POST UTME ABU 2018 Economics | Objective

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Question 1
The concept of scarcity in economics implies that the needs and wants of individuals are unlimited, but the resources available to satisfy these needs and wants are limited. Which of the following is a correct statement regarding the law of diminishing marginal utility?
Correct A. As the quantity of a good consumed increases, the marginal utility derived from each additional unit decreases.
B. The law of diminishing marginal utility is applicable only to normal goods.
C. The law of diminishing marginal utility is a consequence of the law of supply.
D. The law of diminishing marginal utility is a consequence of the law of demand.

Correct Answer: A

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Question 2
A monopolistically competitive firm faces a downward-sloping demand curve due to product differentiation. Which of the following is a characteristic of a monopolistically competitive market?
A. Firms in a monopolistically competitive market produce homogeneous products.
B. Firms in a monopolistically competitive market face a perfectly elastic demand curve.
Correct C. Firms in a monopolistically competitive market have a high degree of product differentiation.
D. Firms in a monopolistically competitive market produce a \single product.

Correct Answer: C

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Question 3
The government of a country imposes a tax on a particular good to reduce its consumption. Which of the following is a consequence of this tax?
A. The tax revenue collected by the government increases.
B. The tax revenue collected by the government decreases.
Correct C. The price of the good increases, but the quantity consumed decreases.
D. The price of the good decreases, but the quantity consumed increases.

Correct Answer: C

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Question 4
A consumer has a budget of ₦1000 and faces the following prices for two goods: Good X \costs ₦200 and Good Y \costs ₦300. Which of the following is a possible combination of goods that the consumer can purchase?
A. Good X: 2 units, Good Y: 1 unit
Correct B. Good X: 3 units, Good Y: 0 units
C. Good X: 1 unit, Good Y: 2 units
D. Good X: 0 units, Good Y: 3 units

Correct Answer: B

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Question 5
A firm is considering investing in a new project that has a net present value (NPV) of ₦100,000. The firm's \cost of capital is 10%. Which of the following is a correct statement regarding the NPV rule?
A. The NPV rule states that a project should be accepted if its NPV is greater than its \cost of capital.
B. The NPV rule states that a project should be accepted if its NPV is less than its \cost of capital.
Correct C. The NPV rule states that a project should be accepted if its NPV is greater than zero.
D. The NPV rule states that a project should be accepted if its NPV is less than zero.

Correct Answer: C

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Question 6
The concept of scarcity in economics implies that the wants and needs of individuals are unlimited, but the resources available to satisfy these wants and needs are limited. Which of the following is a correct statement regarding the implications of scarcity?
A. Scarcity leads to a decrease in the s\tandard of living.
B. Scarcity results in a decrease in the production of goods and services.
Correct C. Scarcity leads to a decrease in the consumption of goods and services.
D. Scarcity results in a decrease in the price of goods and services.

Correct Answer: C

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Question 7
A firm is faced with the following production function: Q = 2L + 3K, where Q is the quantity produced, L is the labor input, and K is the capital input. If the firm is currently producing 10 units of output with 2 units of labor and 3 units of capital, what is the marginal product of labor?
Correct A. 4
B. 6
C. 8
D. 10

Correct Answer: A

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Question 8
The following diagram shows the supply and demand curves for a particular good. If the price of the good is currently at P1, what is the equilibrium quantity?
A. Q1
Correct B. Q2
C. Q3
D. Q4

Correct Answer: B

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Question 9
A consumer has the following utility function: U = 2x + 3y, where x and y are the quantities of two different goods. If the prices of the goods are $2 and $3 respectively, and the consumer has a budget of $10, what is the optimal quantity of good x?
A. 2
B. 3
Correct C. 4
D. 5

Correct Answer: C

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Question 10
The following diagram shows the money market equilibrium. If the money supply increases, what will happen to the interest rate?
Correct A. Increase
B. Decrease
C. No change
D. Uncertain

