Practice Post UTME ACHIEVERS UNIVERSITY economics 2020 Past Questions

Question 1

Determine the equilibrium price and quantity of a commodity in a perfectly competitive market, given the following supply and demand equations: Qd = 100 - 2P, Qs = 50 + 3P.

A. ₦200, 150 units

B. ₦300, 100 units

Correct C. ₦250, 120 units

D. ₦350, 80 units

Correct Answer: C

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Question 2

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current inputs are L = 16 and K = 9, what is the marginal product of labor?

A. 1.5

Correct B. 2.5

C. 3.5

D. 4.5

Correct Answer: B

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Question 3

A consumer's utility function is given by U = 2x + 3y. If the consumer's budget constraint is 2x + 3y = 12, and the price of x is ₦2 and the price of y is ₦3, what is the consumer's optimal bundle?

A. x = 3, y = 2

Correct B. x = 2, y = 3

C. x = 4, y = 1

D. x = 1, y = 4

Correct Answer: B

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Question 4

A firm's demand function is given by Qd = 100 - 2P. If the firm's current price is ₦20, what is the price elasticity of demand?

Correct A. -0.5

B. -1.0

C. -1.5

D. -2.0

Correct Answer: A

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Question 5

A firm is a pure monopolist with a demand function Qd = 100 - 2P. If the firm's current price is ₦20, what is the firm's profit-maximizing quantity?

A. 50 units

Correct B. 60 units

C. 70 units

D. 80 units

Correct Answer: B

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Question 6

Consider a firm operating in a perfectly competitive market with a downward-sloping demand curve. If the firm increases its production from 100 units to 120 units, and the price falls from ₦100 to ₦90, what is the price elasticity of demand?

A. 0.5

Correct B. 1.0

C. 1.5

D. 2.0

Correct Answer: B

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Question 7

A consumer's indifference curve is represented by the equation ( u(x,y) = 2x + 3y ). If the consumer's income is ₦100 and the prices of x and y are ₦5 and ₦10 respectively, what is the consumer's optimal bundle?

A. (10, 5)

Correct B. (15, 3)

C. (20, 2)

D. (25, 1)

Correct Answer: B

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Question 8

A country's GDP is ₦10 trillion, its GNP is ₦12 trillion, and its net factor income from abroad is ₦2 trillion. What is the country's national income?

A. ₦10 trillion

B. ₦12 trillion

Correct C. ₦14 trillion

D. ₦16 trillion

Correct Answer: C

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Question 9

A firm's production function is given by \( Q = 2L^{0.5}K^{0.5} \). If the firm's output is 100 units, and the price of labor is ₦50 per unit, and the price of capital is ₦100 per unit, what is the firm's optimal input combination?

A. (10, 5)

Correct B. (15, 3)

C. (20, 2)

D. (25, 1)

Correct Answer: B

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Question 10

A consumer's budget constraint is given by \( 2x + 3y = 12 \). If the consumer's indifference curve is represented by the equation ( u(x,y) = x + 2y ), what is the consumer's optimal bundle?

A. (3, 4)

Correct B. (4, 3)

C. (5, 2)

D. (6, 1)

Correct Answer: B

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Question 11

The elasticity of demand for a product is measured by the percentage change in the quantity demanded in response to a 1% change in the price of the product. If the demand for a product is elastic, what happens to the total revenue of the firm when the price of the product increases by 10%?

A. Total revenue increases by 10%

Correct B. Total revenue decreases by 10%

C. Total revenue remains the same

D. Total revenue increases by 20%

Correct Answer: B

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Question 12

Agricultural development in Nigeria has been hindered by the lack of access to credit by small-scale farmers. Which of the following policies would most likely address this issue?

Correct A. Establishing a national agricultural bank

B. Providing subsidies to large-scale farmers

C. Implementing a cash crop program

D. Increa\sing tariffs on imported agricultural products

Correct Answer: A

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Question 13

The government of Nigeria has implemented a policy to increase the production of rice by providing subsidies to farmers. What is the likely effect of this policy on the price of rice in the short run?

A. The price of rice decreases

Correct B. The price of rice increases

C. The price of rice remains the same

D. The price of rice fluctuates

Correct Answer: B

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Question 14

The elasticity of supply for a product is measured by the percentage change in the quantity supplied in response to a 1% change in the price of the product. If the supply of a product is inelastic, what happens to the total revenue of the firm when the price of the product increases by 10%?

Correct A. Total revenue increases by 10%

B. Total revenue decreases by 10%

C. Total revenue remains the same

D. Total revenue increases by 20%

Correct Answer: A

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Question 15

The government of Nigeria has implemented a policy to increase the production of textiles by providing subsidies to manufacturers. What is the likely effect of this policy on the price of textiles in the short run?

