POST UTME ACHIEVERS UNIVERSITY 2019 Economics | Objective

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Question 1
A firm is operating in a perfectly competitive market with a cons\tant \cost function. If the firm's average \cost curve intersects its marginal \cost curve at a point where the average \cost is ₦120, what is the firm's optimal output?
A. 10 units
B. 20 units
Correct C. 30 units
D. 40 units

Correct Answer: C

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Question 2
A monopolist faces a demand curve given by Q = 100 - 2P. The firm's marginal revenue function is MR = 50 - 2Q. If the firm's fixed \cost is ₦500, what is the firm's optimal price?
A. ₦40
Correct B. ₦50
C. ₦60
D. ₦70

Correct Answer: B

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Question 3
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's input prices are w_L = ₦100 and w_K = ₦200, and the firm's output price is P = ₦500, what is the firm's optimal input combination?
Correct A. L = 100, K = 100
B. L = 200, K = 200
C. L = 300, K = 300
D. L = 400, K = 400

Correct Answer: A

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Question 4
A firm's demand function is given by Q = 100 - 2P. The firm's marginal revenue function is MR = 50 - 2Q. If the firm's fixed \cost is ₦500, what is the firm's optimal output?
A. 10 units
B. 20 units
Correct C. 30 units
D. 40 units

Correct Answer: C

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Question 5
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's input prices are w_L = ₦100 and w_K = ₦200, and the firm's output price is P = ₦500, what is the firm's optimal input combination?
Correct A. L = 100, K = 100
B. L = 200, K = 200
C. L = 300, K = 300
D. L = 400, K = 400

Correct Answer: A

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Question 6
Consider a monopolistically competitive firm facing the demand curve ( D(p) = 100 - 2p ) and the supply curve ( S(p) = 20 + 5p ). If the firm's marginal revenue is ( MR(p) = 100 - 4p ), find the profit-maximizing price and quantity.
Correct A. \( p = 15, q = 35 \)
B. \( p = 20, q = 30 \)
C. \( p = 25, q = 25 \)
D. \( p = 30, q = 20 \)

Correct Answer: A

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Question 7
A firm is producing a good with a production function \( Q = 2L^2 + 3K^2 \), where ( L ) is labor and ( K ) is capital. If the firm's \cost function is ( C(L,K) = 2L + 3K + 10 ), find the input combination that minimizes the \cost of producing 100 units of output.
Correct A. \( L = 5, K = 5 \)
B. \( L = 10, K = 2 \)
C. \( L = 2, K = 10 \)
D. \( L = 15, K = 1 \)

Correct Answer: A

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Question 8
Consider an economy with a money supply of \( M = 1000 \) and a velocity of money \( V = 5 \). If the price level is \( P = 10 \), find the real money supply.
Correct A. ( 50 )
B. ( 100 )
C. ( 200 )
D. ( 500 )

Correct Answer: A

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Question 9
A firm is facing a demand curve ( D(p) = 100 - 2p ) and a supply curve ( S(p) = 20 + 5p ). If the firm's marginal revenue is ( MR(p) = 100 - 4p ), find the profit-maximizing price and quantity.
Correct A. \( p = 15, q = 35 \)
B. \( p = 20, q = 30 \)
C. \( p = 25, q = 25 \)
D. \( p = 30, q = 20 \)

Correct Answer: A

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Question 10
Consider an economy with a money supply of \( M = 1000 \) and a velocity of money \( V = 5 \). If the price level is \( P = 10 \), find the real money supply.
Correct A. ( 50 )
B. ( 100 )
C. ( 200 )
D. ( 500 )

Correct Answer: A

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Question 11
The following diagram shows a perfectly competitive market with two firms, A and B. If firm A increases its price from ₦100 to ₦120, what will be the effect on firm B's output?
A. Increase
Correct B. Decrease
C. No change
D. Uncertain

Correct Answer: B

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Question 12
A firm's total revenue is given by the equation TR = 100x - 2x^2, where x is the number of units sold. Find the value of x that maximizes TR.
A. 10
B. 20
Correct C. 30
D. 40

Correct Answer: C

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Question 13
A country's GDP is ₦100 billion, and its GNP is ₦120 billion. What is the value of the net factor income from abroad?
A. ₦20 billion
Correct B. ₦30 billion
C. ₦40 billion
D. ₦50 billion

Correct Answer: B

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Question 14
A consumer's budget constraint is given by the equation 2x + 3y = 12, where x and y are the quantities of two goods. Find the value of y when x = 2.
A. 2
B. 4
Correct C. 6
D. 8

Correct Answer: C

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Question 15
A firm's marginal revenue is given by the equation MR = 100 - 2x, where x is the number of units sold. Find the value of x that maximizes MR.
A. 10
Correct B. 20
C. 30
D. 40

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 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 17
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 8 units of capital, what is the total output?
A. 40
B. 50
Correct C. 60
D. 70

Correct Answer: C

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Question 18
The government of a country wants to reduce the unemployment rate from 10% to 5% in the next two years. If the current GDP is ₦10 trillion and the government plans to increase it by 5% each year, what is the total amount of money the government needs to sp\end to achieve its goal?
A. ₦1 trillion
B. ₦2 trillion
Correct C. ₦3 trillion
D. ₦4 trillion

Correct Answer: C

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Question 19
A consumer has a budget of ₦100 and wants to buy two goods, A and B. The prices of the goods are ₦20 and ₦30, respectively. If the consumer wants to sp\end at least ₦50 on good A, what is the maximum amount the consumer can sp\end on good B?
A. ₦20
B. ₦30
Correct C. ₦40
D. ₦50

Correct Answer: C

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Question 20
A firm has 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 firm wants to increase its output by 20% and has 10 units of labor and 8 units of capital, what is the new output?
A. 20
B. 25
Correct C. 30
D. 35

Correct Answer: C

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Question 21
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, find the change in quantity demanded when the price increases by 10%.
A. 20
B. 30
Correct C. 40
D. 50

Correct Answer: C

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Question 22
A firm has a production function Q = 10L^0.5K^0.5, where Q is the output, L is the labor and K is the capital. If the price of labor is 10 and the price of capital is 20, find the optimal level of labor and capital.
A. L = 100, K = 100
B. L = 50, K = 200
C. L = 200, K = 50
Correct D. L = 100, K = 50

Correct Answer: D

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Question 23
The government of Nigeria has introduced a new policy to increase the production of rice. The policy includes a subsidy of 10% on the \cost of production. If the \cost of production is 100, find the new \cost of production.
A. ₦90
B. ₦100
Correct C. ₦110
D. ₦120

Correct Answer: C

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Question 24
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, find the change in quantity demanded when the price increases by 10%.
A. 20
B. 30
Correct C. 40
D. 50

Correct Answer: C

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Question 25
A firm has a production function Q = 10L^0.5K^0.5, where Q is the output, L is the labor and K is the capital. If the price of labor is 10 and the price of capital is 20, find the optimal level of labor and capital.
A. L = 100, K = 100
B. L = 50, K = 200
C. L = 200, K = 50
Correct D. L = 100, K = 50

Correct Answer: D

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