Correct Answer: A

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Question 11
A firm's production function is given by Q = 2L^0.5H^0.5. If the firm's current labor and capital inputs are L = 16 and H = 9, respectively, what is the marginal product of labor (MPL) when the firm is producing at the given input levels?
Correct A. 0.5
B. 1
C. 2
D. 4

Correct Answer: A

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Question 12
A country's GDP is ₦100 billion, and its GNP is ₦120 billion. What is the net factor income from abroad?
Correct A. ₦20 billion
B. ₦30 billion
C. ₦40 billion
D. ₦50 billion

Correct Answer: A

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Question 13
A firm's \cost function is given by C = 2L + 3H. If the firm's current labor and capital inputs are L = 8 and H = 6, respectively, what is the total \cost of production?
A. ₦38
Correct B. ₦40
C. ₦42
D. ₦44

Correct Answer: B

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Question 14
A country's inflation rate is 5% per annum, and its nominal interest rate is 10% per annum. What is the real interest rate?
A. 5%
Correct B. 6%
C. 7%
D. 8%

Correct Answer: B

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Question 15
A firm's production function is given by Q = 3L^0.5H^0.5. If the firm's current labor and capital inputs are L = 25 and H = 16, respectively, what is the total product of labor and capital?
A. 30
B. 40
Correct C. 50
D. 60

Correct Answer: C

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Question 16
A country's economic growth is influenced by its balance of payments. If the balance of payments is in surplus, what is the likely effect on the country's exchange rate?
Correct A. The exchange rate will appreciate.
B. The exchange rate will depreciate.
C. The exchange rate will remain unchanged.
D. The exchange rate will fluctuate.

Correct Answer: A

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Question 17
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 price is increased by 10%, what is the new quantity demanded?
A. 80
Correct B. 90
C. 100
D. 110

Correct Answer: B

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Question 18
A consumer's utility function is given by U(x,y) = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's income is ₦1000 and the prices of the two goods are ₦2 and ₦3 respectively, what is the consumer's optimal bundle?
A. (200, 200)
Correct B. (300, 100)
C. (400, 0)
D. (0, 0)

Correct Answer: B

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Question 19
A firm's production function is given by Q = 2L + 3K, where Q is the quantity produced, L is the labor input, and K is the capital input. If the firm's labor input is 10 units and the capital input is 5 units, what is the quantity produced?
A. 20
Correct B. 25
C. 30
D. 35

Correct Answer: B

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Question 20
A country's balance of payments is given by the equation BOP = X - M, where BOP is the balance of payments, X is the exports, and M is the imports. If the country's exports are ₦1000 and the imports are ₦800, what is the balance of payments?
Correct A. ₦200
B. ₦300
C. ₦400
D. ₦500

Correct Answer: A

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Question 21
Consider a production function of the form Q = f(K,L) = K^0.4L^0.6. If the marginal product of capital is 0.16 and the marginal product of labor is 0.24, what is the ratio of the marginal product of labor to the marginal product of capital?
Correct A. 0.75
B. 1.5
C. 2
D. 3

Correct Answer: A

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Question 22
A country's GDP is ₦100 billion, its imports are ₦20 billion, and its exports are ₦15 billion. What is its balance of trade?
Correct A. ₦5 billion
B. ₦10 billion
C. ₦15 billion
D. ₦20 billion

Correct Answer: A

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Question 23
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 sells 20 units, what is its total revenue?
A. ₦1,600
Correct B. ₦1,800
C. ₦2,000
D. ₦2,200

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 GDP is ₦110 billion. What is its net national product?
A. ₦120 billion
Correct B. ₦130 billion
C. ₦140 billion
D. ₦150 billion

Correct Answer: B

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Question 25
A firm's \cost function is given by the equation C(x) = 50 + 10x + 2x^2. If the firm produces 15 units, what is its total \cost?
A. ₦275
B. ₦325
Correct C. ₦375
D. ₦425

Correct Answer: C

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