POST UTME JOSEPH AYO BABALOLA UNIVERSITY 2025 Economics | Objective

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Question 1
The concept of diminishing marginal utility is a fundamental principle in the theory of consumer behavior. Which of the following best describes this concept?
Correct A. The law of diminishing marginal utility states that as the quantity of a good consumed increases, the marginal utility derived from each additional unit decreases.
B. The law of diminishing marginal utility states that as the quantity of a good consumed increases, the marginal utility derived from each additional unit remains cons\tant.
C. The law of diminishing marginal utility states that as the quantity of a good consumed increases, the marginal utility derived from each additional unit increases.
D. The law of diminishing marginal utility states that as the quantity of a good consumed increases, the marginal utility derived from each additional unit is unaffected.

Correct Answer: A

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Question 2
A firm's production function is given by Q = 2L^0.5K^0.5, where Q is the quantity produced, L is labor, and K is capital. If the firm wants to increase its output by 20%, what percentage increase in labor and capital is required?
A. 10% increase in labor and 10% increase in capital
Correct B. 20% increase in labor and 20% increase in capital
C. 30% increase in labor and 30% increase in capital
D. 40% increase in labor and 40% increase in capital

Correct Answer: B

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Question 3
A government wants to increase its GDP by 10% within the next year. If the current GDP is ₦1,000,000,000, what is the required increase in national income?
A. ₦100,000,000
Correct B. ₦200,000,000
C. ₦300,000,000
D. ₦400,000,000

Correct Answer: B

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Question 4
A firm is considering two different production processes. Process A requires 2 units of labor and 3 units of capital to produce 10 units of output, while Process B requires 3 units of labor and 2 units of capital to produce 12 units of output. Which process is more efficient?
A. Process A is more efficient
Correct B. Process B is more efficient
C. Both processes are equally efficient
D. Neither process is efficient

Correct Answer: B

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Question 5
A government wants to increase its agricultural production by 20% within the next year. If the current agricultural production is 10,000 metric tons, what is the required increase in agricultural production?
A. 2,000 metric tons
Correct B. 4,000 metric tons
C. 6,000 metric tons
D. 8,000 metric tons

Correct Answer: B

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Question 6
A firm's production function is given by Q = 2L^0.5H^0.5. If the wage rate is ₦100 per hour and the rental rate is ₦50 per hour, find the optimal level of labor (L) and capital (H) that maximizes profits.
A. L = 100, H = 100
B. L = 50, H = 50
Correct C. L = 200, H = 200
D. L = 150, H = 150

Correct Answer: C

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Question 7
A country's GDP is ₦10 trillion. If the government imposes a 10% tax on the GDP, what is the new GDP?
Correct A. ₦9 trillion
B. ₦11 trillion
C. ₦10 trillion
D. ₦12 trillion

Correct Answer: A

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Question 8
A firm's \cost function is given by C(L, H) = 2L + 3H. If the firm produces 100 units of output, find the total \cost.
A. ₦500
Correct B. ₦600
C. ₦700
D. ₦800

Correct Answer: B

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Question 9
A country's GNP is ₦15 trillion. If the country has a trade deficit of ₦2 trillion, what is the country's GDP?
Correct A. ₦13 trillion
B. ₦15 trillion
C. ₦17 trillion
D. ₦19 trillion

Correct Answer: A

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Question 10
A firm's revenue function is given by R(L, H) = 2L^2H. If the firm produces 100 units of output, find the total revenue.
A. ₦5000
Correct B. ₦6000
C. ₦7000
D. ₦8000

Correct Answer: B

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Question 11
A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \). If the firm's output is 16 units when L = 4 and K = 9, what is the marginal product of labor?
A. 4
Correct B. 6
C. 8
D. 10

Correct Answer: B

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Question 12
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?
A. (20, 0)
Correct B. (10, 10)
C. (0, 20)
D. (5, 15)

Correct Answer: B

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Question 13
A firm's demand function is given by Q = 100 - 2P. If the firm's output is 60 units, what is the price elasticity of demand?
A. -1
Correct B. -2
C. -3
D. -4

Correct Answer: B

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Question 14
A government's budget function is given by B = T + G. If the government's tax revenue is ₦50 and the government's exp\enditure is ₦30, what is the government's budget balance?
Correct A. ₦20
B. ₦30
C. ₦40
D. ₦50

