Correct B. x = 3, y = 3

C. x = 4, y = 2

D. x = 5, y = 1

Correct Answer: B

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Question 5

A firm is considering investing in a new project with a net present value (NPV) of ₦100,000. The firm's \cost of capital is 10%. Determine the internal rate of return (IRR) of the project.

A. 15%

Correct B. 20%

C. 25%

D. 30%

Correct Answer: B

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Question 6

A country's GDP is calculated as the sum of all final goods and services produced within its borders. However, the GDP of a country can be affected by the following factors: (i) the value of imports, (ii) the value of exports, and (iii) the value of intermediate goods. Which of the following statements is correct?

A. The value of imports is added to the GDP.

Correct B. The value of exports is subtracted from the GDP.

C. The value of intermediate goods is added to the GDP.

D. The value of imports and exports is added to the GDP.

Correct Answer: B

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Question 7

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

A. ₦150

B. ₦200

Correct C. ₦250

D. ₦300

Correct Answer: C

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Question 8

A country's balance of payments account is given by the following equation: BOP = X - M + $ F - I $. If the country's exports (X) are ₦100 billion, imports (M) are ₦80 billion, foreign investment (F) is ₦20 billion, and domestic investment (I) is ₦15 billion, what is the balance of payments?

Correct A. ₦5 billion surplus

B. ₦10 billion surplus

C. ₦15 billion deficit

D. ₦20 billion deficit

Correct Answer: A

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Question 9

A firm's revenue function is given by R(q) = 20q - 2q^2. If the firm produces 5 units of the good, what is the marginal revenue?

A. ₦10

Correct B. ₦20

C. ₦30

D. ₦40

Correct Answer: B

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Question 10

A country's inflation rate is given by the following equation: Inflation rate = $ CPI - CPI_last_year $ / CPI_last_year. If the current CPI is 120 and the CPI last year was 100, what is the inflation rate?

Correct A. 20%

B. 25%

C. 30%

D. 35%

Correct Answer: A

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Question 11

A government imposes a tax on a commodity to reduce its consumption. If the tax revenue is used to fund a public good that benefits all consumers of the commodity, what type of tax is this?

Correct A. Pigovian tax

B. Sin tax

C. Excise tax

D. Value-added tax

Correct Answer: A

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Question 12

A firm faces a downward-sloping demand curve and a fixed \cost of production. If the firm increases its price, what will happen to its total revenue?

A. Total revenue will increase

Correct B. Total revenue will decrease

C. Total revenue will remain cons\tant

D. Total revenue will increase at a decrea\sing rate

Correct Answer: B

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Question 13

A government wants to reduce poverty in a region by increa\sing the minimum wage. However, this may lead to higher production \costs for firms. What type of economic problem is this?

A. Scarcity

B. Opportunity \cost

Correct C. Inefficient allocation of resources

D. Market failure

Correct Answer: C

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Question 14

A firm has a production function of Q = 2L + 3K, where L is labor and K is capital. If the firm wants to produce 10 units of output, how many units of labor will it need if it uses 2 units of capital?

A. 4

Correct B. 6

C. 8

D. 10

Correct Answer: B

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Question 15

A government wants to reduce inequality in a country by redistributing income from the rich to the poor. What type of economic policy is this?

Correct A. Progressive taxation

B. Regressive taxation

C. Proportional taxation

D. Redistributive policy

Correct Answer: A

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Question 16

A firm operating in a perfectly competitive market produces a homogeneous product. If the firm's average total \cost (ATC) curve intersects its marginal \cost (MC) curve at a point where MC < ATC, what is the likely outcome for the firm's profit?

A. The firm will increase its production to maximize profit.

Correct B. The firm will decrease its production to minimize loss.

C. The firm will operate at a loss.

D. The firm will break even.

Correct Answer: B

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Question 17

A country's balance of payments (BOP) account is in equilibrium when its current account is equal to its capital account. If the country's current account is in deficit, what is the likely outcome for its capital account?

Correct A. The capital account will be in surplus.

B. The capital account will be in deficit.

C. The capital account will be in equilibrium.

D. The capital account will be zero.

Correct Answer: A

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Question 18

A consumer's indifference curve is downward sloping and convex to the origin. If the consumer's income increases, what is the likely outcome for the consumer's optimal consumption bundle?

Correct A. The consumer will consume more of both goods.

B. The consumer will consume less of both goods.

C. The consumer will consume more of good X and less of good Y.

D. The consumer will consume more of good Y and less of good X.

Correct Answer: A

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Question 19

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's labor (L) increases by 10% and its capital (K) remains cons\tant, what is the likely outcome for the firm's output (Q)?

Correct A. The firm's output will increase by 10%.

B. The firm's output will decrease by 10%.

C. The firm's output will remain cons\tant.

D. The firm's output will increase by 20%.

Correct Answer: A

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Question 20

A country's agricultural sector is characterized by a high degree of market power, leading to a significant price distortion. If the government intervenes to correct the price distortion, what is the likely outcome for the agricultural sector?

Correct A. The agricultural sector will become more competitive.

B. The agricultural sector will become less competitive.

C. The agricultural sector will experience a decrease in output.

D. The agricultural sector will experience an increase in output.

Correct Answer: A

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Question 21

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 the firm is producing at the given input levels?

Correct A. 1.5

B. 2.5

C. 3.5

D. 4.5

Correct Answer: A

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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. If the consumer's budget constraint is 10x + 5y = 50, and the prices of the two goods are $2 and $5, respectively, what is the consumer's optimal bundle of goods?

A. x = 2, y = 5

Correct B. x = 3, y = 4

C. x = 4, y = 3

D. x = 5, y = 2

Correct Answer: B

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Question 23

A firm's \cost function is given by C = 2L + 3H, where C is \cost, 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 firm's total \cost?

A. ₦40

B. ₦50

Correct C. ₦60

D. ₦70

Correct Answer: C

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Question 24

A consumer's demand function for a good is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the consumer's income is $100 and the price of the good is $5, what is the consumer's quantity demanded?

A. 20

B. 30

C. 40

Correct D. 50

Correct Answer: D

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Question 25

A firm's supply function is given by Q = 2P + 5, where Q is quantity supplied and P is price. If the firm's fixed \cost is $10 and the price of the good is $5, what is the firm's quantity supplied?

A. 15

B. 20

Correct C. 25

D. 30

Correct Answer: C

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