POST UTME VERITAS UNIVERSITY 2023 Economics | Objective

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Question 1
A firm's demand curve for a product is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's total revenue is given by TR = P * Q, find the price at which the firm's total revenue is maximized.
A. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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Question 2
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 given by 2x + 3y = 12, find the optimal quantities of x and y that maximize the consumer's utility.
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 3
A country's balance of payments account is given by the following 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 is ₦100 billion and the value of imports is ₦120 billion, find the balance of payments.
Correct A. ₦20 billion
B. ₦40 billion
C. ₦60 billion
D. ₦80 billion

Correct Answer: A

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Question 4
A firm's supply curve is given by Q = 2P + 10, where Q is the quantity supplied and P is the price. If the firm's marginal \cost is given by MC = 2P + 5, find the price at which the firm's marginal \cost equals its marginal revenue.
A. ₦20
B. ₦30
Correct C. ₦40
D. ₦50

Correct Answer: C

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Question 5
A country's government is considering a tax on a particular good. The demand curve for the good is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the government wants to raise ₦100 million in revenue, find the price at which the tax should be imposed.
A. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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Question 6
A monopolistically competitive firm faces a downward-sloping demand curve and has the ability to produce a unique product. If the firm's marginal revenue (MR) curve intersects its marginal \cost (MC) curve at a point where MR > MC, what will be the firm's optimal price and quantity?
A. The firm will produce at a point where MR = MC, and the optimal price and quantity will be determined by the intersection of the demand curve and the MC curve.
Correct B. The firm will produce at a point where MR > MC, and the optimal price and quantity will be determined by the intersection of the demand curve and the MR curve.
C. The firm will produce at a point where MR < MC, and the optimal price and quantity will be determined by the intersection of the demand curve and the MC curve.
D. The firm will not produce at all, as the MR curve does not intersect the MC curve.

Correct Answer: B

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Question 7
A country's balance of payments (BOP) accounts show a trade deficit of $100 billion and a capital account surplus of $50 billion. What is the overall balance of payments position of the country?
A. The country has a trade deficit of $50 billion.
B. The country has a trade surplus of $50 billion.
C. The country has a balance of payments deficit of $50 billion.
Correct D. The country has a balance of payments surplus of $50 billion.

Correct Answer: D

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Question 8
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's current labor and capital inputs are L = 4 and K = 9, respectively, what is the firm's current output?
A. Q = 12
B. Q = 18
Correct C. Q = 24
D. Q = 36

Correct Answer: C

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Question 9
A country's government imposes a tax on a particular good, cau\sing the supply curve to shift to the left. What is the effect on the equilibrium price and quantity of the good?
Correct A. The equilibrium price and quantity decrease.
B. The equilibrium price increases, and the quantity decreases.
C. The equilibrium price and quantity remain unchanged.
D. The equilibrium price decreases, and the quantity increases.

Correct Answer: A

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Question 10
A firm's \cost function is given by C = 2L + 3K, where C is \cost, L is labor, and K is capital. If the firm's current labor and capital inputs are L = 6 and K = 8, respectively, what is the firm's current \cost?
A. C = 30
B. C = 36
Correct C. C = 42
D. C = 48

Correct Answer: C

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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. 40%
C. 60%
D. 80%

Correct Answer: A

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Question 12
A country's balance of payments is given by the equation BOP = X - M, where X is the value of exports and M is the value of imports. If the value of exports is 100 and the value of imports is 80, what is the balance of payments?
Correct A. 20
B. 30
C. 40
D. 50

Correct Answer: A

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Question 13
A firm's production function is given by the equation Q = 100K^0.5L^0.5, where Q is the quantity produced, K is the capital and L is the labor. If the capital is 100 and the labor is 100, what is the quantity produced?
A. 100
Correct B. 200
C. 300
D. 400

Correct Answer: B

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Question 14
A country's money supply is given by the equation M = 100 + 0.5Y, where M is the money supply and Y is the income. If the income is 1000, what is the money supply?
A. 150
Correct B. 200
C. 250
D. 300

Correct Answer: B

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Question 15
A firm's \cost function is given by the equation C = 100 + 2Q, where C is the \cost and Q is the quantity produced. If the quantity produced is 50, what is the \cost?
A. 150
Correct B. 200
C. 250
D. 300

Correct Answer: B

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Question 16
A firm is operating in a perfectly competitive market with a downward-sloping demand curve. If the firm increases its price, what will happen to its revenue?
A. Revenue will increase
Correct B. Revenue will decrease
C. Revenue will remain the same
D. Revenue will increase at first, then decrease

Correct Answer: B

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Question 17
A monopolist is facing a demand curve with an elasticity of -2. If the firm increases its price by 10%, what will happen to its revenue?
A. Revenue will increase by 20%
Correct B. Revenue will decrease by 20%
C. Revenue will increase by 10%
D. Revenue will decrease by 10%

Correct Answer: B

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Question 18
Agricultural production in Nigeria is characterized by a high degree of seasonality. What is the main reason for this seasonality?
A. Climate change
B. Soil degradation
Correct C. Seasonal rainfall patterns
D. Lack of irrigation facilities

Correct Answer: C

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Question 19
The Central Bank of Nigeria (CBN) has implemented a monetary policy aimed at reducing inflation. If the CBN increases the reserve requirement for commercial banks, what will happen to the money supply?
A. Money supply will increase
Correct B. Money supply will decrease
C. Money supply will remain the same
D. Money supply will increase at first, then decrease

Correct Answer: B

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Question 20
A firm is producing a good u\sing a production function with cons\tant returns to scale. If the firm increases its input of labor by 10%, what will happen to its output?
Correct A. Output will increase by 10%
B. Output will increase by 20%
C. Output will remain the same
D. Output will decrease by 10%

Correct Answer: A

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Question 21
A consumer's indifference curve is given by the equation u(x, y) = 2x + 3y. If the consumer's income is ₦500 and the prices of x and y are ₦10 and ₦20 respectively, what is the consumer's optimal bundle?
A. x = 20, y = 15
Correct B. x = 15, y = 20
C. x = 10, y = 25
D. x = 25, y = 10

Correct Answer: B

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Question 22
A government plans to implement a new tax on luxury goods. The tax rate is 10% of the price of the good. If the price of the good is ₦1000, what is the amount of tax paid?
A. ₦100
Correct B. ₦110
C. ₦120
D. ₦130

Correct Answer: B

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Question 23
A firm has a production function given by Q = 2L^0.5K^0.5. If the firm's output is 100 units and the price of labor is ₦50 per unit, what is the minimum \cost of production?
A. ₦5000
B. ₦7500
Correct C. ₦10000
D. ₦12500

Correct Answer: C

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Question 24
A central bank increases the money supply by 10%. What is the expected effect on the price level?
Correct A. Increase by 10%
B. Increase by 5%
C. No change
D. Decrease by 5%

Correct Answer: A

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Question 25
A firm has a production function given by Q = 2L^0.5K^0.5. If the firm's output is 100 units and the price of labor is ₦50 per unit, what is the minimum \cost of production?
A. ₦5000
B. ₦7500
Correct C. ₦10000
D. ₦12500

Correct Answer: C

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