POST UTME MADONNA UNIVERSITY 2025 Economics | Objective

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Question 1
Consider a firm operating in a perfectly competitive market. If the firm's marginal revenue (MR) curve intersects its marginal \cost (MC) curve at point E, where MR = MC, and the firm is producing at its profit-maximizing level of output. What is the implication of this intersection point for the firm's short-run supply curve?
A. The firm's short-run supply curve is upward-sloping.
Correct B. The firm's short-run supply curve is horizontal.
C. The firm's short-run supply curve is vertical.
D. The firm's short-run supply curve is downward-sloping.

Correct Answer: B

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Question 2
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), and the consumer is willing to trade 2 units of x for 1 unit of y, what is the new \endowment point (x1,y1)?
Correct A. (4,5)
B. (3,4)
C. (2,2)
D. (1,1)

Correct Answer: A

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Question 3
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current input levels are L = 16 and K = 9, what is the firm's current level of output?
A. 24
B. 36
Correct C. 48
D. 60

Correct Answer: C

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Question 4
A consumer's budget constraint is given by the equation 2x + 3y = 12. If the consumer's current consumption bundle is (x,y) = (2,2), what is the consumer's marginal rate of substitution (MRS) of x for y?
Correct A. 1/2
B. 1
C. 2
D. 3

Correct Answer: A

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Question 5
A firm's demand curve is given by the equation Qd = 100 - 2P. If the firm's current price is P = 20, what is the firm's current level of demand?
A. 60
Correct B. 80
C. 100
D. 120

Correct Answer: B

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Question 6
Determine the equilibrium price and quantity of a perfectly competitive market, given the following supply and demand equations:\n\nSupply: Qs = 100 + 2P\nDemand: Qd = 200 - 3P
Correct A. \( P = 10, Q = 150 \)
B. \( P = 20, Q = 100 \)
C. \( P = 30, Q = 50 \)
D. \( P = 40, Q = 0 \)

Correct Answer: A

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Question 7
A firm operating in a monopoly market has a demand curve given by Qd = 100 - 2P and a marginal revenue function of MR = 20 - 2Q. Find the profit-maximizing price and quantity.
A. \( P = 40, Q = 60 \)
Correct B. \( P = 50, Q = 70 \)
C. \( P = 60, Q = 80 \)
D. \( P = 70, Q = 90 \)

Correct Answer: B

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Question 8
A country's GDP is ₦1,000,000,000,000, and its GNP is ₦1,100,000,000,000. Calculate the net factor income from abroad.
A. ₦100,000,000,000
Correct B. ₦200,000,000,000
C. ₦300,000,000,000
D. ₦400,000,000,000

Correct Answer: B

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Question 9
A firm's demand curve is given by Qd = 100 - 2P, and its supply curve is given by Qs = 50 + 3P. Find the equilibrium price and quantity.
A. \( P = 20, Q = 80 \)
B. \( P = 30, Q = 70 \)
Correct C. \( P = 40, Q = 60 \)
D. \( P = 50, Q = 50 \)

Correct Answer: C

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Question 10
A country's GDP at market price is ₦1,500,000,000,000, and its GDP at factor \cost is ₦1,400,000,000,000. Calculate the indirect tax.
Correct A. ₦100,000,000,000
B. ₦200,000,000,000
C. ₦300,000,000,000
D. ₦400,000,000,000

Correct Answer: A

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Question 11
A monopolistically competitive firm faces a downward-sloping demand curve. If the firm increases its output from 100 units to 120 units, and the price elasticity of demand is 2, what is the percentage change in total revenue?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 12
A firm is producing a good with the following production function: Q = 2L^0.5K^0.5. If the firm increases its labor input from 100 units to 120 units, and the capital input remains cons\tant at 100 units, what is the percentage change in output?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 13
A country is experiencing a recession, and the government decides to implement a fiscal policy to stimulate the economy. If the government increases its sp\ending by ₦10 billion, and the marginal propensity to consume is 0.8, what is the multiplier effect on aggregate demand?
A. ₦8 billion
Correct B. ₦10 billion
C. ₦12 billion
D. ₦15 billion

Correct Answer: B

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Question 14
A firm is producing a good with the following production function: Q = 2L^0.5K^0.5. If the firm increases its capital input from 100 units to 120 units, and the labor input remains cons\tant at 100 units, what is the percentage change in output?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 15
A country is experiencing a recession, and the government decides to implement a monetary policy to stimulate the economy. If the central bank increases the money supply by ₦5 billion, and the velocity of money is 2, what is the increase in nominal GDP?
A. ₦10 billion
Correct B. ₦15 billion
C. ₦20 billion
D. ₦25 billion

Correct Answer: B

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Question 16
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output increases by 20% due to 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 17
A country's GDP at market price is ₦1,200 billion, while its GNP at market price is ₦1,250 billion. What is the net factor income from abroad?
Correct A. ₦50 billion
B. ₦100 billion
C. ₦150 billion
D. ₦200 billion

Correct Answer: A

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Question 18
A government imposes a tax of ₦10 per liter on a commodity. If the price elasticity of demand for the commodity is -2, what is the revenue generated from the tax?
A. ₦20 million
Correct B. ₦30 million
C. ₦40 million
D. ₦50 million

Correct Answer: B

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Question 19
A central bank increases the reserve requirement for commercial banks from 10% to 15%. What is the effect on the money supply?
A. Increase
Correct B. Decrease
C. No change
D. Indeterminate

Correct Answer: B

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Question 20
A firm's demand function is given by Q = 100 - 2P. If the price elasticity of demand is -2, what is the price at which the firm sells 80 units?
A. ₦20
B. ₦30
Correct C. ₦40
D. ₦50

Correct Answer: C

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Question 21
Consider a country with a GDP of ₦10 trillion and a GNP of ₦12 trillion. If the country's net factor income from abroad is ₦2 trillion, what is the value of its net foreign investment?
Correct A. ₦8 trillion
B. ₦10 trillion
C. ₦12 trillion
D. ₦14 trillion

Correct Answer: A

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Question 22
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?
A. 5%
B. 10%
Correct C. 15%
D. 20%

Correct Answer: C

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Question 23
A consumer's utility function is given by U = 2x^0.5y^0.5. 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. (10, 10)
B. (20, 5)
Correct C. (15, 7.5)
D. (25, 4)

Correct Answer: C

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Question 24
Consider a country with a balance of payments deficit of ₦500 billion. If the country's foreign exchange reserves are ₦2 trillion, what is the percentage change in the value of the country's currency?
Correct A. -10%
B. -5%
C. 0%
D. +5%

Correct Answer: A

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Question 25
A firm's \cost function is given by C = 2L + 3K. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in the firm's total \cost?
A. 5%
B. 10%
C. 15%
Correct D. 20%

Correct Answer: D

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