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POST UTME GREENFIELD UNIVERSITY 2025 Economics | Objective

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Question 1

The elasticity of demand for a commodity is given by the formula \( eta = \frac{p}{x} \frac{dx}{dp} \). If the price of the commodity increases by 10% and the quantity demanded decreases by 5%, what is the elasticity of demand?

Correct A. 0.5

B. 1.0

C. 1.5

D. 2.0

Correct Answer: A

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Question 2

A firm's production function is given by \( Q = 100L^{0.5}K^{0.5} \). If the price of labor increases by 20% and the price of capital increases by 15%, what is the optimal combination of labor and capital that minimizes the \cost of production?

A. L = 50, K = 100

B. L = 75, K = 150

Correct C. L = 100, K = 200

D. L = 125, K = 250

Correct Answer: C

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Question 3

A government imposes a tax on a commodity, which increases its price from ₦100 to ₦120. If the demand for the commodity is given by the equation \( Q = 100 - 2P \), what is the new quantity demanded?

A. 50

B. 60

Correct C. 70

D. 80

Correct Answer: C

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Question 4

A consumer's utility function is given by \( U = 2x + 3y \), where x and y are the quantities of two goods consumed. If the prices of the two goods are ₦10 and ₦20 respectively, and the consumer's income is ₦100, what is the optimal combination of x and y that maximizes utility?

A. x = 5, y = 10

B. x = 10, y = 20

Correct C. x = 15, y = 30

D. x = 20, y = 40

Correct Answer: C

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Question 5

A central bank increases the money supply by 10%. If the demand for money is given by the equation \( M = 1000 - 2P \), where P is the price level, what is the new price level?

A. ₦500

Correct B. ₦600

C. ₦700

D. ₦800

Correct Answer: B

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Question 6

The concept of scarcity in economics implies that the production of one good or service is limited by the availability of resources, which can be used to produce other goods or services. This is an example of a trade-off between two competing goals. Which of the following is a correct statement about trade-offs?

A. Trade-offs are always voluntary.

Correct B. Trade-offs involve a sacrifice of one good or service for another.

C. Trade-offs are always involuntary.

D. Trade-offs are only relevant in the short run.

Correct Answer: B

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Question 7

Agricultural development in Nigeria has been hindered by several factors, including inadequate infrastructure, lack of access to credit, and limited market information. Which of the following policies would be most effective in addres\sing these challenges?

A. Increa\sing government subsidies for agricultural inputs.

Correct B. Establishing a national agricultural extension service.

C. Implementing a cash transfer program for smallholder farmers.

D. Providing training on modern farming techniques.

Correct Answer: B

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Question 8

The concept of opportunity \cost is closely related to the concept of scarcity. Which of the following statements accurately describes the relationship between these two concepts?

Correct A. Opportunity \cost is the \cost of producing one good or service instead of another.

B. Opportunity \cost is the benefit of producing one good or service instead of another.

C. Opportunity \cost is the \cost of not producing one good or service.

D. Opportunity \cost is the benefit of not producing one good or service.

Correct Answer: A

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Question 9

The Gross Domestic Product (GDP) of a country is a widely used indicator of economic activity. Which of the following is a correct statement about GDP?

Correct A. GDP measures the total value of all goods and services produced within a country's borders.

B. GDP measures the total value of all goods and services produced by a country's citizens, regardless of where they are produced.

C. GDP measures the total value of all goods and services consumed within a country.

D. GDP measures the total value of all goods and services imported into a country.

Correct Answer: A

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Question 10

The Balance of Payments (BOP) is a statistical statement that summarizes a country's international transactions over a specific period of time. Which of the following is a correct statement about the BOP?

A. The BOP measures the total value of a country's exports and imports.

B. The BOP measures the total value of a country's foreign exchange reserves.

Correct C. The BOP measures the total value of a country's international transactions, including trade, investment, and services.

D. The BOP measures the total value of a country's domestic production.

Correct Answer: C

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Question 11

A firm operating in a perfectly competitive market is characterized by which of the following?

A. A \single price maker

Correct B. Many buyers and sellers

C. A \single buyer

D. A \single seller

Correct Answer: B

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Question 12

A country's balance of payments is in equilibrium when the value of its exports equals the value of its imports. What is the term for this equilibrium?

A. Trade deficit

Correct B. Trade surplus

C. Current account deficit

D. Current account surplus

Correct Answer: B

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Question 13

A consumer's indifference curve is a graphical representation of the various combinations of two goods that yield the same level of satisfaction. What is the term for the slope of the indifference curve?

Correct A. Marginal rate of substitution

B. Marginal rate of transformation

C. Marginal utility

D. Opportunity \cost

Correct Answer: A

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Question 14

A firm's production function is given by Q = 2L^0.5K^0.5. What is the marginal product of labor?

Correct A. \frac{L^{0.5}K^{0.5}}{2L}

B. \frac{L^{0.5}K^{0.5}}{2K}

C. \frac{L^{0.5}K^{0.5}}{2}

D. \frac{L^{0.5}K^{0.5}}{2L^2}

Correct Answer: A

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Question 15

A country's GDP is given by the equation GDP = C + I + G + \( X - M \). What is the term for the difference between a country's exports and imports?

A. Trade deficit

B. Trade surplus

C. Current account deficit

Correct D. Current account surplus

Correct Answer: D

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Question 16

A firm's production function is given by Q = 100L^0.5K^0.5. If the price of labor (L) is ₦100 per unit and the price of capital (K) is ₦200 per unit, calculate the opportunity \cost of one additional unit of labor in terms of capital.

A. ₦100

B. ₦200

C. ₦50

Correct D. ₦150

Correct Answer: D

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Question 17

A monopolist faces a demand curve given by P = 100 - 2Q. The marginal revenue (MR) function is given by MR = 100 - 4Q. Find the profit-maximizing quantity of output.

A. 20

B. 30

Correct C. 40

D. 50

Correct Answer: C

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Question 18

A firm's total revenue (TR) function is given by TR = 100Q - 2Q^2. If the firm sells Q = 20 units, calculate the elasticity of demand.

Correct A. 0.5

B. 1

C. 2

D. 3

Correct Answer: A

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Question 19

A firm's production function is given by Q = 100L^0.5K^0.5. If the price of labor (L) is ₦100 per unit and the price of capital (K) is ₦200 per unit, calculate the marginal product of labor (MPL) when L = 10 units.

A. 5

Correct B. 10

C. 15

D. 20

Correct Answer: B

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Question 20

A monopolist faces a demand curve given by P = 100 - 2Q. The marginal revenue (MR) function is given by MR = 100 - 4Q. Find the profit-maximizing price.

A. 50

B. 60

Correct C. 70

D. 80

Correct Answer: C

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