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POST UTME SUMMIT UNIVERSITY 2019 Economics | Objective

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Question 1

Consider a firm operating under cons\tant returns to scale. If the firm's production function is given by Q = 2L^2 + 5K, where Q is output, L is labor, and K is capital, what is the marginal product of labor (MPL) when L = 4 and K = 3?

Correct A. 6

B. 8

C. 10

D. 12

Correct Answer: A

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Question 2

A government is considering a policy to reduce inflation by increa\sing the reserve requirement for commercial banks. If the current reserve requirement is 10% and the government increases it to 15%, what is the expected effect on the money supply?

A. Increase

Correct B. Decrease

C. No change

D. Uncertain

Correct Answer: B

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Question 3

A monopolistically competitive firm faces a demand curve given by Q = 100 - 2P. If the firm's marginal \cost (MC) is 10, what is the optimal price (P) and quantity (Q) that the firm should produce?

Correct A. P = 40, Q = 60

B. P = 50, Q = 50

C. P = 60, Q = 40

D. P = 70, Q = 30

Correct Answer: A

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Question 4

A government is considering a tax on a particular good. If the tax is 10% of the price of the good, and the demand curve for the good is given by Q = 100 - 2P, what is the effect on the equilibrium price and quantity?

Correct A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price remains the same, quantity decreases

D. Price remains the same, quantity increases

Correct Answer: A

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Question 5

A firm is considering a production function given by Q = 2L^2 + 5K, where Q is output, L is labor, and K is capital. If the firm's current production is Q = 100, and the firm wants to increase production by 20%, what is the required increase in labor and capital?

Correct A. Increase labor by 10, increase capital by 5

B. Increase labor by 5, increase capital by 10

C. Increase labor by 15, increase capital by 15

D. Increase labor by 20, increase capital by 20

Correct Answer: A

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Question 6

A firm's production function is given by Q = 2L^0.5H^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. 10%

B. 12%

Correct C. 15%

D. 18%

Correct Answer: C

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Question 7

A consumer's utility function is given by U = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦3 respectively, what is the consumer's optimal bundle?

Correct A. x = 40, y = 20

B. x = 30, y = 30

C. x = 20, y = 40

D. x = 10, y = 50

Correct Answer: A

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Question 8

A country's GDP is ₦1000 billion and its GNP is ₦1200 billion. What is the country's net factor income from abroad?

A. ₦200 billion

Correct B. ₦300 billion

C. ₦400 billion

D. ₦500 billion

Correct Answer: B

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Question 9

A firm's production function is given by Q = 2L^0.5H^0.5. If the firm's labor input is increased by 20% and the capital input remains cons\tant, what is the percentage change in output?

Correct A. 10%

B. 12%

C. 15%

D. 18%

Correct Answer: A

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Question 10

A consumer's utility function is given by U = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦3 respectively, what is the consumer's optimal bundle?

Correct A. x = 40, y = 20

B. x = 30, y = 30

C. x = 20, y = 40

D. x = 10, y = 50

Correct Answer: A

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Question 11

A firm's production function exhibits increa\sing returns to scale. If the firm's output increases by 20% and its input increases by 15%, what is the percentage increase in its average product?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 12

A country's balance of payments account shows a trade deficit of $100 million and a capital account surplus of $150 million. What is the overall balance on the current account?

Correct A. -$50 million

B. $50 million

C. $100 million

D. $150 million

Correct Answer: A

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Question 13

A firm's demand for labor is given by the equation Qd = 100L^$ -1/2 $. If the wage rate is $10 per hour, what is the firm's labor demand at a wage rate of $15 per hour?

A. 20 hours

Correct B. 30 hours

C. 40 hours

D. 50 hours

Correct Answer: B

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Question 14

A country's GDP at market price is $100 billion. If the implicit deflator is 120, what is the GDP at factor \cost?

A. $80 billion

B. $90 billion

Correct C. $100 billion

D. $110 billion

Correct Answer: C

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Question 15

A firm's production function is given by the equation Q = 100L^$ -1/2 $K^$ -1/2 $. If the firm's output is 100 units and its labor input is 25 units, what is the value of its capital input?

A. 25 units

B. 50 units

Correct C. 75 units

D. 100 units

Correct Answer: C

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Question 16

A perfectly competitive market has a downward-sloping demand curve and a horizontal supply curve. If the market equilibrium price is ₦100, and the price elasticity of demand is 0.5, what is the price elasticity of supply?

A. 0.5

Correct B. 1

C. 2

D. 3

Correct Answer: B

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Question 17

A government imposes a tax on a firm's output. If the firm's supply curve shifts to the left by 10% due to the tax, and the price elasticity of supply is 2, what is the percentage change in the firm's output?

A. -5%

Correct B. -10%

C. -15%

D. -20%

Correct Answer: B

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Question 18

A monopolist faces a demand curve with a price elasticity of 0.8. If the monopolist increases the price of its product by 10%, what is the percentage change in the quantity demanded?

Correct A. -8%

B. -10%

C. -12%

D. -15%

Correct Answer: A

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Question 19

A government wants to increase its revenue from taxation. If the government imposes a tax on a firm's output, and the firm's supply curve shifts to the left by 15% due to the tax, what is the percentage change in the government's revenue?

A. -10%

B. -12%

Correct C. -15%

D. -18%

Correct Answer: C

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Question 20

A firm is considering investing in a new project. If the project has a net present value (NPV) of ₦100,000, and the firm's \cost of capital is 10%, what is the internal rate of return (IRR) of the project?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 21

A firm's demand curve is given by Qd = 100 - 2P, and the supply curve is given by Qs = 2P - 50. Find the equilibrium price and quantity.

Correct A. ₦50, 75

B. ₦25, 50

C. ₦75, 25

D. ₦100, 0

Correct Answer: A

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Question 22

A consumer's utility function is given by U(x, y) = 2x + 3y. If the consumer's budget is ₦100 and the prices of x and y are ₦5 and ₦10 respectively, find the optimal quantities of x and y.

Correct A. x = 10, y = 5

B. x = 5, y = 10

C. x = 15, y = 0

D. x = 0, y = 10

Correct Answer: A

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Question 23

A monopolist's demand curve is given by Qd = 100 - 2P, and the marginal revenue function is given by MR = 2P - 50. Find the price and quantity at which the monopolist maximizes profit.

Correct A. ₦75, 25

B. ₦50, 50

C. ₦25, 75

D. ₦100, 0

Correct Answer: A

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Question 24

A government imposes a tax of ₦5 on a good whose supply curve is given by Qs = 2P - 50. Find the new supply curve and the equilibrium price and quantity.

Correct A. Qs = 2P - 55, ₦50, 75

B. Qs = 2P - 45, ₦45, 50

C. Qs = 2P - 35, ₦35, 75

D. Qs = 2P - 25, ₦25, 50

Correct Answer: A

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Question 25

A firm's production function is given by Q = 2L + 3K. If the firm's \cost of labor is ₦5 per unit and the \cost of capital is ₦10 per unit, find the optimal quantities of labor and capital.

Correct A. L = 10, K = 5

B. L = 5, K = 10

C. L = 15, K = 0

D. L = 0, K = 10

Correct Answer: A

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