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POST UTME NOUN 2020 Economics | Objective

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Question 1

Consider a country with a fixed money supply and a moderate rate of inflation. If the central bank increases the reserve requirement for commercial banks, what will be the effect on the money supply?

Correct A. The money supply will decrease

B. The money supply will increase

C. The money supply will remain unchanged

D. The effect on the money supply is uncertain

Correct Answer: A

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Question 2

A firm is considering two different production techno\logies: one that uses a lot of labor and another that uses a lot of capital. If the firm's production function is characterized by decrea\sing returns to scale, what will be the effect on the firm's output if it increases the amount of labor used?

A. The output will increase

Correct B. The output will decrease

C. The output will remain unchanged

D. The effect on the output is uncertain

Correct Answer: B

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Question 3

A country is experiencing a trade deficit due to a large imbalance in its trade with a major trading partner. If the country's central bank decides to implement a policy of currency appreciation, what will be the effect on the trade deficit?

A. The trade deficit will increase

Correct B. The trade deficit will decrease

C. The trade deficit will remain unchanged

D. The effect on the trade deficit is uncertain

Correct Answer: B

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Question 4

A firm is considering two different pricing strategies: one that uses a high price and another that uses a low price. If the firm's demand function is characterized by a high price elasticity, what will be the effect on the firm's revenue if it increases the price?

A. The revenue will increase

Correct B. The revenue will decrease

C. The revenue will remain unchanged

D. The effect on the revenue is uncertain

Correct Answer: B

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Question 5

A country is experiencing a recession due to a decline in aggregate demand. If the central bank decides to implement a policy of expansionary monetary policy, what will be the effect on the aggregate demand?

A. The aggregate demand will decrease

Correct B. The aggregate demand will increase

C. The aggregate demand will remain unchanged

D. The effect on the aggregate demand is uncertain

Correct Answer: B

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Question 6

A perfectly competitive firm's supply curve is upward-sloping because of the law of increa\sing

Correct A. marginal \cost

B. marginal revenue

C. marginal utility

D. marginal propensity to consume

Correct Answer: A

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Question 7

The production function is given by Q = 2L^0.5K^0.5. If the price of labor is $10 per unit and the price of capital is $20 per unit, and if the firm is currently producing 100 units of output, then the total \cost of production is

A. ₦2000

Correct B. ₦4000

C. ₦6000

D. ₦8000

Correct Answer: B

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Question 8

A country's GDP is $100 billion, its imports are $20 billion, and its exports are $30 billion. What is its balance of payments?

A. ₦10 billion surplus

Correct B. ₦10 billion deficit

C. ₦20 billion surplus

D. ₦20 billion deficit

Correct Answer: B

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Question 9

A firm's production function is given by Q = 3L^0.5K^0.5. If the price of labor is $10 per unit and the price of capital is $20 per unit, and if the firm is currently producing 100 units of output, then the marginal product of labor is

A. 0.5

B. 1

Correct C. 2

D. 3

Correct Answer: C

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Question 10

A country's GNP is $120 billion, its GDP is $100 billion, and its net factor income from abroad is $10 billion. What is its balance of payments?

Correct A. ₦10 billion surplus

B. ₦10 billion deficit

C. ₦20 billion surplus

D. ₦20 billion deficit

Correct Answer: A

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Question 11

Calculate the value of the elasticity of demand for a commodity whose price elasticity of demand is 0.5 and whose price increases by 10%.

Correct A. 0.5

B. 0.6

C. 0.7

D. 0.8

Correct Answer: A

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Question 12

A firm's total revenue is given by the equation TR = 100x - 2x^2, where x is the number of units sold. If the firm sells 20 units, what is its total revenue?

A. 1000

Correct B. 1200

C. 1500

D. 1800

Correct Answer: B

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Question 13

A country's GDP is 100 billion naira. If the country's population is 20 million, what is the per capita income?

A. 5,000

Correct B. 10,000

C. 15,000

D. 20,000

Correct Answer: B

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Question 14

A firm's production function is given by the equation Q = 10L^0.5K^0.5, where Q is the output, L is the labor, and K is the capital. If the firm uses 100 units of labor and 100 units of capital, what is the output?

A. 100

B. 200

Correct C. 300

D. 400

Correct Answer: C

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Question 15

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

A. 10,000,000,000

Correct B. 20,000,000,000

C. 30,000,000,000

D. 40,000,000,000

Correct Answer: B

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Question 16

Suppose the demand function for a commodity is given by $ Q^d = 100 - 2P $ and the supply function is given by $ Q^s = 2P - 10 $. Find the equilibrium price and quantity u\sing the diagram below.

A. ₦50

B. ₦75

Correct C. ₦100

D. ₦125

Correct Answer: C

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Question 17

A government imposes a tax of ₦10 on a commodity. If the demand function is given by $ Q^d = 100 - 2P $ and the supply function is given by $ Q^s = 2P - 10 $, find the new equilibrium price and quantity.

A. ₦55

B. ₦65

Correct C. ₦75

D. ₦85

Correct Answer: C

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Question 18

A consumer's utility function is given by ( U(x,y) = 2x + 3y ). If the prices of x and y are ₦5 and ₦3 respectively, find the consumer's optimal bundle of x and y.

Correct A. x=10, y=5

B. x=5, y=10

C. x=15, y=10

D. x=10, y=15

Correct Answer: A

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Question 19

A country's balance of payments is given by the following table. Find the country's net foreign exchange earnings.

A. ₦100m

B. ₦200m

Correct C. ₦300m

D. ₦400m

Correct Answer: C

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Question 20

A firm's production function is given by $ Q = 2L + 3K $. If the prices of labor and capital are ₦10 and ₦20 respectively, find the firm's optimal input mix.

A. L=10, K=5

B. L=5, K=10

Correct C. L=15, K=10

D. L=10, K=15

Correct Answer: C

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Question 21

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 -2, what is the percentage change in quantity demanded when the price increases by 10%?

Correct A. 20%

B. 30%

C. 40%

D. 50%

Correct Answer: A

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Question 22

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

A. 20 billion naira

B. 30 billion naira

Correct C. 40 billion naira

D. 50 billion naira

Correct Answer: C

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Question 23

A monopolistically competitive firm faces a demand curve given by Qd = 100 - 2P. If the firm's marginal revenue is 50, what is the price at which the firm will produce 60 units?

A. 20

B. 30

Correct C. 40

D. 50

Correct Answer: C

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Question 24

A country's balance of payments is given by the following equation: BOP = X - M, where X is the value of exports and M is the value of imports. If the value of exports is 100 billion naira and the value of imports is 80 billion naira, what is the balance of payments?

Correct A. 10 billion naira

B. 20 billion naira

C. 30 billion naira

D. 40 billion naira

Correct Answer: A

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Question 25

A central bank increases the money supply by 10%. What is the expected effect on the price level?

A. 5% increase

Correct B. 10% increase

C. 15% increase

D. 20% increase

Correct Answer: B

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