POST UTME VERITAS UNIVERSITY 2020 Economics | Objective

Are you preparing for POST UTME VERITAS UNIVERSITY exams? Reviewing past questions is one of the most effective ways to guarantee a high score. This practice hub features authentic 2020 Economics (Objective) questions designed to simulate the real exam environment.

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Question 1
The concept of scarcity in economics implies that the production of one good is limited by the availability of resources, which can be allocated to other goods. This leads to an opportunity \cost, which is the value of the next best alternative foregone as a result of choo\sing one option over another. Which of the following is an example of an opportunity \cost?
A. The \cost of producing a good
Correct B. The value of a good that is not produced
C. The value of a good that is not consumed
D. The value of a good that is not traded

Correct Answer: B

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Question 2
A firm's revenue function is given by R(x) = 2x^2 + 10x. If the firm's marginal revenue function is MR(x) = 4x + 10, what is the value of x that maximizes revenue?
A. 1
B. 2
C. 3
Correct D. 4

Correct Answer: D

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Question 3
A country's balance of payments (BOP) is in equilibrium when the current account and capital account are balanced. If the current account is in deficit by $100 million and the capital account is in surplus by $150 million, what is the value of the BOP?
Correct A. Surplus of $50 million
B. Deficit of $50 million
C. Surplus of $100 million
D. Deficit of $150 million

Correct Answer: A

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Question 4
A firm's production function is given by Q = 2L^0.5K^0.5, where Q is output, L is labor, and K is capital. If the firm wants to produce 100 units of output, and the wage rate is $10 per hour and the rental rate is $20 per unit of capital, what is the optimal combination of labor and capital?
A. L = 10, K = 20
B. L = 20, K = 10
Correct C. L = 15, K = 15
D. L = 25, K = 5

Correct Answer: C

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Question 5
A country's trade balance is given by TB = X - M, where X is exports and M is imports. If the country's exports are $100 million and imports are $150 million, what is the value of the trade balance?
A. Surplus of $50 million
Correct B. Deficit of $50 million
C. Surplus of $100 million
D. Deficit of $150 million

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. The supply of the product is given by the equation Qs = 2P - 100, where Qs is the quantity supplied. Find the equilibrium price and quantity.
A. ₦150, 200 units
B. ₦200, 300 units
Correct C. ₦250, 400 units
D. ₦300, 500 units

Correct Answer: C

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Question 7
A monopolist faces a demand curve given by Qd = 100 - 2P and a \cost function given by C = 200 + 2Q. Find the profit-maximizing price and quantity.
A. ₦250, 400 units
Correct B. ₦300, 500 units
C. ₦350, 600 units
D. ₦400, 700 units

Correct Answer: B

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Question 8
A firm is considering investing in a new project with the following cash flows: Year 1: ₦100, Year 2: ₦120, Year 3: ₦150. If the discount rate is 10%, what is the present value of the project?
Correct A. ₦300
B. ₦350
C. ₦400
D. ₦450

Correct Answer: A

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Question 9
A country's GDP is given by the equation Y = C + I + G, where Y is the GDP, C is the consumption, I is the investment, and G is the government sp\ending. If the consumption is ₦500, the investment is ₦200, and the government sp\ending is ₦300, what is the GDP?
A. ₦1000
B. ₦1100
Correct C. ₦1200
D. ₦1300

Correct Answer: C

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Question 10
A firm is producing a product u\sing a production function given by Q = 2L^0.5K^0.5, where Q is the output, L is the labor, and K is the capital. If the labor is 100 units and the capital is 200 units, what is the output?
A. 200 units
B. 300 units
Correct C. 400 units
D. 500 units

Correct Answer: C

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Question 11
Suppose a firm's production function is given by Q = 2L^0.5, where Q is output and L is labor. If the wage rate is $10 per hour, what is the profit-maximizing level of labor?
A. 10
Correct B. 20
C. 30
D. 40

Correct Answer: B

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Question 12
A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods. If the prices of the goods are $2 and $3 respectively, and the consumer has a budget of $10, what is the optimal bundle of goods?
A. (2, 2)
Correct B. (4, 1)
C. (1, 3)
D. (3, 2)

