Practice post utme pan-atlantic university economics 2022 Past Questions

Question 1

Consider a production function \( Q = f\( L, K \ \) ) where ( Q ) is the output, ( L ) is labor, and ( K ) is capital. If the marginal product of labor is \( MPL = \frac{partial Q}{partial L} = 10L \) and the marginal product of capital is \( MPK = \frac{partial Q}{partial K} = 20K \), what is the returns to scale of the production function?

A. Increa\sing Returns to Scale

B. Decrea\sing Returns to Scale

Correct C. Cons\tant Returns to Scale

D. No Returns to Scale

Correct Answer: C

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Question 2

Suppose the Nigerian government implements a policy to increase the price of a commodity by 20%. If the demand for the commodity is given by the equation \( Q = 100 - 2P \), where ( Q ) is the quantity demanded and ( P ) is the price, what will be the new quantity demanded?

Correct A. 80

B. 100

C. 120

D. 140

Correct Answer: A

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Question 3

A firm's production function is given by \( Q = 2L^2 + 3K \), where ( Q ) is the output, ( L ) is labor, and ( K ) is capital. If the firm is currently u\sing 4 units of labor and 2 units of capital, what is the marginal product of labor?

Correct A. 8

B. 16

C. 24

D. 32

Correct Answer: A

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Question 4

Consider the following diagram:

A. The demand curve is downward sloping

B. The supply curve is upward sloping

Correct C. The equilibrium price is 10

D. The equilibrium quantity is 20

Correct Answer: C

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Question 5

Suppose the Nigerian government imposes a tariff on imported goods. If the tariff is 20% and the price of the imported good is 100, what will be the new price of the good?

A. 80

B. 100

Correct C. 120

D. 140

Correct Answer: C

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Question 6

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 7

A central bank can implement expansionary monetary policy by

A. increa\sing the reserve requirement for commercial banks

Correct B. lowering the discount rate

C. selling government securities on the open market

D. impo\sing a tax on currency holdings

Correct Answer: B

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Question 8

A government's budget deficit is financed by

Correct A. issuing new government bonds

B. printing more money

C. increa\sing taxes

D. reducing government sp\ending

Correct Answer: A

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Question 9

A country's balance of payments deficit is caused by

A. a trade deficit and a capital account surplus

B. a trade surplus and a capital account deficit

Correct C. a trade deficit and a capital account deficit

D. a trade surplus and a capital account surplus

Correct Answer: C

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Question 10

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 10% and 20% respectively, the new level of output will be

A. 12.5

Correct B. 15

C. 20

D. 25

Correct Answer: B

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Question 11

Consider a firm operating in a perfectly competitive market. If the firm's marginal revenue (MR) is greater than its marginal \cost (MC), what will be the effect on the firm's output?

Correct A. The firm will increase its output.

B. The firm will decrease its output.

C. The firm's output will remain unchanged.

D. The firm will exit the market.

Correct Answer: A

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Question 12

A country's GDP is ₦100 billion, its imports are ₦20 billion, and its exports are ₦15 billion. What is its net foreign exchange earnings?

Correct A. ₦5 billion

B. ₦10 billion

C. ₦15 billion

D. ₦20 billion

Correct Answer: A

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Question 13

A firm's demand curve is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the firm's supply curve is given by the equation Qs = 2P - 100, what is the equilibrium price?

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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Question 14

A country's GNP is ₦120 billion, its net factor income from abroad is ₦10 billion, and its net transfer from abroad is ₦5 billion. What is its GDP?

A. ₦115 billion

Correct B. ₦120 billion

C. ₦125 billion

D. ₦130 billion

Correct Answer: B

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Question 15

A firm's elasticity of demand is given by the equation E = 0.5P, where E is the elasticity and P is the price. If the firm's price is ₦50, what is its elasticity of demand?

A. 0.25

Correct B. 0.5

C. 0.75

D. 1.0

Correct Answer: B

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Question 16

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

A. Increase

Correct B. Decrease

C. Remain the same

D. Become perfectly elastic

Correct Answer: B

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Question 17

A government imposes a tax on a good, cau\sing the supply curve to shift to the left. What will happen to the equilibrium price and quantity?

Correct A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

D. Price decreases, quantity decreases

Correct Answer: A

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Question 18

A firm is faced with a budget constraint of ₦100,000. If it allocates ₦50,000 to labor and ₦30,000 to capital, what will be the opportunity \cost of hiring one more worker?

A. ₦10,000

Correct B. ₦20,000

C. ₦30,000

D. ₦40,000

Correct Answer: B

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Question 19

A country is experiencing a recession. The government implements a fiscal policy to stimulate the economy. What will be the effect on the aggregate demand curve?

A. Shift to the left

Correct B. Shift to the right

C. Remain the same

D. Become perfectly elastic

Correct Answer: B

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Question 20

A farmer is faced with a choice between cultivating wheat or maize. If the opportunity \cost of cultivating wheat is ₦50,000 and the opportunity \cost of cultivating maize is ₦30,000, what will be the opportunity \cost of choo\sing maize over wheat?

Correct A. ₦20,000

B. ₦30,000

C. ₦40,000

D. ₦50,000

Correct Answer: A

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Question 21

Consider a perfectly competitive market with n firms, each producing a homogeneous product. If the market demand curve is downward sloping and the firms are price takers, what is the equilibrium price and quantity in the market?

Correct A. \( P = 100, Q = 1000 \)

B. \( P = 50, Q = 2000 \)

C. \( P = 200, Q = 500 \)

D. \( P = 150, Q = 750 \)

Correct Answer: A

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Question 22

A monopolist faces a market demand curve given by \( Q = 100 - 2P \). If the monopolist's marginal \cost curve is given by \( MC = 10 + 2Q \), what is the monopolist's profit-maximizing price and quantity?

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 23

A government imposes a tax of ₦10 per unit on a firm that produces a homogeneous product. If the firm's supply curve is given by \( Q = 100 + 2P \), what is the firm's new supply curve after the tax is imposed?

Correct A. \( Q = 100 + 2P - 10 \)

B. \( Q = 100 + 2P + 10 \)

C. \( Q = 100 + 2P \times 10 \)

D. \( Q = 100 + 2P / 10 \)

Correct Answer: A

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Question 24

A firm's demand curve is given by \( Q = 100 - 2P \). If the firm's marginal revenue curve is given by \( MR = 200 - 2Q \), what is the firm's marginal \cost curve?

Correct A. \( MC = 10 + 2Q \)

B. \( MC = 10 - 2Q \)

C. \( MC = 20 + 2Q \)

D. \( MC = 20 - 2Q \)

Correct Answer: A

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Question 25

A government imposes a tax of ₦10 per unit on a firm that produces a homogeneous product. If the firm's supply curve is given by \( Q = 100 + 2P \), what is the firm's new supply curve after the tax is imposed?

Correct A. \( Q = 100 + 2P - 10 \)

B. \( Q = 100 + 2P + 10 \)

C. \( Q = 100 + 2P \times 10 \)

D. \( Q = 100 + 2P / 10 \)

Correct Answer: A

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