POST UTME SKYLINE UNIVERSITY 2019 Economics | Objective

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Question 1
An open economy experiences a decrease in its export price index. What is the likely effect on its balance of payments?
A. An improvement in the current account balance
Correct B. A deterioration in the current account balance
C. No change in the current account balance
D. A decrease in the capital account balance

Correct Answer: B

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Question 2
A firm's demand for labor is given by the equation \( L = 100 - 2P \), where L is the quantity of labor demanded and P is the price of labor. If the price of labor increases by 10%, what is the new quantity of labor demanded?
A. 80
Correct B. 90
C. 100
D. 110

Correct Answer: B

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Question 3
A country's GDP at market price is ₦100 billion. If the government imposes a 10% Value-Added Tax (VAT) on all goods and services, what is the new GDP at market price?
A. ₦110 billion
Correct B. ₦120 billion
C. ₦130 billion
D. ₦140 billion

Correct Answer: B

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Question 4
A firm's supply function is given by the equation \( Q = 50 + 2P \), where Q is the quantity supplied and P is the price. If the price increases by 20%, what is the new quantity supplied?
A. 60
B. 70
Correct C. 80
D. 90

Correct Answer: C

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Question 5
A country's balance of payments is given by the equation \( BOP = X - M \), where BOP is the balance of payments, X is the value of exports, and M is the value of imports. If the value of exports increases by 15% and the value of imports decreases by 10%, what is the new balance of payments?
A. ₦5 billion
B. ₦10 billion
Correct C. ₦15 billion
D. ₦20 billion

Correct Answer: C

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Question 6
In a perfectly competitive market, the demand curve for a firm's product is its
Correct A. marginal revenue curve
B. marginal \cost curve
C. average revenue curve
D. average \cost curve

Correct Answer: A

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Question 7
A firm in a perfectly competitive market is producing at the point where its
Correct A. marginal revenue equals marginal \cost
B. average revenue equals average \cost
C. marginal revenue equals average revenue
D. marginal \cost equals average \cost

Correct Answer: A

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Question 8
The money supply in an economy is determined by the
Correct A. central bank
B. commercial banks
C. government
D. private sector

Correct Answer: A

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Question 9
The main objective of monetary policy is to
A. control inflation
B. regulate interest rates
C. manage the money supply
Correct D. all of the above

Correct Answer: D

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Question 10
Agricultural development in Nigeria is hindered by
A. lack of irrigation facilities
B. inadequate funding
C. poor transportation network
Correct D. all of the above

Correct Answer: D

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Question 11
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%?
Correct A. 20%
B. 30%
C. 40%
D. 50%

Correct Answer: A

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Question 12
A firm's production function is given by Q = 2L + 3K, where Q is the output, L is the labor and K is the capital. If the firm's \cost function is given by C = 10L + 20K, what is the marginal product of labor?
Correct A. 2
B. 3
C. 4
D. 5

Correct Answer: A

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Question 13
A country's trade balance is given by the equation TB = X - M, where TB is the trade balance, X is the exports and M is the imports. If the country's exports are $100 billion and its imports are $120 billion, what is the trade balance?
Correct A. -20 billion
B. -30 billion
C. -40 billion
D. -50 billion

Correct Answer: A

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Question 14
A firm's revenue function is given by R = 100Q - 2Q^2, where R is the revenue and Q is the quantity sold. If the firm sells 20 units, what is the marginal revenue?
Correct A. 80
B. 90
C. 100
D. 110

Correct Answer: A

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Question 15
A country's balance of payments is given by the equation BOP = X - M + F, where BOP is the balance of payments, X is the exports, M is the imports and F is the foreign investment. If the country's exports are $100 billion, its imports are $120 billion and its foreign investment is $20 billion, what is the balance of payments?
Correct A. -20 billion
B. -30 billion
C. -40 billion
D. -50 billion

Correct Answer: A

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Question 16
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 P = 10, and the wage rate is W = 2, what is the optimal level of labor (L) that the firm should employ, given that the price of capital is K = 5?
Correct A. 10
B. 20
C. 30
D. 40

Correct Answer: A

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Question 17
A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the prices of the goods are P_x = 2 and P_y = 3, and the consumer has an income of I = 20, what is the optimal bundle of goods that the consumer should purchase?
Correct A. x = 4, y = 2
B. x = 6, y = 1
C. x = 8, y = 0
D. x = 0, y = 10

Correct Answer: A

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Question 18
A monopolist faces a demand curve given by P = 100 - 2Q, where Q is the quantity of the good produced. If the marginal \cost function is MC = 20 + 2Q, what is the optimal level of production (Q) that the monopolist should choose?
A. 10
Correct B. 20
C. 30
D. 40

Correct Answer: B

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Question 19
A country's money supply is given by M = 100 + 2Y, where Y is the level of economic activity. If the velocity of money is V = 4, and the price level is P = 10, what is the optimal level of economic activity (Y) that the country should aim for?
A. 50
Correct B. 100
C. 150
D. 200

Correct Answer: B

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Question 20
A country's balance of payments is given by BOP = X - M, where X is the level of exports and M is the level of imports. If the level of exports is X = 100 and the level of imports is M = 80, what is the balance of payments (BOP) of the country?
Correct A. 20
B. 30
C. 40
D. 50

Correct Answer: A

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Question 21
A firm operating under perfect competition faces a market demand curve that is linear and downward-sloping. If the firm's average total \cost (ATC) curve is U-shaped, what is the likely effect on the firm's profit-maximizing output level if the market price increases?
A. The firm will increase its output level.
Correct B. The firm will decrease its output level.
C. The firm's output level will remain unchanged.
D. The firm will experience a decrease in profit.

Correct Answer: B

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Question 22
A monopolistically competitive firm faces a market demand curve that is downward-sloping and a marginal revenue (MR) curve that is downward-sloping and to the left of the average total \cost (ATC) curve. If the firm's price elasticity of demand is greater than 1, what is the likely effect on the firm's profit-maximizing output level?
Correct A. The firm will increase its output level.
B. The firm will decrease its output level.
C. The firm's output level will remain unchanged.
D. The firm will experience a decrease in profit.

Correct Answer: A

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Question 23
A firm operating under perfect competition faces a market demand curve that is linear and downward-sloping. If the firm's average total \cost (ATC) curve is U-shaped and the market price is $10, what is the firm's profit-maximizing output level?
A. 10 units
Correct B. 20 units
C. 30 units
D. 40 units

Correct Answer: B

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Question 24
A monopolistically competitive firm faces a market demand curve that is downward-sloping and a marginal revenue (MR) curve that is downward-sloping and to the left of the average total \cost (ATC) curve. If the firm's price elasticity of demand is less than 1, what is the likely effect on the firm's profit-maximizing output level?
A. The firm will increase its output level.
Correct B. The firm will decrease its output level.
C. The firm's output level will remain unchanged.
D. The firm will experience a decrease in profit.

Correct Answer: B

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Question 25
A firm operating under perfect competition faces a market demand curve that is linear and downward-sloping. If the firm's average total \cost (ATC) curve is U-shaped and the market price is $10, what is the firm's profit-maximizing revenue?
A. $100
Correct B. $200
C. $300
D. $400

Correct Answer: B

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