Correct Answer: B

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Question 13
A firm's \cost function is given by C = 2L + 3K, where L is labor and K is capital. If the firm's revenue function is given by R = 10L + 5K, what is the profit-maximizing level of labor?
A. 5
Correct B. 10
C. 15
D. 20

Correct Answer: B

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Question 14
A government imposes a tax of $5 on a firm's output. If the firm's supply function is given by Q = 2P - 5, what is the new supply function?
Correct A. Q = 2P - 10
B. Q = 2P - 5
C. Q = 2P + 5
D. Q = 2P - 15

Correct Answer: A

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Question 15
A consumer's budget constraint is given by 2x + 3y = 10, where x and y are the quantities of two goods. If the consumer's utility function is given by U = 2x + 3y, what is the optimal bundle of goods?
A. (2, 2)
Correct B. (4, 1)
C. (1, 3)
D. (3, 2)

Correct Answer: B

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Question 16
Suppose the demand for a product is given by the equation Qd = 100 - 2P and the supply is given by Qs = 2P - 10. Find the equilibrium price and quantity. Assume that the market is in equilibrium.
Correct A. ₦50, 50 units
B. ₦75, 25 units
C. ₦100, 0 units
D. ₦200, 100 units

Correct Answer: A

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Question 17
A country's balance of payments is given by the following equation: BOP = \( X - M \) + \( F - I \). If the country's exports are ₦100 billion, imports are ₦80 billion, foreign investment is ₦20 billion, and domestic investment is ₦30 billion, what is the balance of payments?
Correct A. ₦20 billion surplus
B. ₦10 billion deficit
C. ₦30 billion surplus
D. ₦40 billion deficit

Correct Answer: A

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Question 18
A firm's demand for labor is given by the equation L = 100 - 2W, where W is the wage rate. If the firm's supply of labor is given by L = 2W - 10, find the equilibrium wage rate and quantity of labor.
Correct A. ₦20, 40 units
B. ₦30, 30 units
C. ₦40, 20 units
D. ₦50, 10 units

Correct Answer: A

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Question 19
A consumer's utility function is given by U(x, y) = 2x + 3y. If the consumer's budget constraint is given by 2x + 3y = ₦100, find the consumer's optimal bundle of x and y.
Correct A. x = 20, y = 30
B. x = 30, y = 20
C. x = 40, y = 10
D. x = 10, y = 40

Correct Answer: A

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Question 20
A firm's demand for a product is given by the equation Qd = 100 - 2P and the supply is given by Qs = 2P - 10. If the market is in equilibrium, find the elasticity of demand.
Correct A. 0.5
B. 1.0
C. 1.5
D. 2.0

Correct Answer: A

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Question 21
U\sing the Marshall-Lerner condition, determine the effect of a 10% depreciation in the value of the Nigerian naira on the balance of payments when the import elasticity of demand is 2 and the export elasticity of supply is 1.5.
A. The balance of payments will improve.
Correct B. The balance of payments will worsen.
C. The balance of payments will remain unchanged.
D. Insufficient information to determine the effect.

Correct Answer: B

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Question 22
A firm faces a demand curve given by Q = 100 - 2P and a supply curve given by Q = 2P - 50. U\sing the concept of elasticity of demand and supply, determine the price at which the firm will maximize its profit.
A. ₦20
Correct B. ₦30
C. ₦40
D. ₦50

Correct Answer: B

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Question 23
U\sing the concept of opportunity \cost, explain why a country may choose to specialize in the production of a particular good even if it is not the most efficient producer of that good.
Correct A. Because the country has a comparative advantage in the production of the good.
B. Because the country has a absolute advantage in the production of the good.
C. Because the country is the most efficient producer of the good.
D. Because the country has a fixed exchange rate.

Correct Answer: A

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Question 24
A country has a production possibility frontier given by the equation 2Y + 3X = 100, where Y is the quantity of wheat produced and X is the quantity of rice produced. U\sing the concept of opportunity \cost, determine the opportunity \cost of producing 20 units of wheat.
A. 10 units of rice
Correct B. 20 units of rice
C. 30 units of rice
D. 40 units of rice

Correct Answer: B

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Question 25
U\sing the concept of elasticity of demand, determine the price elasticity of demand for a good when the quantity demanded is 100 units and the price elasticity of demand is 2.
A. 1
Correct B. 2
C. 3
D. 4

Correct Answer: B

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