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POST UTME CALEB UNIVERSITY 2017 Economics | Objective

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Question 1

A firm is operating under cons\tant returns to scale. If it increases its output by 10%, what will be the percentage change in its total \cost?

Correct A. 0%

B. 5%

C. 10%

D. 15%

Correct Answer: A

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Question 2

A monopolist faces a demand curve given by Q = 100 - 2P. The inverse demand function is

A. \frac{100}{2} + P

Correct B. \frac{100}{2} - P

C. 100 + 2P

D. 100 - 2P

Correct Answer: B

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Question 3

A government imposes a tax of ₦10 per unit on a good. If the pre-tax price of the good is ₦50, what will be the new price of the good?

A. ₦40

B. ₦50

Correct C. ₦60

D. ₦70

Correct Answer: C

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Question 4

A firm is operating under decrea\sing returns to scale. If it increases its output by 10%, what will be the percentage change in its total \cost?

A. 0%

B. 5%

C. 10%

Correct D. 15%

Correct Answer: D

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Question 5

A government imposes a tax of ₦10 per unit on a good. If the pre-tax price of the good is ₦50, what will be the new price of the good?

A. ₦40

B. ₦50

Correct C. ₦60

D. ₦70

Correct Answer: C

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Question 6

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 percentage change in quantity demanded when the price increases by 10%.

Correct A. 20%

B. 30%

C. 40%

D. 50%

Correct Answer: A

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Question 7

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

A. Increase in money supply

Correct B. Decrease in money supply

C. No change in money supply

D. Dep\endence on other factors

Correct Answer: B

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Question 8

A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. Find the profit-maximizing price and quantity.

Correct A. P = 40, Q = 30

B. P = 50, Q = 20

C. P = 60, Q = 10

D. P = 70, Q = 5

Correct Answer: A

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Question 9

A government wants to reduce the budget deficit by increa\sing taxes. However, the tax increase will lead to a decrease in consumer sp\ending. What is the likely effect on the economy?

A. Increase in GDP

Correct B. Decrease in GDP

C. No change in GDP

D. Dep\endence on other factors

Correct Answer: B

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Question 10

A firm is considering two investment projects. Project A has a higher initial \cost but a higher expected return. Project B has a lower initial \cost but a lower expected return. Which project should the firm choose?

Correct A. Project A

B. Project B

C. Dep\endence on other factors

D. Both projects are equally good

Correct Answer: A

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Question 11

The demand for a commodity is said to be elastic if the percentage change in the quantity demanded is greater than the percentage change in the price. Which of the following is a characteristic of an elastic demand?

A. The demand curve is steeper than the supply curve

Correct B. The demand curve is flatter than the supply curve

C. The demand curve is vertical

D. The demand curve is horizontal

Correct Answer: B

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Question 12

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?

Correct A. 1

B. 2

C. 3

D. 4

Correct Answer: A

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Question 13

A country's balance of payments is in equilibrium when the current account is equal to the capital account. Which of the following is a characteristic of a country with a balance of payments equilibrium?

Correct A. The exchange rate is stable

B. The exchange rate is volatile

C. The trade balance is in surplus

D. The trade balance is in deficit

Correct Answer: A

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Question 14

A firm's \cost function is given by C = 2L + 3K. If the firm's current input levels are L = 4 and K = 6, what is the total \cost?

A. 20

Correct B. 26

C. 30

D. 40

Correct Answer: B

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Question 15

A country's inflation rate is 5% per annum. If the current price level is 100, what is the price level after one year?

A. 100

Correct B. 105

C. 110

D. 115

Correct Answer: B

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Question 16

A firm is operating under cons\tant returns to scale. If it increases its output by 10%, what will be the percentage change in its total \cost?

A. 10%

B. 5%

Correct C. 0%

D. 15%

Correct Answer: C

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Question 17

A monopolist faces a demand curve given by Q = 100 - 2P. If the firm's marginal revenue (MR) is 50, what is its marginal \cost (MC)?

A. 25

Correct B. 50

C. 75

D. 100

Correct Answer: B

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Question 18

A consumer's utility function is given by U = 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?

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 19

A bank has a reserve requirement of 20% and a cash reserve of ₦100,000. If the bank's deposits are ₦500,000, what is the bank's maximum amount of loans it can make?

A. ₦200,000

Correct B. ₦250,000

C. ₦300,000

D. ₦350,000

Correct Answer: B

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Question 20

A firm is experiencing a 10% increase in the price of its inputs. If the firm's production function is given by Q = 2L^0.5K^0.5, what is the percentage change in its output?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 21

Determine the equilibrium price and quantity of a commodity in a market where the demand function is given by Qd = 100 - 2P and the supply function is given by Qs = 2P - 10.

A. ₦50, 50 units

B. ₦75, 25 units

Correct C. ₦100, 0 units

D. ₦125, 50 units

Correct Answer: C

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Question 22

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 ₦3 respectively, determine the optimal quantities of x and y.

A. x = 10, y = 10

Correct B. x = 15, y = 5

C. x = 20, y = 0

D. x = 0, y = 20

Correct Answer: B

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Question 23

A country's balance of payments is given by the following equation: BOP = \( X - M \) + \( F - I \). If the country's exports are ₦100, imports are ₦80, foreign investment is ₦20, and domestic investment is ₦10, determine the balance of payments.

Correct A. ₦30

B. ₦40

C. ₦50

D. ₦60

Correct Answer: A

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Question 24

A monopolist's demand function is given by Qd = 100 - 2P and the marginal revenue function is given by MR = 2P - 10. Determine the monopolist's equilibrium price and quantity.

A. ₦50, 50 units

B. ₦75, 25 units

Correct C. ₦100, 0 units

D. ₦125, 50 units

Correct Answer: C

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Question 25

A country's economic growth rate is given by the following equation: GDP = C + I + G + \( X - M \). If the country's consumption is ₦100, investment is ₦20, government exp\enditure is ₦30, exports are ₦50, and imports are ₦20, determine the country's economic growth rate.

Correct A. 10%

B. 15%

C. 20%

D. 25%

Correct Answer: A

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