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POST UTME LAUTECH 2021 Economics | Objective

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Question 1

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 0.5, what is the price elasticity of supply?

A. 0.5

Correct B. 1

C. 2

D. 3

Correct Answer: B

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Question 2

A firm is producing a good with a production function Q = 2L^0.5K^0.5, where L is labor and K is capital. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, and the firm is currently producing 100 units of output, what is the total \cost of production?

A. ₦20,000

B. ₦30,000

Correct C. ₦40,000

D. ₦50,000

Correct Answer: C

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Question 3

A country's GDP is ₦1 trillion, its GNP is ₦1.1 trillion, and its national income is ₦1.2 trillion. What is the difference between the GNP and the national income?

A. ₦100 billion

B. ₦200 billion

Correct C. ₦300 billion

D. ₦400 billion

Correct Answer: C

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Question 4

A firm is operating in a perfectly competitive market with a demand curve given by Qd = 100 - 2P and a supply curve given by Qs = 2P. What is the equilibrium price and quantity?

A. P = ₦50, Q = 50

Correct B. P = ₦75, Q = 75

C. P = ₦100, Q = 100

D. P = ₦125, Q = 125

Correct Answer: B

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Question 5

A firm is producing a good with a production function Q = 2L^0.5K^0.5, where L is labor and K is capital. If the firm is currently producing 100 units of output and the price of labor is ₦100 per unit, what is the marginal product of labor?

Correct A. 0.5

B. 1

C. 2

D. 3

Correct Answer: A

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Question 6

A consumer's indifference curve is represented by the equation ( u(x,y) = 2x + 3y ). If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, what is the consumer's optimal bundle of x and y?

Correct A. (20, 10)

B. (15, 15)

C. (10, 20)

D. (5, 25)

Correct Answer: A

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Question 7

A firm's production function is given by \( Q = 2L^{1/2}K^{1/2} \). If the firm's output is 16 units and the price of labor is ₦10 per unit, what is the minimum \cost of production?

Correct A. ₦160

B. ₦320

C. ₦640

D. ₦1280

Correct Answer: A

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Question 8

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

A. ₦20 billion

Correct B. ₦30 billion

C. ₦40 billion

D. ₦50 billion

Correct Answer: B

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Question 9

A firm's demand function is given by \( Q = 100 - 2P \). If the price of the good is ₦20, what is the firm's revenue?

Correct A. ₦2000

B. ₦4000

C. ₦6000

D. ₦8000

Correct Answer: A

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Question 10

A country's balance of payments is given by the following table:\n\n| Item | Value |\n| --- | --- |\n| Exports | ₦100 billion |\n| Imports | ₦120 billion |\n| Net Factor Income | ₦20 billion |\n| Net Transfer | ₦10 billion |\n\nWhat is the country's current account deficit?

A. ₦30 billion

Correct B. ₦40 billion

C. ₦50 billion

D. ₦60 billion

Correct Answer: B

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Question 11

The Marshall-Lerner condition states that a country's balance of payments will improve if the sum of the percentage changes in its export and import prices exceeds the percentage change in its exchange rate. If the percentage change in the exchange rate is 10% and the percentage change in the export price is 15%, what is the minimum percentage change in the import price required for the Marshall-Lerner condition to hold?

Correct A. 5%

B. 10%

C. 15%

D. 20%

Correct Answer: A

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Question 12

A perfectly competitive firm's supply curve is given by the equation Q = 100 + 2P, where Q is the quantity supplied and P is the price. If the price is 20, what is the quantity supplied?

A. 120

Correct B. 140

C. 160

D. 180

Correct Answer: B

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Question 13

A monopolist faces a demand curve given by the equation P = 100 - 2Q, where P is the price and Q is the quantity demanded. If the monopolist produces 20 units, what is the price?

Correct A. 80

B. 70

C. 60

D. 50

Correct Answer: A

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Question 14

A country's GDP is 100 billion naira. If the country's GNP is 120 billion naira, what is the net factor income from abroad?

