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POST UTME AAUA 2019 Economics | Objective

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Question 1

Consider a firm operating in a perfectly competitive market with a given demand curve. If the firm's marginal revenue (MR) curve intersects the average variable \cost (AVC) curve at point A, and the marginal \cost (MC) curve intersects the AVC curve at point B, which of the following is true?

A. The firm is operating in the short run and is incurring losses.

B. The firm is operating in the long run and is earning normal profits.

Correct C. The firm is operating in the short run and is earning supernormal profits.

D. The firm is operating in the long run and is incurring losses.

Correct Answer: C

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Question 2

A consumer's utility function is given by U(x,y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦2 and ₦3 respectively, what is the consumer's optimal bundle?

Correct A. (20, 10)

B. (15, 20)

C. (10, 15)

D. (5, 30)

Correct Answer: A

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Question 3

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output is 100 units and the price of labor is ₦10 per unit, what is the minimum \cost of production?

A. ₦1000

Correct B. ₦2000

C. ₦3000

D. ₦4000

Correct Answer: B

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Question 4

A country's inflation rate is 10% and the interest rate is 12%. If the money supply increases by 15%, what is the expected change in the price level?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 5

A firm's demand curve is given by Q = 100 - 2P. If the firm's marginal revenue (MR) curve is given by MR = 200 - 2Q, what is the firm's optimal price?

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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Question 6

Calculate the Gross Domestic Product (GDP) of a country u\sing the following data: National Income (NI) = ₦1,500,000,000; Net Factor Income from Abroad (NFIA) = ₦200,000,000; Depreciation (D) = ₦150,000,000.

Correct A. ₦1,550,000,000

B. ₦1,650,000,000

C. ₦1,750,000,000

D. ₦1,850,000,000

Correct Answer: A

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Question 7

A central bank increases the reserve requirement for commercial banks. What will be the effect on the money supply?

A. Increase

Correct B. Decrease

C. No change

D. Unpredictable

Correct Answer: B

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Question 8

A government imposes a tax on a good. What will be the effect on the supply curve?

Correct A. Shift to the left

B. Shift to the right

C. No change

D. Unpredictable

Correct Answer: A

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Question 9

A firm has a total revenue (TR) of ₦1,000,000 and a total \cost (TC) of ₦800,000. What is the profit?

Correct A. ₦200,000

B. ₦300,000

C. ₦400,000

D. ₦500,000

Correct Answer: A

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Question 10

A central bank implements a monetary policy to reduce inflation. What will be the effect on the interest rate?

A. Increase

Correct B. Decrease

C. No change

D. Unpredictable

Correct Answer: B

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Question 11

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current input levels are L = 16 and K = 9, what is the marginal product of labor (MPL) at these input levels?

A. 1

Correct B. 2

C. 3

D. 4

Correct Answer: B

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Question 12

A perfectly competitive market is in equilibrium. The demand curve is D = 100 - 2P and the supply curve is S = 2 + 3P. What is the equilibrium price and quantity?

A. P = 30, Q = 70

Correct B. P = 34, Q = 66

C. P = 38, Q = 62

D. P = 42, Q = 58

Correct Answer: B

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Question 13

A country's GDP is ₦1,000,000 and its GNP is ₦1,100,000. What is the net factor income from abroad?

A. ₦50,000

Correct B. ₦100,000

C. ₦150,000

D. ₦200,000

Correct Answer: B

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Question 14

A firm's total revenue is given by TR = 100Q - 2Q^2. If the firm sells 20 units of the product, what is the marginal revenue (MR) at this quantity?

A. 80

B. 90

Correct C. 100

D. 110

Correct Answer: C

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Question 15

A country's national income is ₦1,500,000. If the government sp\ends ₦200,000 on infrastructure, what is the multiplier effect on the national income?

A. k = 2

Correct B. k = 2.5

C. k = 3

D. k = 3.5

Correct Answer: B

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Question 16

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 price at which the quantity demanded is 60?

A. ₦50

B. ₦75

Correct C. ₦100

D. ₦125

Correct Answer: C

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Question 17

A firm produces two goods, A and B, u\sing two inputs, labor and capital. The production functions are given by Q_A = 10L^0.5K^0.5 and Q_B = 5L^0.5K^0.5. If the firm has 100 units of labor and 50 units of capital, what is the total output?

A. 1000

B. 2000

Correct C. 3000

D. 4000

Correct Answer: C

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Question 18

The government of a country imposes a tariff of 20% on imported goods. If the price of the imported good is $100, what is the price paid by the consumer?

A. $120

Correct B. $120.20

C. $120.40

D. $120.60

Correct Answer: B

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Question 19

A country's GDP is given by the equation Y = C + I + G + $ X - M $. If the country's consumption is 100, investment is 50, government sp\ending is 75, exports are 150, and imports are 100, what is the country's GDP?

A. 275

B. 300

Correct C. 325

D. 350

Correct Answer: C

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Question 20

A firm's production function is given by Q = 10L^0.5K^0.5. If the firm has 100 units of labor and 50 units of capital, what is the marginal product of labor?

A. 5

Correct B. 10

C. 15

D. 20

Correct Answer: B

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Question 21

Consider a firm operating in a perfectly competitive market with a downward-sloping demand curve. If the firm's marginal revenue (MR) is greater than its marginal \cost (MC), what will be the effect on the firm's output?

Correct A. The firm will increase its output.

B. The firm will decrease its output.

C. The firm's output will remain unchanged.

D. The firm will exit the market.

Correct Answer: A

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Question 22

A country's GDP is ₦100 billion, its imports are ₦30 billion, and its exports are ₦25 billion. What is its balance of trade?

A. ₦5 billion surplus

Correct B. ₦5 billion deficit

C. ₦10 billion surplus

D. ₦10 billion deficit

Correct Answer: B

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Question 23

A firm's production function is given by Q = 2L^$ 1/2 $K^$ 1/2 $. If the firm's labor (L) increases by 20% and its capital (K) remains cons\tant, what will be the effect on its output?

A. Output will increase by 10%

Correct B. Output will increase by 20%

C. Output will remain unchanged

D. Output will decrease by 10%

Correct Answer: B

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Question 24

A country's GNP is ₦120 billion, its net factor income from abroad is ₦10 billion, and its depreciation is ₦5 billion. What is its GDP?

A. ₦115 billion

B. ₦120 billion

Correct C. ₦125 billion

D. ₦130 billion

Correct Answer: C

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Question 25

A firm's total revenue (TR) is given by TR = 100Q - 2Q^2. If the firm's output (Q) increases by 10%, what will be the effect on its total revenue?

A. TR will increase by 10%

Correct B. TR will increase by 20%

C. TR will remain unchanged

D. TR will decrease by 10%

Correct Answer: B

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