Correct A. The price of textiles decreases

B. The price of textiles increases

C. The price of textiles remains the same

D. The price of textiles fluctuates

Correct Answer: A

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Question 16

The government of Nigeria has introduced a new policy to increase revenue from taxation. The policy aims to reduce the tax burden on low-income earners while increa\sing the tax rate on high-income earners. U\sing the concept of elasticity of taxation, explain why this policy is likely to increase revenue.

A. The policy will lead to a decrease in tax revenue due to the reduction in tax burden on low-income earners.

Correct B. The policy will lead to an increase in tax revenue due to the increase in tax rate on high-income earners.

C. The policy will lead to a decrease in tax revenue due to the increase in tax rate on high-income earners.

D. The policy will lead to an increase in tax revenue due to the reduction in tax burden on low-income earners.

Correct Answer: B

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Question 17

A firm is considering investing in a new project that requires an initial investment of ₦10 million. The project is expected to generate a revenue of ₦15 million in the first year, ₦20 million in the second year, and ₦25 million in the third year. U\sing the concept of net present value (NPV), calculate the NPV of the project and determine whether it is a viable investment opportunity.

Correct A. The NPV of the project is ₦5 million, making it a viable investment opportunity.

B. The NPV of the project is ₦10 million, making it a viable investment opportunity.

C. The NPV of the project is ₦15 million, making it a viable investment opportunity.

D. The NPV of the project is ₦20 million, making it a viable investment opportunity.

Correct Answer: A

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Question 18

The government of Nigeria has introduced a new policy to increase agricultural production. The policy aims to provide subsidies to farmers who use modern farming techniques. U\sing the concept of production theory, explain why this policy is likely to increase agricultural production.

A. The policy will lead to a decrease in agricultural production due to the increase in \cost of production.

Correct B. The policy will lead to an increase in agricultural production due to the increase in supply of inputs.

C. The policy will lead to a decrease in agricultural production due to the decrease in supply of inputs.

D. The policy will lead to an increase in agricultural production due to the increase in demand for agricultural products.

Correct Answer: B

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Question 19

A firm is considering investing in a new project that requires an initial investment of ₦5 million. The project is expected to generate a revenue of ₦10 million in the first year, ₦15 million in the second year, and ₦20 million in the third year. U\sing the concept of \cost-benefit analysis, calculate the \cost-benefit ratio of the project and determine whether it is a viable investment opportunity.

A. The \cost-benefit ratio of the project is 1:1, making it a viable investment opportunity.

Correct B. The \cost-benefit ratio of the project is 2:1, making it a viable investment opportunity.

C. The \cost-benefit ratio of the project is 3:1, making it a viable investment opportunity.

D. The \cost-benefit ratio of the project is 4:1, making it a viable investment opportunity.

Correct Answer: B

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Question 20

The government of Nigeria has introduced a new policy to increase industrial production. The policy aims to provide incentives to firms that invest in new techno\logy. U\sing the concept of production theory, explain why this policy is likely to increase industrial production.

A. The policy will lead to a decrease in industrial production due to the increase in \cost of production.

Correct B. The policy will lead to an increase in industrial production due to the increase in supply of inputs.

C. The policy will lead to a decrease in industrial production due to the decrease in supply of inputs.

D. The policy will lead to an increase in industrial production due to the increase in demand for industrial products.

Correct Answer: B

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Question 21

A firm operates in a perfectly competitive market with a given supply curve. If the price elasticity of demand is 0.5, what is the likely effect on the firm's output?

A. Increase output

Correct B. Decrease output

C. No change in output

D. Increase price

Correct Answer: B

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Question 22

A country's GDP is ₦1,000,000,000,000. If the population is 200 million, what is the per capita income?

Correct A. ₦5,000

B. ₦10,000

C. ₦20,000

D. ₦50,000

Correct Answer: A

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Question 23

A monopolist faces a demand curve given by Q = 100 - 2P. If the marginal \cost is ₦50, what is the optimal price?

Correct A. ₦25

B. ₦50

C. ₦75

D. ₦100

Correct Answer: A

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Question 24

A firm's revenue function is given by R(Q) = 2Q^2 - 10Q + 100. If the marginal revenue is ₦50, what is the optimal quantity?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 25

A country's GNP is ₦1,500,000,000,000. If the GDP is ₦1,200,000,000,000, what is the net factor income from abroad?

Correct A. ₦300,000,000,000

B. ₦400,000,000,000

C. ₦500,000,000,000

D. ₦600,000,000,000

Correct Answer: A

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