Correct Answer: A

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Question 15
A monopolist's demand function is given by Q = 100 - 2P. If the monopolist's output is 60 units, what is the monopolist's price?
A. ₦20
Correct B. ₦30
C. ₦40
D. ₦50

Correct Answer: B

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Question 16
Suppose a firm's marginal revenue (MR) and marginal \cost (MC) curves intersect at a point where MR = 120 and MC = 100. If the firm's demand curve is given by Q = 100 - 2P, and the firm's total \cost (TC) function is TC = 200 + 20Q + 0.5Q^2, what is the firm's optimal price (P) and quantity (Q) at the point of equilibrium?
Correct A. \( P = 40, Q = 30 \)
B. \( P = 50, Q = 25 \)
C. \( P = 60, Q = 20 \)
D. \( P = 70, Q = 15 \)

Correct Answer: A

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Question 17
A country's GDP at market price is ₦1,500 billion, while its GDP at factor \cost is ₦1,400 billion. What is the value of the indirect taxes (IT) in the country?
Correct A. ₦100 billion
B. ₦50 billion
C. ₦75 billion
D. ₦25 billion

Correct Answer: A

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Question 18
A firm's \cost function is given by TC = 100 + 20Q + 0.5Q^2, where Q is the quantity produced. If the firm's revenue function is given by R = 200Q - 0.5Q^2, what is the firm's profit-maximizing quantity (Q)?
Correct A. \( Q = 10 \)
B. \( Q = 15 \)
C. \( Q = 20 \)
D. \( Q = 25 \)

Correct Answer: A

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Question 19
A government budget is given by the equation: G = T + I, where G is government exp\enditure, T is tax revenue, and I is investment. If the government exp\enditure is ₦500 billion, tax revenue is ₦300 billion, and investment is ₦200 billion, what is the value of the budget deficit (BD)?
Correct A. ₦100 billion
B. ₦200 billion
C. ₦300 billion
D. ₦400 billion

Correct Answer: A

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Question 20
A country's national income (NI) is given by the equation: NI = C + I + G, where C is consumption, I is investment, and G is government exp\enditure. If the consumption is ₦500 billion, investment is ₦200 billion, and government exp\enditure is ₦300 billion, what is the value of the national income?
A. ₦1,000 billion
B. ₦1,200 billion
Correct C. ₦1,500 billion
D. ₦2,000 billion

Correct Answer: C

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Question 21
The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the agricultural sector. The policy requires farmers to pay a 10% tax on their total sales. However, the farmers are allowed to deduct 20% of their total sales as a discount. If a farmer sells goods worth ₦1,000,000, how much tax will they pay?
A. ₦80,000
Correct B. ₦90,000
C. ₦100,000
D. ₦110,000

Correct Answer: B

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Question 22
A consumer has a budget of ₦50,000 per month for entertainment. The consumer has the following options for entertainment: a movie ticket that \costs ₦2,000, a concert ticket that \costs ₦5,000, and a dinner at a restaurant that \costs ₦10,000. U\sing the concept of utility, which option will the consumer choose?
Correct A. Movie ticket
B. Concert ticket
C. Dinner at a restaurant
D. None of the above

Correct Answer: A

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Question 23
The government of Nigeria has introduced a new policy aimed at increa\sing the production of rice in the country. The policy includes a subsidy of ₦50 per ki\logram of rice produced. If a farmer produces 10,000 ki\lograms of rice, how much subsidy will they receive?
Correct A. ₦500,000
B. ₦500,000
C. ₦500,000
D. ₦500,000

Correct Answer: A

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Question 24
A country's GDP is calculated as the sum of the value of all final goods and services produced within the country. If a country's GDP is ₦10,000,000,000 and its GNP is ₦12,000,000,000, what is the difference between the two?
Correct A. ₦2,000,000,000
B. ₦2,000,000,000
C. ₦2,000,000,000
D. ₦2,000,000,000

Correct Answer: A

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Question 25
A country's balance of payments account includes the following items: exports, imports, and net factor income from abroad. If a country's exports are ₦5,000,000,000, its imports are ₦6,000,000,000, and its net factor income from abroad is ₦1,000,000,000, what is the balance of payments deficit?
Correct A. ₦1,000,000,000
B. ₦1,000,000,000
C. ₦1,000,000,000
D. ₦1,000,000,000

Correct Answer: A

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