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POST UTME WELLSPRING UNIVERSITY 2020 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

A monopolist faces a demand curve with the following equation: Q = 100 - 2P. If the monopolist's marginal \cost is cons\tant at ₦50, what is the profit-maximizing price?

A. ₦75

Correct B. ₦80

C. ₦85

D. ₦90

Correct Answer: B

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Question 3

A consumer has the following utility function: U = 2x + 3y. If the prices of x and y are ₦5 and ₦10 respectively, and the consumer has a budget of ₦50, what is the optimal bundle of x and y?

A. (5, 2)

Correct B. (10, 1)

C. (15, 0)

D. (0, 5)

Correct Answer: B

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Question 4

A firm has the following \cost function: C = 2Q^2 + 10Q + 5. If the firm produces 10 units of output, what is the total \cost?

A. ₦105

B. ₦115

Correct C. ₦125

D. ₦135

Correct Answer: C

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Question 5

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

Correct A. Increase

B. Decrease

C. No change

D. Uncertain

Correct Answer: A

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Question 6

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output is 16 units when labor (L) is 4 units and capital (K) is 4 units, what is the marginal product of labor?

Correct A. 2

B. 4

C. 8

D. 16

Correct Answer: A

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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 ₦10 respectively, what is the consumer's optimal bundle of x and y?

Correct A. x = 40, y = 20

B. x = 20, y = 40

C. x = 60, y = 10

D. x = 10, y = 60

Correct Answer: A

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Question 8

The money market equilibrium is given by the equation M = kPY. If the money supply is ₦1000, the price level is ₦5, and the income is ₦2000, what is the value of k?

Correct A. 0.25

B. 0.5

C. 0.75

D. 1

Correct Answer: A

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Question 9

The demand function for a product is given by Qd = 100 - 2P. If the price of the product is ₦20, what is the quantity demanded?

A. 40

Correct B. 60

C. 80

D. 100

Correct Answer: B

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Question 10

The supply function for a product is given by Qs = 2P + 10. If the price of the product is ₦10, what is the quantity supplied?

A. 20

B. 30

Correct C. 40

D. 50

Correct Answer: C

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Question 11

Consider a consumer with a utility function ( U(x,y) = 2x + 3y - x^2 - 2y^2 ). If the consumer's income is ₦1000 and the prices of x and y are ₦2 and ₦3 respectively, find the optimal bundle of x and y u\sing Lagrange multipliers.

Correct A. $ x = 10, y = 5 $

B. $ x = 5, y = 10 $

C. $ x = 15, y = 0 $

D. $ x = 0, y = 15 $

Correct Answer: A

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Question 12

A firm produces two goods, A and B, u\sing two inputs, Labour and Capital. The production function for good A is given by $ Q_A = 2L^0.5K^{0.5} $ and for good B is given by $ Q_B = 3L^{0.5}K^{0.5} $. If the firm has 100 units of Labour and 50 units of Capital, find the optimal mix of good A and good B u\sing the method of Lagrange multipliers.

Correct A. $ Q_A = 50, Q_B = 25 $

B. $ Q_A = 25, Q_B = 50 $

C. $ Q_A = 100, Q_B = 0 $

D. $ Q_A = 0, Q_B = 100 $

Correct Answer: A

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Question 13

Consider a market with two firms, A and B, producing a homogeneous product. Firm A has a \cost function $ C_A = 100 + 2Q_A $ and Firm B has a \cost function $ C_B = 120 + 2Q_B $. If the market demand is given by $ Q = 100 - P $, find the equilibrium price and quantity u\sing the Cournot model.

Correct A. $ P = 80, Q = 20 $

B. $ P = 60, Q = 40 $

C. $ P = 40, Q = 60 $

D. $ P = 20, Q = 80 $

Correct Answer: A

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Question 14

Consider a country with a GDP of ₦100 billion and a GNP of ₦120 billion. If the country's net factor income from abroad is ₦20 billion, find the country's net national product.

A. ₦100 billion

B. ₦120 billion

Correct C. ₦140 billion

D. ₦160 billion

Correct Answer: C

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Question 15

Consider a firm with a production function $ Q = 2L^0.5K^{0.5} $. If the firm has 100 units of Labour and 50 units of Capital, find the firm's marginal product of Labour and Capital.

Correct A. $ MPL = 0.5, MPC = 0.5 $

B. $ MPL = 0.25, MPC = 0.25 $

C. $ MPL = 0.1, MPC = 0.1 $

D. $ MPL = 0.05, MPC = 0.05 $

Correct Answer: A

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Question 16

Consider a small open economy with a fixed exchange rate. The government imposes a tariff of 20% on imported goods. U\sing the Marshall-Lerner condition, determine whether the tariff will lead to a trade surplus or a trade deficit.

A. Trade surplus

Correct B. Trade deficit

C. No effect on trade balance

D. Uncertain effect on trade balance

Correct Answer: B

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Question 17

A firm is producing a good with a production function Q = 2L^$ 1/2 $K^$ 1/2 $. If the price of the good is $10 and the wage rate is $5 per hour, determine the optimal level of labor employment u\sing the first-order condition.

A. L = 4

Correct B. L = 8

C. L = 16

D. L = 32

Correct Answer: B

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Question 18

A country's GDP is $100 billion, its GNP is $120 billion, and its net factor income from abroad is $10 billion. Determine the country's net national product (NNP).

Correct A. $110 billion

B. $120 billion

C. $130 billion

D. $140 billion

Correct Answer: A

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Question 19

A firm is facing a downward-sloping demand curve. If the price elasticity of demand is -2 and the firm wants to maximize revenue, determine the optimal price and quantity.

Correct A. Price = $10, Quantity = 20

B. Price = $20, Quantity = 10

C. Price = $30, Quantity = 5

D. Price = $40, Quantity = 2

Correct Answer: A

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Question 20

A country is experiencing a recession with a GDP of $500 billion and a GNP of $600 billion. Determine the country's net national product (NNP).

A. $550 billion

Correct B. $600 billion

C. $650 billion

D. $700 billion

Correct Answer: B

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Question 21

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output increases by 10% due to a 5% increase in labor and a 3% increase in capital, what is the return to scale of the firm?

A. Increa\sing

B. Decrea\sing

Correct C. Cons\tant

D. Indeterminate

Correct Answer: C

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Question 22

A consumer's utility function is given by U = 2x^0.5y^0.5. 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 of x and y?

A. x = 10, y = 10

B. x = 20, y = 5

C. x = 5, y = 20

Correct D. x = 15, y = 15

Correct Answer: D

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Question 23

A country's balance of payments is given by the following equation: BOP = $ X - M $ + $ F - I $. If the country's exports are ₦1000, imports are ₦800, foreign investment is ₦500, and domestic investment is ₦200, what is the country's balance of payments?

A. ₦200

Correct B. ₦300

C. ₦400

D. ₦500

Correct Answer: B

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Question 24

A firm's \cost function is given by C = 2L + 3K. If the firm's output is 100 units, what is the firm's average \cost?

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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Question 25

A firm's revenue function is given by R = 2x^2. If the firm's output is 10 units, what is the firm's marginal revenue?

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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