POST UTME AFE BABALOLA UNIVERSITY 2019 Economics | Objective

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Question 1
The concept of scarcity in economics implies that the production of one good is limited by the availability of resources, which can be allocated to other goods. Which of the following is a correct example of scarcity?
Correct A. A farmer has 100 hectares of land to plant either maize or wheat.
B. A country has an abundance of natural resources to produce all the goods it needs.
C. A consumer has a limited budget to purchase all the goods they want.
D. A factory can produce an unlimited quantity of goods without any constraints.

Correct Answer: A

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Question 2
The demand for a product is elastic if a small change in price leads to a large change in quantity demanded. Which of the following is a correct example of an elastic demand?
A. The demand for a luxury item such as a private jet is elastic.
B. The demand for a necessity such as bread is inelastic.
Correct C. The demand for a product with many substitutes such as coffee is elastic.
D. The demand for a product with no substitutes such as water is inelastic.

Correct Answer: C

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Question 3
The production function is given by Q = 2L^0.5K^0.5, where Q is the output, L is the labor, and K is the capital. What is the return to scale of this production function?
Correct A. Increa\sing returns to scale
B. Decrea\sing returns to scale
C. Cons\tant returns to scale
D. Negative returns to scale

Correct Answer: A

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Question 4
The government imposes a tax on a particular good, which leads to a decrease in its demand. What is the effect of this tax on the government's revenue?
A. The government's revenue increases
Correct B. The government's revenue decreases
C. The government's revenue remains the same
D. The government's revenue becomes negative

Correct Answer: B

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Question 5
The following diagram shows the supply and demand curves for a particular good. What is the equilibrium price and quantity of this good?
A. P = 10, Q = 20
Correct B. P = 15, Q = 30
C. P = 20, Q = 40
D. P = 25, Q = 50

Correct Answer: B

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Question 6
The Marshall-Lerner condition states that a country's balance of payments will improve if the sum of the percentage changes in its export and import prices is greater than the percentage change in its exchange rate. U\sing the given data, calculate the percentage change in the exchange rate.
A. 10%
B. 15%
Correct C. 20%
D. 25%

Correct Answer: C

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Question 7
A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. If the firm's revenue function is R(q) = 20q - 2q^2, calculate the firm's profit function.
Correct A. R(q) - C(q) = 8q - 2q^2
B. R(q) - C(q) = 12q - 2q^2
C. R(q) - C(q) = 16q - 2q^2
D. R(q) - C(q) = 20q - 2q^2

Correct Answer: A

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Question 8
A central bank uses the following monetary policy tools: open market operations, reserve requirements, and discount rate. Which tool is most effective in reducing inflation?
A. Open market operations
B. Reserve requirements
Correct C. Discount rate
D. All of the above

Correct Answer: C

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Question 9
A consumer's utility function is given by U(x, y) = 2x^0.5y^0.5. If the consumer's budget constraint is 2x + 3y = 12, find the consumer's optimal consumption bundle.
Correct A. x = 3, y = 4
B. x = 4, y = 3
C. x = 6, y = 2
D. x = 8, y = 1

Correct Answer: A

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Question 10
A firm's demand function is given by Q = 100 - 2P. If the firm's supply function is Q = 2P - 10, find the equilibrium price and quantity.
Correct A. P = 20, Q = 30
B. P = 30, Q = 20
C. P = 40, Q = 10
D. P = 50, Q = 0

Correct Answer: A

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Question 11
The concept of 'dualism' in the context of agricultural development in Nigeria refers to the coexistence of modern and traditional farming practices. Which of the following best describes the implications of this dualism on agricultural productivity?
A. Increased productivity due to the adoption of modern farming techniques
B. Decreased productivity due to the inefficiencies of traditional farming practices
Correct C. No significant impact on productivity due to the coexistence of both practices
D. Increased productivity due to the diversification of farming practices

Correct Answer: C

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Question 12
A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. If the firm produces 20 units of output, what is the total \cost of production?
A. ₦150
Correct B. ₦200
C. ₦250
D. ₦300

Correct Answer: B

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Question 13
The government of Nigeria has implemented a policy to increase the production of rice in the country. Which of the following is a likely consequence of this policy?
A. Increased imports of rice
B. Decreased prices of rice
Correct C. Increased production of rice
D. Increased unemployment in the agricultural sector

Correct Answer: C

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Question 14
A consumer's utility function is given by U(x, y) = 2x + 3y. If the consumer's income is ₦100 and the prices of x and y are ₦5 and ₦10 respectively, what is the consumer's optimal bundle of x and y?
Correct A. x = 10, y = 5
B. x = 5, y = 10
C. x = 15, y = 3
D. x = 20, y = 2

Correct Answer: A

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Question 15
The government of Nigeria has implemented a policy to increase the production of electricity in the country. Which of the following is a likely consequence of this policy?
Correct A. Increased production of electricity
B. Decreased prices of electricity
C. Increased unemployment in the energy sector
D. Increased imports of electricity

Correct Answer: A

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Question 16
A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. What is the profit-maximizing price?
A. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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Question 17
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current inputs are L = 4 and K = 9, what is the marginal product of labor?
A. 1
Correct B. 2
C. 3
D. 4

Correct Answer: B

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Question 18
A government imposes a tax of ₦10 per unit on a firm's output. The firm's supply curve is given by Q = 100 - 2P. What is the new supply curve after the tax?
A. Q = 100 - 2P
Correct B. Q = 90 - 2P
C. Q = 80 - 2P
D. Q = 70 - 2P

Correct Answer: B

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Question 19
A consumer's budget constraint is given by 2Q + 3P = 100. The consumer's indifference curve is given by U = 2Q + P. What is the consumer's optimal consumption bundle?
Correct A. Q = 20, P = 30
B. Q = 30, P = 20
C. Q = 40, P = 10
D. Q = 50, P = 0

Correct Answer: A

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Question 20
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current inputs are L = 4 and K = 9, what is the total product?
A. 8
B. 16
Correct C. 32
D. 64

Correct Answer: C

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Question 21
A monopolistically competitive firm faces a demand curve with the following equation: \( Q = 100 - 2P \). If the firm's marginal revenue (MR) is given by \( MR = 200 - 2P \), what is the firm's optimal price?
A. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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Question 22
A country's GDP is ₦1.2 trillion, and its GNP is ₦1.5 trillion. What is the country's net factor income from abroad?
A. ₦300 billion
Correct B. ₦400 billion
C. ₦500 billion
D. ₦600 billion

Correct Answer: B

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Question 23
A firm's production function is given by \( Q = 2L^2 + 3K^2 \), where ( L ) is labor and ( K ) is capital. If the firm's \cost function is given by \( C = 10L + 20K \), what is the firm's optimal input combination?
A. \( L = 5, K = 10 \)
B. \( L = 10, K = 5 \)
Correct C. \( L = 15, K = 15 \)
D. \( L = 20, K = 20 \)

Correct Answer: C

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Question 24
A country's government is considering a policy to reduce poverty. The government's budget constraint is given by \( B = 100 + 0.5G \), where ( B ) is the budget and ( G ) is the government sp\ending. If the government wants to sp\end ₦500 million on poverty reduction, what is the optimal level of government sp\ending?
A. ₦250 million
B. ₦300 million
Correct C. ₦350 million
D. ₦400 million

Correct Answer: C

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Question 25
A firm's demand curve is given by \( Q = 100 - 2P \). If the firm's marginal revenue (MR) is given by \( MR = 200 - 2P \), what is the firm's optimal price?
A. ₦50
B. ₦75
Correct C. ₦100
D. ₦125

Correct Answer: C

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