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POST UTME RHEMA UNIVERSITY 2019 Economics | Objective

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Question 1

U\sing the concept of opportunity \cost, explain why a country may choose to import a good even if it can be produced domestically.

A. The opportunity \cost of producing the good domestically is lower than the opportunity \cost of importing it.

B. The opportunity \cost of importing the good is lower than the opportunity \cost of producing it domestically.

Correct C. The opportunity \cost of producing the good domestically is higher than the opportunity \cost of importing it.

D. The opportunity \cost of importing the good is higher than the opportunity \cost of producing it domestically.

Correct Answer: C

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Question 2

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

A. The quantity demanded will increase.

Correct B. The quantity demanded will decrease.

C. The quantity demanded will remain the same.

D. The firm will experience a decrease in revenue.

Correct Answer: B

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Question 3

A country's GDP is $100 billion. The government imposes a 10% tax on all goods and services. What is the new GDP?

A. $90 billion

B. $100 billion

Correct C. $110 billion

D. $120 billion

Correct Answer: C

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Question 4

A firm is considering two different production processes. Process A has a fixed \cost of $10,000 and a variable \cost of $5 per unit. Process B has a fixed \cost of $20,000 and a variable \cost of $3 per unit. If the firm produces 10,000 units, which process will result in a lower total \cost?

Correct A. Process A

B. Process B

C. Both processes will result in the same total \cost.

D. Neither process will result in a lower total \cost.

Correct Answer: A

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Question 5

A monopolist faces a demand curve given by the equation $ Q = 100 - 2P $. If the firm produces 20 units, what is the price per unit?

A. $20

Correct B. $30

C. $40

D. $50

Correct Answer: B

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Question 6

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 7

A firm is producing a good with a total revenue of ₦100,000 and a total \cost of ₦80,000. If the price elasticity of demand is -2, what is the price elasticity of supply?

A. 0.5

B. 1

Correct C. 2

D. 3

Correct Answer: C

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Question 8

The government of Nigeria is considering a policy to increase the minimum wage from ₦30,000 to ₦40,000 per month. If the average worker has a marginal propensity to consume of 0.8, what is the increase in aggregate demand?

A. ₦32,000

B. ₦40,000

Correct C. ₦48,000

D. ₦60,000

Correct Answer: C

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Question 9

A firm is producing a good with a total revenue of ₦120,000 and a total \cost of ₦100,000. If the price elasticity of demand is -1.5, what is the price elasticity of supply?

A. 0.5

B. 1

Correct C. 1.5

D. 2

Correct Answer: C

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Question 10

The government of Nigeria is considering a policy to increase the minimum wage from ₦30,000 to ₦50,000 per month. If the average worker has a marginal propensity to consume of 0.9, what is the increase in aggregate demand?

A. ₦48,000

B. ₦60,000

Correct C. ₦72,000

D. ₦80,000

Correct Answer: C

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Question 11

Calculate the returns to scale for a firm that experiences an increase in output from 100 units to 225 units when the input of labor increases from 5 workers to 9 workers.

Correct A. Increa\sing Returns to Scale

B. Decrea\sing Returns to Scale

C. Cons\tant Returns to Scale

D. No Returns to Scale

Correct Answer: A

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Question 12

A country's GDP is ₦1,500 billion, and its GNP is ₦1,600 billion. What is the net factor income from abroad?

Correct A. ₦100 billion

B. ₦50 billion

C. ₦0 billion

D. ₦-50 billion

Correct Answer: A

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Question 13

A government budget has a total exp\enditure of ₦2,500 billion and a total revenue of ₦2,200 billion. What is the budget deficit?

Correct A. ₦300 billion

B. ₦500 billion

C. ₦700 billion

D. ₦1,000 billion

Correct Answer: A

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Question 14

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

A. P = ₦50, Q = 150

Correct B. P = ₦75, Q = 100

C. P = ₦100, Q = 50

D. P = ₦150, Q = 25

Correct Answer: B

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Question 15

A country's population is 20 million, and its GDP per capita is ₦75,000. What is the total GDP?

Correct A. ₦1,500 billion

B. ₦1,800 billion

C. ₦2,000 billion

D. ₦2,500 billion

Correct Answer: A

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Question 16

A consumer's indifference curve is downward sloping and convex to the origin. What is the implication of this shape on the consumer's willingness to substitute one good for another?

A. The consumer is willing to substitute one good for another at an increa\sing rate.

Correct B. The consumer is willing to substitute one good for another at a decrea\sing rate.

C. The consumer is indifferent to substituting one good for another.

D. The consumer is unwilling to substitute one good for another.

Correct Answer: B

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Question 17

A perfectly competitive market has a large number of firms producing a homogeneous product. What is the implication of this on the market's price?

A. The market price is determined by the marginal \cost of the firms.

B. The market price is determined by the marginal revenue of the firms.

Correct C. The market price is determined by the intersection of the demand and supply curves.

D. The market price is determined by the average \cost of the firms.

Correct Answer: C

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Question 18

A firm's total revenue is given by the equation TR = 100x - 2x^2, where x is the number of units sold. What is the firm's marginal revenue?

Correct A. 100 - 4x

B. 100 + 4x

C. 100x - 2x^2

D. 100x + 2x^2

Correct Answer: A

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Question 19

A consumer has a budget of ₦1000 and is willing to sp\end up to ₦500 on good X. What is the opportunity \cost of consuming one more unit of good X?

Correct A. ₦250

B. ₦500

C. ₦750

D. ₦1000

Correct Answer: A

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Question 20

A firm's marginal \cost is given by the equation MC = 2x + 5, where x is the number of units produced. What is the firm's average \cost?

Correct A. \frac{1}{2}x + 5

B. 2x + 5

C. x + 5

D. x - 5

Correct Answer: A

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Question 21

Determine the returns to scale for a firm that experiences a 20% increase in all inputs, resulting in a 25% increase in output.

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 22

A firm is considering a new production process that will increase its output by 15% while increa\sing its \costs by 10%. What is the marginal rate of technical substitution (MRTS) for this firm?

A. 0.75

Correct B. 1.25

C. 1.5

D. 2.0

Correct Answer: B

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Question 23

A government is considering a tax on a particular good. The tax will increase the price of the good by 10% and reduce the quantity demanded by 5%. What is the elasticity of demand for this good?

A. 0.5

Correct B. 1.0

C. 1.5

D. 2.0

Correct Answer: B

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Question 24

A firm is producing a good u\sing two inputs, labor and capital. 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, what is the optimal combination of labor and capital that minimizes the \cost of production?

A. L = 10, K = 5

Correct B. L = 5, K = 10

C. L = 10, K = 10

D. L = 5, K = 5

Correct Answer: B

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Question 25

A government is considering a budget that allocates 30% of its revenue to education, 20% to healthcare, and 50% to defense. If the government's revenue is $100 million, what is the total amount allocated to education and healthcare?

A. $20 million

Correct B. $30 million

C. $40 million

D. $50 million

Correct Answer: B

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