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POST UTME COAL CITY UNIVERSITY 2022 Economics | Objective

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Question 1

Determine the returns to scale for a firm that experiences a 20% increase in all inputs and a 25% increase in output.

A. Increa\sing Returns to Scale

B. Decrea\sing Returns to Scale

Correct C. Cons\tant Returns to Scale

D. No Returns to Scale

Correct Answer: C

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Question 2

A consumer has a utility function U(x,y) = 2x + 3y. If the prices of x and y are ₦10 and ₦20 respectively, and the consumer has a budget of ₦100, determine the optimal bundle of x and y.

Correct A. x = 2, y = 3

B. x = 3, y = 2

C. x = 4, y = 1

D. x = 1, y = 4

Correct Answer: A

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Question 3

A firm has a \cost function C(x) = 2x^2 + 3x. Determine the marginal \cost function.

Correct A. ( C'(x) = 4x + 3 )

B. ( C'(x) = 2x + 3 )

C. ( C'(x) = x + 3 )

D. ( C'(x) = 2x - 3 )

Correct Answer: A

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Question 4

A bank has a reserve requirement of 20% and a cash reserve of ₦100,000. If the bank wants to increase its loans by ₦500,000, determine the maximum amount of deposits it can accept.

A. ₦2,500,000

Correct B. ₦3,000,000

C. ₦3,500,000

D. ₦4,000,000

Correct Answer: B

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Question 5

A firm has a revenue function R(x) = 2x^2 + 3x. Determine the marginal revenue function.

Correct A. ( R'(x) = 4x + 3 )

B. ( R'(x) = 2x + 3 )

C. ( R'(x) = x + 3 )

D. ( R'(x) = 2x - 3 )

Correct Answer: A

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Question 6

A firm operating in a perfectly competitive market is producing at the point where its marginal revenue (MR) equals its marginal \cost (MC). What is the implication of this for the firm's profit-maximizing output?

Correct A. The firm is maximizing its profits.

B. The firm is minimizing its \costs.

C. The firm is producing at the point where its average revenue (AR) equals its average \cost (AC).

D. The firm is producing at the point where its marginal revenue product (MRP) equals its marginal factor \cost (MFC).

Correct Answer: A

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Question 7

A consumer's indifference curve is steeper than another consumer's indifference curve. What does this imply about the two consumers' preferences?

A. The first consumer is more risk-averse than the second consumer.

Correct B. The first consumer is more risk-seeking than the second consumer.

C. The first consumer prefers a more diverse basket of goods than the second consumer.

D. The first consumer prefers a less diverse basket of goods than the second consumer.

Correct Answer: B

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Question 8

A firm is considering investing in a new project with a net present value (NPV) of ₦1,000,000. The firm's \cost of capital is 10%. What is the internal rate of return (IRR) of the project?

Correct A. 10%

B. 12%

C. 15%

D. 18%

Correct Answer: A

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Question 9

A monopolist is facing a demand curve with the following equation: Q = 100 - 2P. The monopolist's marginal \cost (MC) is ₦50. What is the monopolist's profit-maximizing price?

A. ₦50

Correct B. ₦60

C. ₦70

D. ₦80

Correct Answer: B

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Question 10

A consumer's budget constraint is given by the equation: 2X + 3Y = ₦1,000. The consumer's indifference curve is given by the equation: U = 2X + 3Y. What is the consumer's optimal bundle of goods?

Correct A. (X, Y) = (₦200, ₦300)

B. (X, Y) = (₦300, ₦200)

C. (X, Y) = (₦400, ₦100)

D. (X, Y) = (₦100, ₦400)

Correct Answer: A

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Question 11

A firm's average total \cost curve intersects its marginal \cost curve at point E, where MC = ATC. If the firm is currently producing at point D, where MC > ATC, what can be concluded about the firm's short-run production decision?

A. The firm should increase production to point E.

B. The firm should decrease production to point E.

Correct C. The firm should maintain production at point D.

D. The firm should shut down production.

Correct Answer: C

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Question 12

A consumer's indifference curve is given by the equation u(x, y) = 2x + 3y. If the consumer's initial \endowment is (x0, y0) = (2, 3), what is the consumer's optimal bundle of goods?

Correct A. (4, 2)

B. (2, 4)

C. (3, 3)

D. (1, 5)

Correct Answer: A

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Question 13

A monopolist faces a demand curve given by P = 100 - 2Q. The firm's marginal \cost is MC = 20. What is the monopolist's optimal quantity of output?

A. 20

Correct B. 30

C. 40

D. 50

Correct Answer: B

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Question 14

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 firm's current output?

A. 6

Correct B. 8

C. 10

D. 12

Correct Answer: B

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Question 15

A consumer's utility function is given by u(x, y) = xy. If the consumer's initial \endowment is (x0, y0) = (2, 3), what is the consumer's optimal bundle of goods?

Correct A. (4, 2)

B. (2, 4)

C. (3, 3)

D. (1, 5)

Correct Answer: A

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Question 16

A country's balance of payments is in equilibrium when its current account is equal to its capital account. What is the name of this equilibrium?

A. Current Account Equilibrium

B. Capital Account Equilibrium

Correct C. Balance of Payments Equilibrium

D. Exchange Rate Equilibrium

Correct Answer: C

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Question 17

A firm's \cost function is given by C(q) = 10q^2 + 20q + 100. What is the marginal \cost when q = 5?

A. 100

Correct B. 120

C. 140

D. 160

Correct Answer: B

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Question 18

A perfectly competitive market has a demand function given by p = 100 - 2q. What is the price when q = 20?

A. 60

Correct B. 80

C. 100

D. 120

Correct Answer: B

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Question 19

A monopolist's revenue function is given by R(q) = 100q - 2q^2. What is the price when q = 10?

A. 80

Correct B. 90

C. 100

D. 110

Correct Answer: B

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Question 20

A country's GDP is given by the equation Y = C + I + G + $ X - M $. What is the name of this equation?

A. GDP Equation

Correct B. National Income Equation

C. Balance of Payments Equation

D. Fiscal Policy Equation

Correct Answer: B

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Question 21

The government of a country imposes a tax on imports to raise revenue. This tax is an example of a _______ tax.

A. Proportional

B. Progressive

Correct C. Regressive

D. Lump sum

Correct Answer: C

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Question 22

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output is 16 units, and the labor input is 4 units, what is the required capital input?

A. 2

Correct B. 4

C. 8

D. 16

Correct Answer: B

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Question 23

A country's GDP is $100 billion, and its GNP is $120 billion. What is the country's net factor income from abroad?

Correct A. $10 billion

B. $20 billion

C. $30 billion

D. $40 billion

Correct Answer: A

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Question 24

A firm's demand function is given by Q = 100 - 2P. If the price is $10, what is the quantity demanded?

A. 80

Correct B. 90

C. 100

D. 110

Correct Answer: B

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Question 25

A country's balance of payments is given by the following table:\n\n| Item | Value |\n| --- | --- |\n| Exports | $100 |\n| Imports | $120 |\n| Net factor income | $10 |\n| Net transfers | $20 |\n\nWhat is the country's balance of payments deficit?

A. $10

Correct B. $20

C. $30

D. $40

Correct Answer: B

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