POST UTME MOUNTAIN TOP UNIVERSITY 2022 Economics | Objective

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Question 1
In a perfectly competitive market, the demand curve for a firm's product is its
Correct A. marginal revenue curve
B. marginal \cost curve
C. average revenue curve
D. average \cost curve

Correct Answer: A

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Question 2
The formula for calculating the Gross Domestic Product (GDP) is
Correct A. C + I + G + \( X - M \)
B. C + I + G + X + M
C. C + I + G + X - M
D. C + I + G - X + M

Correct Answer: A

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Question 3
A monopolist's demand curve is downward-sloping because
A. the monopolist has a fixed supply of the product
B. the monopolist faces a downward-sloping demand curve
Correct C. the monopolist has a downward-sloping marginal revenue curve
D. the monopolist has a fixed price for the product

Correct Answer: C

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Question 4
The diagram below shows the supply and demand curves for a product. If the price of the product is ₦10, what is the equilibrium quantity?
A. 10
Correct B. 20
C. 30
D. 40

Correct Answer: B

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Question 5
The formula for calculating the inflation rate is
Correct A. \( CPI_t - CPI_\( t-1 \ \)) / CPI_\( t-1 \)
B. \( CPI_t - CPI_\( t-1 \ \)) / CPI_t
C. \( CPI_t + CPI_\( t-1 \ \)) / 2
D. CPI_t - CPI_\( t-1 \)

Correct Answer: A

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Question 6
The demand for a commodity is inversely related to its price. If the price of the commodity increases from ₦100 to ₦120, and the quantity demanded decreases from 100 units to 80 units, what is the price elasticity of demand?
A. 0.5
B. 1.25
C. -0.5
Correct D. -1.25

Correct Answer: D

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Question 7
A monopolist faces a demand curve given by Q = 100 - 2P. If the marginal \cost is cons\tant at ₦20, what is the profit-maximizing price?
A. ₦40
Correct B. ₦60
C. ₦80
D. ₦100

Correct Answer: B

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Question 8
A country's balance of payments is given by the following equation: BOP = X - M. If the country's exports (X) are ₦100 billion and imports (M) are ₦80 billion, what is the balance of payments?
Correct A. ₦20 billion
B. ₦10 billion
C. ₦5 billion
D. ₦0 billion

Correct Answer: A

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Question 9
A firm's production function is given by Q = 2L + 3K. If the firm's labor (L) increases from 10 units to 15 units, and the capital (K) remains cons\tant at 5 units, what is the marginal product of labor?
A. 2
Correct B. 4
C. 6
D. 8

Correct Answer: B

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Question 10
A country's inflation rate is given by the following equation: inflation rate = \( P - P0 \) / P0. If the current price level (P) is ₦100 and the previous price level (P0) is ₦80, what is the inflation rate?
A. 25%
Correct B. 50%
C. 75%
D. 100%

Correct Answer: B

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Question 11
Consider a firm operating in a perfectly competitive market with a given supply curve. If the firm's marginal revenue (MR) curve intersects the supply curve at a point where MR > MC, what will be the effect on the firm's output?
Correct A. Increase output
B. Decrease output
C. Output remains unchanged
D. Output increases but then decreases

Correct Answer: A

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Question 12
A country's GDP is ₦100 billion, and its GNP is ₦120 billion. What is the value of net factor income from abroad?
Correct A. ₦20 billion
B. ₦10 billion
C. ₦5 billion
D. ₦15 billion

Correct Answer: A

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Question 13
A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \). If the firm increases its labor input from 4 units to 9 units, and holds capital input cons\tant at 16 units, what is the percentage change in output?
A. 25%
Correct B. 50%
C. 75%
D. 100%

Correct Answer: B

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Question 14
A country's trade balance is in deficit, and its current account deficit is financed by foreign direct investment. What is the effect on the country's exchange rate?
A. Appreciation
Correct B. Depreciation
C. No change
D. Uncertain

Correct Answer: B

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Question 15
A monopolist faces a demand curve given by P = 100 - 2Q. If the firm's marginal \cost (MC) is cons\tant at ₦20, what is the profit-maximizing output level?
A. 20 units
Correct B. 30 units
C. 40 units
D. 50 units

Correct Answer: B

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Question 16
The concept of scarcity in economics implies that the production of one good is limited by the availability of resources that could be used to produce another good. Which of the following is a correct example of scarcity?
A. A farmer has 100 hectares of land to grow either wheat or maize.
Correct B. A country has a fixed amount of money to sp\end on either defense or education.
C. A factory has a limited number of machines to produce either cars or bicycles.
D. A person has a choice between eating a sandwich or drinking a glass of water.

Correct Answer: B

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Question 17
The demand for a product is said to be elastic if a small change in price leads to a large change in quantity demanded. Which of the following is a correct example of an elastic demand?
A. The demand for a luxury item such as a private jet.
B. The demand for a necessity such as bread.
Correct C. The demand for a product with a high price elasticity such as a new smartphone.
D. The demand for a product with a low price elasticity such as a utility bill.

Correct Answer: C

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Question 18
The government of a country imposes a tax on a product to reduce its consumption. Which of the following is a correct effect of this tax?
A. The tax revenue collected by the government increases.
Correct B. The price of the product increases, leading to a decrease in demand.
C. The tax revenue collected by the government decreases.
D. The tax has no effect on the demand for the product.

Correct Answer: B

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Question 19
The money supply in an economy is the total amount of money available for use in the economy. Which of the following is a correct factor that affects the money supply?
Correct A. The government's monetary policy.
B. The level of economic activity.
C. The level of inflation.
D. The level of unemployment.

Correct Answer: A

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Question 20
The inflation rate in an economy is the rate at which the general price level of goods and services is ri\sing. Which of the following is a correct effect of inflation?
Correct A. The purcha\sing power of money decreases.
B. The value of money increases.
C. The level of economic activity increases.
D. The level of unemployment decreases.

Correct Answer: A

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Question 21
The concept of opportunity \cost in economics refers to the value of the next best alternative that is given up when a choice is made. Which of the following is a correct example of opportunity \cost?
A. A farmer chooses to grow wheat instead of maize.
B. A person chooses to eat a sandwich instead of a salad.
Correct C. A company chooses to invest in a new project instead of expanding an existing one.
D. A government chooses to sp\end money on defense instead of education.

Correct Answer: C

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Question 22
The demand for a product is said to be inelastic if a small change in price leads to a small change in quantity demanded. Which of the following is a correct example of an inelastic demand?
A. The demand for a luxury item such as a private jet.
Correct B. The demand for a necessity such as bread.
C. The demand for a product with a high price elasticity such as a new smartphone.
D. The demand for a product with a low price elasticity such as a utility bill.

Correct Answer: B

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Question 23
The government of a country imposes a tax on a product to reduce its consumption. Which of the following is a correct effect of this tax?
Correct A. The tax revenue collected by the government increases.
B. The price of the product increases, leading to a decrease in demand.
C. The tax revenue collected by the government decreases.
D. The tax has no effect on the demand for the product.

Correct Answer: A

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Question 24
The money supply in an economy is the total amount of money available for use in the economy. Which of the following is a correct factor that affects the money supply?
A. The government's monetary policy.
B. The level of economic activity.
C. The level of inflation.
D. The level of unemployment.

Correct Answer: VIEW ANSWER

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Question 25
A firm's production function is given by Q = 2L^0.5H^0.5, where L and H are inputs. If the firm's output is 16 units, and the input of labor (L) is 4 units, what is the input of capital (H)?
A. 4
B. 9
Correct C. 16
D. 36

Correct Answer: C

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