POST UTME CHRISTOPHER UNIVERSITY 2024 Economics | Objective

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Question 1
Determine the elasticity of demand for a commodity whose price elasticity of demand is 0.8 and the cross-price elasticity of demand with respect to a related commodity is 0.2. Assume that the income elasticity of demand is 0.5.
A. 0.6
B. 0.7
Correct C. 0.8
D. 0.9

Correct Answer: C

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Question 2
A firm is considering two investment projects. Project A has a net present value (NPV) of ₦1,500,000 and a payback period of 5 years. Project B has an NPV of ₦1,200,000 and a payback period of 4 years. Assuming that the \cost of capital is 10% per annum, which project should the firm choose?
Correct A. Project A
B. Project B
C. Both projects are equally attractive
D. Neither project is attractive

Correct Answer: A

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Question 3
A country's GDP at market price is ₦10,000,000,000. The implicit deflator is 120. If the country's GDP at factor \cost is ₦8,000,000,000, what is the net indirect tax?
Correct A. ₦1,000,000,000
B. ₦1,500,000,000
C. ₦2,000,000,000
D. ₦2,500,000,000

Correct Answer: A

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Question 4
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output is 100 units and the wage rate is ₦50 per hour, what is the optimal level of capital?
A. 10 units
B. 20 units
Correct C. 30 units
D. 40 units

Correct Answer: C

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Question 5
A country's inflation rate is 10% per annum. If the nominal interest rate is 12% per annum, what is the real interest rate?
A. 2%
Correct B. 4%
C. 6%
D. 8%

Correct Answer: B

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Question 6
Consider a country with a fixed money supply and a central bank that uses the Taylor rule to set interest rates. If the inflation rate is 4% and the output gap is 2%, what will be the new interest rate set by the central bank, assuming the Taylor rule is implemented?
A. 6%
Correct B. 8%
C. 10%
D. 12%

Correct Answer: B

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Question 7
A firm is producing a good with a production function of Q = 2L^0.5K^0.5. If the price of labor is $10 per hour and the price of capital is $20 per hour, and the firm is currently producing 100 units of output, what is the opportunity \cost of producing one more unit of output?
A. $5
Correct B. $10
C. $15
D. $20

Correct Answer: B

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Question 8
A country is experiencing a trade deficit due to a decrease in exports and an increase in imports. If the country's GDP is $100 billion and the trade deficit is $20 billion, what is the opportunity \cost of the trade deficit?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 9
A firm is operating in a perfectly competitive market with a demand curve of Q = 100 - 2P and a supply curve of Q = 20 + 3P. If the price of the good is $10, what is the firm's profit-maximizing quantity?
A. 50
Correct B. 60
C. 70
D. 80

Correct Answer: B

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Question 10
A country is experiencing a balance of payments crisis due to a large trade deficit. If the country's trade deficit is $20 billion and the country's foreign exchange reserves are $10 billion, what is the opportunity \cost of the trade deficit?
A. 20%
Correct B. 30%
C. 40%
D. 50%

Correct Answer: B

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Question 11
A firm's demand curve for a product is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. The supply curve is given by Qs = 2P - 50. Find the equilibrium price and quantity.
A. ₦50
Correct B. ₦75
C. ₦100
D. ₦125

Correct Answer: B

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Question 12
A consumer's utility function is given by U(x, y) = 2x + 3y. The consumer's budget constraint is given by 2x + 3y = 100. Find the consumer's optimal bundle of x and y.
Correct A. x = 20, y = 30
B. x = 30, y = 20
C. x = 25, y = 25
D. x = 15, y = 35

Correct Answer: A

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Question 13
A firm's demand curve for a product is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. The supply curve is given by Qs = 2P - 50. Find the price elasticity of demand at a price of ₦75.
Correct A. 0.5
B. 1
C. 2
D. 3

Correct Answer: A

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Question 14
Agricultural development in Nigeria has been hindered by the lack of access to credit. What policy intervention would you recomm\end to address this issue?
A. Establish a government-owned bank to provide credit to farmers
Correct B. Introduce a microfinance scheme to provide small loans to farmers
C. Increase the budget allocation for agricultural development
D. Implement a cash transfer program to support farmers

Correct Answer: B

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Question 15
The balance of payments (BOP) accounts for a country are given by: Current Account = 100, Capital Account = 50, and Financial Account = 20. What is the overall balance of payments position?
Correct A. ₦170
B. ₦180
C. ₦190
D. ₦200

Correct Answer: A

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Question 16
A firm's average \cost curve intersects its marginal \cost curve at point E, where the average \cost is ₦120. If the firm's total fixed \cost is ₦10,000 and its marginal \cost is ₦50 at point E, calculate the firm's total output at point E.
A. 100 units
Correct B. 200 units
C. 300 units
D. 400 units

Correct Answer: B

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Question 17
A country's GDP is ₦1,500,000,000,000. If the country's net factor income from abroad is ₦50,000,000,000, calculate the country's GNP.
Correct A. ₦1,550,000,000,000
B. ₦1,550,500,000,000
C. ₦1,550,000,000,000
D. ₦1,550,500,000,000

Correct Answer: A

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Question 18
A firm's demand function is given by Q = 100 - 2P. If the firm's supply function is given by Q = 2P - 10, calculate the equilibrium price and quantity.
Correct A. P = ₦20, Q = 60
B. P = ₦30, Q = 80
C. P = ₦40, Q = 100
D. P = ₦50, Q = 120

Correct Answer: A

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Question 19
A country's money supply is ₦500,000,000,000. If the country's velocity of money is 5, calculate the country's nominal GDP.
Correct A. ₦2,500,000,000,000
B. ₦2,500,500,000,000
C. ₦2,500,000,000,000
D. ₦2,500,500,000,000

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 inputs are L = 100 and K = 100, calculate the firm's output.
A. 200
Correct B. 400
C. 600
D. 800

Correct Answer: B

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Question 21
The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue. The policy includes a 10% tax on all goods and services. If the current GDP of Nigeria is ₦120 trillion, and the government expects the tax revenue to be 5% of the GDP, what is the expected tax revenue in billions of naira?
A. ₦6,000 billion
Correct B. ₦12,000 billion
C. ₦18,000 billion
D. ₦24,000 billion

Correct Answer: B

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Question 22
A firm is producing a good with a marginal \cost (MC) of ₦100 and a marginal revenue (MR) of ₦150. If the firm is currently producing 100 units of the good, what is the change in the firm's profit?
A. ₦5,000
Correct B. ₦10,000
C. ₦15,000
D. ₦20,000

Correct Answer: B

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Question 23
The Central Bank of Nigeria (CBN) has set a monetary policy target of 10% inflation rate. If the current inflation rate is 8%, and the CBN expects the inflation rate to increase by 2% in the next quarter, what is the expected inflation rate in the next quarter?
A. 10%
Correct B. 12%
C. 14%
D. 16%

Correct Answer: B

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Question 24
A farmer is producing wheat on a 100-hectare farm. The farmer's total revenue is ₦1.5 million, and the total \cost is ₦1.2 million. If the farmer's profit is ₦300,000, what is the farmer's profit margin?
A. 20%
B. 25%
Correct C. 30%
D. 35%

Correct Answer: C

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Question 25
The Nigerian government has introduced a new policy to increase the production of rice. The policy includes a subsidy of ₦50 per ki\logram of rice produced. If the current price of rice is ₦200 per ki\logram, and the government expects the price to decrease by 25%, what is the expected price of rice in the next quarter?
A. ₦150
Correct B. ₦175
C. ₦200
D. ₦225

Correct Answer: B

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