POST UTME WELLSPRING UNIVERSITY 2022 Economics | Objective

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Question 1
A firm operating in a perfectly competitive market is characterized by which of the following?
A. A \single price setter
Correct B. A large number of firms producing a homogeneous product
C. A firm that can influence the market price
D. A firm that produces a differentiated product

Correct Answer: B

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Question 2
The opportunity \cost of producing one more unit of a good is the
Correct A. marginal \cost
B. marginal revenue
C. average \cost
D. average revenue

Correct Answer: A

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Question 3
A monopolist's marginal revenue curve lies below the
Correct A. demand curve
B. average revenue curve
C. marginal \cost curve
D. average \cost curve

Correct Answer: A

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Question 4
The money supply in an economy is influenced by the
Correct A. central bank
B. commercial banks
C. government
D. foreign investors

Correct Answer: A

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Question 5
The inflation rate is calculated as the percentage change in the
A. GDP deflator
Correct B. consumer price index
C. producer price index
D. average price level

Correct Answer: B

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Question 6
A government imposes a tax on imported goods to raise revenue. The tax is levied at a rate of 15% of the value of the good. If the value of the good is ₦10,000, what is the amount of tax paid?
A. ₦1,000
Correct B. ₦1,500
C. ₦2,000
D. ₦2,500

Correct Answer: B

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Question 7
A firm's \cost function is given by C(q) = 2q^2 + 5q + 10. If the firm produces 10 units of the good, what is the total \cost?
A. ₦150
B. ₦250
Correct C. ₦350
D. ₦450

Correct Answer: C

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Question 8
A consumer's utility function is given by U(x,y) = 2x + 3y. If the consumer has a budget constraint of 100 and the prices of x and y are 5 and 10 respectively, what is the optimal consumption bundle?
A. (10, 0)
Correct B. (5, 5)
C. (0, 10)
D. (15, 5)

Correct Answer: B

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Question 9
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?
A. ₦10 billion
Correct B. ₦20 billion
C. ₦30 billion
D. ₦40 billion

Correct Answer: B

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Question 10
A firm's supply function is given by Q = 2P - 10. If the price of the good is ₦20, what is the quantity supplied?
A. 10 units
Correct B. 20 units
C. 30 units
D. 40 units

Correct Answer: B

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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 0.5, what is the percentage change in quantity demanded when the price increases by 10%?
Correct A. 5%
B. 10%
C. 15%
D. 20%

Correct Answer: A

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Question 12
A firm produces two goods, X and Y, u\sing two inputs, labor (L) and capital (K). The production functions are given by X = 2L + 3K and Y = 4L + 2K. If the firm has 10 units of labor and 5 units of capital, what is the total output?
A. 30
B. 40
Correct C. 50
D. 60

Correct Answer: C

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Question 13
The government of a country is considering a policy to reduce the budget deficit. The current budget deficit is ₦100 billion, and the government wants to reduce it by 20% in the next year. If the interest rate is 10%, what is the present value of the future budget deficit?
Correct A. ₦80 billion
B. ₦90 billion
C. ₦100 billion
D. ₦110 billion

Correct Answer: A

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Question 14
A consumer has a budget constraint of ₦100, and the prices of two goods, X and Y, are ₦5 and ₦10, respectively. If the consumer's indifference curve is given by the equation U = 2X + 3Y, what is the optimal consumption bundle?
A. X = 10, Y = 20
Correct B. X = 15, Y = 15
C. X = 20, Y = 10
D. X = 25, Y = 5

Correct Answer: B

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Question 15
A firm is considering investing in a new project. The initial investment is ₦100,000, and the expected cash flows are ₦20,000 in the first year, ₦30,000 in the second year, and ₦40,000 in the third year. If the discount rate is 10%, what is the net present value of the project?
A. ₦10,000
B. ₦20,000
Correct C. ₦30,000
D. ₦40,000

Correct Answer: C

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Question 16
Suppose 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 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. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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Question 17
A firm's total revenue is given by the equation TR = 100x - 2x^2, where x is the number of units sold. If the firm's total \cost is given by the equation TC = 50x + 100, find the profit-maximizing level of output.
A. 20 units
B. 30 units
Correct C. 40 units
D. 50 units

Correct Answer: C

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Question 18
The government of Nigeria is considering a policy to increase the production of agricultural products. If the current GDP is ₦10 trillion and the government expects an increase of 10% in agricultural production, what will be the new GDP?
A. ₦11 trillion
Correct B. ₦11.1 trillion
C. ₦11.2 trillion
D. ₦11.3 trillion

Correct Answer: B

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Question 19
A firm is considering two different production processes. Process A has a fixed \cost of ₦50,000 and a variable \cost of ₦100 per unit. Process B has a fixed \cost of ₦75,000 and a variable \cost of ₦80 per unit. If the firm produces 1,000 units, which process will result in lower total \cost?
Correct A. Process A
B. Process B
C. Both processes are equal
D. Neither process is better

Correct Answer: A

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Question 20
The government of Nigeria is considering a policy to increase the production of industrial goods. If the current GNP is ₦15 trillion and the government expects an increase of 15% in industrial production, what will be the new GNP?
A. ₦17.25 trillion
Correct B. ₦17.5 trillion
C. ₦17.75 trillion
D. ₦18 trillion

Correct Answer: B

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Question 21
Consider a firm operating in a perfectly competitive market with a cons\tant returns to scale production function. If the firm's short-run average \cost curve intersects the long-run average \cost curve at a point where the firm is operating at its optimal scale, what is the implication for the firm's long-run supply curve?
Correct A. The firm's long-run supply curve will be perfectly elastic.
B. The firm's long-run supply curve will be perfectly inelastic.
C. The firm's long-run supply curve will be upward-sloping.
D. The firm's long-run supply curve will be downward-sloping.

Correct Answer: A

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Question 22
A country's GDP is ₦1,500 billion, its imports are ₦300 billion, and its exports are ₦200 billion. What is the country's net foreign income?
Correct A. ₦1,100 billion
B. ₦1,200 billion
C. ₦1,300 billion
D. ₦1,400 billion

Correct Answer: A

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Question 23
A firm's demand curve is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the firm's supply curve is given by the equation Qs = 2P - 50, where Qs is the quantity supplied, what is the equilibrium price and quantity?
A. P = ₦50, Q = 25
B. P = ₦75, Q = 25
Correct C. P = ₦100, Q = 50
D. P = ₦125, Q = 75

Correct Answer: C

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Question 24
A firm's production function is given by the equation Q = 2L^0.5K^0.5, where Q is the output, L is the labor, and K is the capital. If the firm's input prices are given by the equation w = ₦100 and r = ₦200, what is the firm's \cost-minimizing input bundle?
Correct A. L = 100, K = 100
B. L = 200, K = 200
C. L = 100, K = 200
D. L = 200, K = 100

Correct Answer: A

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Question 25
A country's money supply is ₦1,000 billion, its velocity of money is 2, and its price level is ₦100. What is the country's nominal GDP?
Correct A. ₦2,000 billion
B. ₦3,000 billion
C. ₦4,000 billion
D. ₦5,000 billion

Correct Answer: A

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