A. 20 billion naira

Correct B. 30 billion naira

C. 40 billion naira

D. 50 billion naira

Correct Answer: B

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Question 15

A consumer's indifference curve is given by the equation U = 2x + 3y, where U is the utility and x and y are the quantities of two goods. If the consumer is indifferent between 2 units of good x and 3 units of good y, what is the utility?

A. 9

Correct B. 10

C. 11

D. 12

Correct Answer: B

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Question 16

Consider a country with a GDP of ₦10 trillion and a GNP of ₦12 trillion. If the country's population is 200 million, calculate the per capita GDP and GNP.

A. ₦50,000

Correct B. ₦60,000

C. ₦70,000

D. ₦80,000

Correct Answer: B

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Question 17

A firm's demand function is given by Q = 100 - 2P. If the price elasticity of demand is calculated at a price of ₦20, determine the elasticity.

A. 0.5

B. 1

C. 2

Correct D. -1

Correct Answer: D

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Question 18

A government imposes a tax of ₦10 on every unit of a commodity. If the supply function is given by Q = 100 + 2P, determine the new supply function after the tax is imposed.

A. Q = 100 + 2P

Correct B. Q = 90 + 2P

C. Q = 100 + 4P

D. Q = 90 + 4P

Correct Answer: B

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Question 19

A firm's \cost function is given by C = 100 + 2Q. If the revenue function is given by R = 50Q, determine the profit function.

Correct A. P = 50Q - 100

B. P = 50Q + 100

C. P = 100 - 50Q

D. P = 100 + 50Q

Correct Answer: A

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Question 20

A government's budget is given by B = 100 + 2T, where T is the tax revenue. If the tax revenue is ₦50 million, determine the government's budget.

A. ₦150 million

Correct B. ₦160 million

C. ₦170 million

D. ₦180 million

Correct Answer: B

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Question 21

An economy is said to be in a state of stagflation if it experiences both high inflation and high unemployment. U\sing the Phillips Curve model, explain why this phenomenon occurs.

A. The Phillips Curve shows a negative relationship between inflation and unemployment.

B. The Phillips Curve shows a positive relationship between inflation and unemployment.

Correct C. The Phillips Curve shows a negative relationship between inflation and unemployment, but the curve shifts to the right due to stagflation.

D. The Phillips Curve shows a positive relationship between inflation and unemployment, but the curve shifts to the left due to stagflation.

Correct Answer: C

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Question 22

A monopolistically competitive firm faces a downward-sloping demand curve. If the firm increases its price, what will happen to its revenue?

Correct A. Revenue will decrease.

B. Revenue will increase.

C. Revenue will remain the same.

D. Revenue will increase, but at a decrea\sing rate.

Correct Answer: A

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Question 23

A firm is considering investing in a new project. The project has a net present value (NPV) of ₦1,000,000 and a payback period of 5 years. What is the minimum required rate of return for the project?

A. 10%

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

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Question 24

A firm is considering two different production processes. Process A has a fixed \cost of ₦500,000 and a variable \cost of ₦200 per unit. Process B has a fixed \cost of ₦300,000 and a variable \cost of ₦300 per unit. If the firm produces 10,000 units, what is the total \cost of each process?

Correct A. Process A: ₦2,500,000; Process B: ₦2,300,000

B. Process A: ₦2,300,000; Process B: ₦2,500,000

C. Process A: ₦2,000,000; Process B: ₦2,400,000

D. Process A: ₦2,400,000; Process B: ₦2,000,000

Correct Answer: A

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Question 25

A firm is considering two different pricing strategies. Strategy A is a price discrimination strategy, where the firm charges a higher price to a segment of the market. Strategy B is a penetration pricing strategy, where the firm charges a lower price to enter the market. Which strategy is more likely to increase the firm's revenue?

Correct A. Strategy A

B. Strategy B

C. Both strategies are equally likely to increase revenue.

D. Neither strategy is likely to increase revenue.

Correct Answer: A

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