POST UTME CRAWFORD UNIVERSITY 2024 Economics | Objective

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Question 1
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output increases by 20% with a 10% increase in labor and a 15% increase in capital, what is the return to scale?
A. Increa\sing
B. Decrea\sing
Correct C. Cons\tant
D. Indeterminate

Correct Answer: C

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Question 2
The Central Bank of Nigeria (CBN) has implemented a monetary policy to reduce inflation. The policy involves a decrease in the money supply by 5%. If the demand for money is given by M = 1000 + 0.5Y, where Y is the national income, what is the effect of the policy on the interest rate?
A. Increases
Correct B. Decreases
C. Remains Cons\tant
D. Indeterminate

Correct Answer: B

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Question 3
Agricultural production in Nigeria is characterized by a high degree of seasonality. If the demand for agricultural products is given by Q = 1000 + 0.5P, where P is the price, and the supply of agricultural products is given by Q = 500 + 0.2P, what is the price elasticity of demand?
A. Elastic
Correct B. Inelastic
C. Unit Elastic
D. Indeterminate

Correct Answer: B

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Question 4
The Nigerian government has implemented a tax policy to increase revenue. The policy involves a 10% increase in the corporate tax rate. If the tax revenue is given by TR = 1000 + 0.5P, where P is the price, what is the effect of the policy on the tax revenue?
Correct A. Increases
B. Decreases
C. Remains Cons\tant
D. Indeterminate

Correct Answer: A

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Question 5
The Nigerian government has implemented a budget policy to reduce the budget deficit. The policy involves a 20% decrease in government exp\enditure. If the budget is given by B = 1000 + 0.5G, where G is the government exp\enditure, what is the effect of the policy on the budget deficit?
A. Increases
Correct B. Decreases
C. Remains Cons\tant
D. Indeterminate

Correct Answer: B

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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 -2, what is the percentage change in quantity demanded when the price increases by 10%?
Correct A. 20%
B. 15%
C. 10%
D. 5%

Correct Answer: A

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Question 7
A farmer produces wheat and corn on a 100-hectare farm. The marginal product of wheat is 20 units per hectare, and the marginal product of corn is 15 units per hectare. If the farmer allocates 60 hectares to wheat and 40 hectares to corn, what is the opportunity \cost of producing one more unit of wheat?
A. 0.4 units of corn
B. 0.5 units of corn
Correct C. 0.6 units of corn
D. 0.7 units of corn

Correct Answer: C

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Question 8
A firm produces two goods, A and B, u\sing two inputs, labor and capital. The production function for good A is Q_A = 2L^0.5K^0.5, and the production function for good B is Q_B = 3L^0.7K^0.3. If the firm allocates 100 units of labor and 50 units of capital, what is the marginal rate of technical substitution (MRTS) of labor for good A with respect to good B?
A. 0.5
B. 0.6
Correct C. 0.7
D. 0.8

Correct Answer: C

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Question 9
A consumer has an indifference curve given by the equation U = 2x^0.5y^0.5, where x is the quantity of good A and y is the quantity of good B. If the consumer's income is ₦1000 and the prices of good A and good B are ₦5 and ₦10 respectively, what is the consumer's optimal bundle of goods?
A. x = 20, y = 10
Correct B. x = 15, y = 15
C. x = 10, y = 20
D. x = 5, y = 25

Correct Answer: B

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Question 10
A firm produces a product with a total revenue of ₦1000 and a total \cost of ₦800. If the firm's marginal revenue is ₦20 and its marginal \cost is ₦15, what is the firm's profit-maximizing quantity of output?
A. 20 units
B. 30 units
Correct C. 40 units
D. 50 units

Correct Answer: C

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Question 11
A monopolist faces a market demand curve given by Q = 100 - 2P and a marginal revenue function MR = 50 - 2Q. Find the profit-maximizing quantity and price.
A. 50
B. 75
Correct C. 100
D. 125

Correct Answer: C

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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 inputs are L = 4 and K = 9, what is the marginal product of labor?
A. 0.5
B. 1
Correct C. 1.5
D. 2

Correct Answer: C

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Question 13
A government imposes a tax on a firm's output. The firm's supply curve is given by Q = 100 + 2P. If the tax rate is 10%, what is the new supply curve?
Correct A. Q = 100 + 2.2P
B. Q = 100 + 2P
C. Q = 100 + 1.8P
D. Q = 100 + 1.2P

Correct Answer: A

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Question 14
A firm's \cost function is given by C = 100 + 2L + 3K. If the firm's current inputs are L = 4 and K = 9, what is the total \cost?
A. 250
B. 300
Correct C. 350
D. 400

Correct Answer: C

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Question 15
A government wants to increase its revenue. It imposes a tax on a firm's output. The firm's supply curve is given by Q = 100 + 2P. If the tax rate is 10%, what is the new supply curve?
Correct A. Q = 100 + 2.2P
B. Q = 100 + 2P
C. Q = 100 + 1.8P
D. Q = 100 + 1.2P

Correct Answer: A

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Question 16
Suppose the demand for a commodity is given by the equation Qd = 100 - 2P and the supply is given by Qs = 2P - 10. If the equilibrium price is 15, what is the equilibrium quantity?
Correct A. 20
B. 30
C. 40
D. 50

Correct Answer: A

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Question 17
A central bank wants to reduce inflation by increa\sing the interest rate. If the initial interest rate is 5% and the inflation rate is 8%, what is the new interest rate if the central bank increases it by 2%?
Correct A. 7%
B. 9%
C. 11%
D. 13%

Correct Answer: A

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Question 18
A firm has a production function given by Q = 2L + 3K, where L is labor and K is capital. If the firm has 10 units of labor and 5 units of capital, what is the total output?
A. 20
B. 30
Correct C. 35
D. 40

Correct Answer: C

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Question 19
A consumer has a budget of ₦1000 and a demand function given by Q = 2P - 10. If the price of the commodity is 10, what is the consumer's willingness to pay?
Correct A. ₦1000
B. ₦900
C. ₦800
D. ₦700

Correct Answer: A

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Question 20
A firm has a \cost function given by C = 2L + 3K, where L is labor and K is capital. If the firm has 10 units of labor and 5 units of capital, what is the total \cost?
A. ₦20
B. ₦30
Correct C. ₦35
D. ₦40

Correct Answer: C

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Question 21
A country's GDP grows at an annual rate of 5% while its population increases at a rate of 2.5%. What is the rate of growth of per capita GDP?
Correct A. 3.5%
B. 2%
C. 4%
D. 6%

Correct Answer: A

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Question 22
A firm has a production function Q = 2L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, what is the optimal combination of labor and capital?
Correct A. L = 100, K = 50
B. L = 50, K = 100
C. L = 200, K = 100
D. L = 100, K = 200

Correct Answer: A

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Question 23
A country has a trade deficit of ₦100 billion and a current account deficit of ₦50 billion. What is the balance of payments identity?
A. BOP = CA - FA
Correct B. BOP = CA + FA
C. BOP = CA - CA
D. BOP = FA - CA

Correct Answer: B

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Question 24
A firm has a demand function Q = 100 - 2P. If the price is ₦50, what is the quantity demanded?
A. 50
Correct B. 75
C. 100
D. 125

Correct Answer: B

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Question 25
A country has a tax rate of 20% and a government exp\enditure of ₦500 billion. What is the budget balance?
A. ₦100 billion surplus
Correct B. ₦100 billion deficit
C. ₦500 billion surplus
D. ₦500 billion deficit

Correct Answer: B

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