Practice Post UTME AFE BABALOLA UNIVERSITY economics 2018 Past Questions

Question 1

The government of Nigeria has implemented a policy to increase agricultural production by providing subsidies to farmers. However, this policy has been criticized for being inefficient and wasteful. What is the opportunity \cost of this policy?

Correct A. The opportunity \cost is the value of the next best alternative use of the resources.

B. The opportunity \cost is the value of the resources that could have been used for other purposes.

C. The opportunity \cost is the value of the resources that could have been used for other purposes, but are now being used for agricultural production.

D. The opportunity \cost is the value of the resources that could have been used for other purposes, but are now being wasted due to inefficiency.

Correct Answer: A

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Question 2

A monopolist produces a good with a demand curve given by Q = 100 - 2P and a \cost function given by C(Q) = 10Q + 100. What is the profit-maximizing price and quantity?

Correct A. P = 50, Q = 50

B. P = 40, Q = 60

C. P = 60, Q = 40

D. P = 70, Q = 30

Correct Answer: A

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Question 3

A government budget is given by the equation B = T + I + G, where B is the budget, T is the tax revenue, I is the interest payment, and G is the government exp\enditure. If the tax revenue is ₦100 billion, the interest payment is ₦20 billion, and the government exp\enditure is ₦150 billion, what is the budget?

Correct A. ₦270 billion

B. ₦280 billion

C. ₦290 billion

D. ₦300 billion

Correct Answer: A

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Question 4

A firm has a production function given by Q = 2L + 3K, where Q is the output, L is the labor, and K is the capital. If the firm wants to produce 100 units of output, how many units of labor and capital are required?

Correct A. L = 40, K = 20

B. L = 30, K = 30

C. L = 20, K = 40

D. L = 10, K = 50

Correct Answer: A

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Question 5

A consumer has a budget constraint given by the equation I = 100 - 2C, where I is the income and C is the consumption. If the consumer's income is ₦100, what is the maximum amount of consumption?

Correct A. ₦50

B. ₦60

C. ₦70

D. ₦80

Correct Answer: A

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Question 6

A consumer's indifference curve is given by the equation ( U(x,y) = 2x + 3y ). If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, find the consumer's optimal bundle of x and y.

A. x = 40, y = 30

Correct B. x = 60, y = 20

C. x = 80, y = 10

D. x = 100, y = 0

Correct Answer: B

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Question 7

The demand function for a product is given by \( Q_d = 100 - 2P \) and the supply function is given by \( Q_s = 2P - 10 \). Find the equilibrium price and quantity.

Correct A. P = 20, Q = 40

B. P = 30, Q = 50

C. P = 40, Q = 60

D. P = 50, Q = 70

Correct Answer: A

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Question 8

A country's balance of payments is given by the equation \( BOP = X - M \), where X is the value of exports and M is the value of imports. If the value of exports is ₦500 billion and the value of imports is ₦600 billion, find the balance of payments.

Correct A. ₦-100 billion

B. ₦100 billion

C. ₦200 billion

D. ₦300 billion

Correct Answer: A

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Question 9

A farmer produces wheat and corn on a 100-hectare farm. The marginal revenue product of wheat is ₦200 per hectare and the marginal revenue product of corn is ₦150 per hectare. If the farmer's opportunity \cost of producing wheat is ₦100 per hectare and the opportunity \cost of producing corn is ₦80 per hectare, find the optimal allocation of land to wheat and corn.

A. 50 hectares of wheat, 50 hectares of corn

Correct B. 60 hectares of wheat, 40 hectares of corn

C. 70 hectares of wheat, 30 hectares of corn

D. 80 hectares of wheat, 20 hectares of corn

Correct Answer: B

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Question 10

A country's inflation rate is given by the equation \( pi = \frac{M}{V} \), where M is the money supply and V is the velocity of money. If the money supply is ₦500 billion and the velocity of money is 2, find the inflation rate.

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 11

Suppose 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 supply of the product is given by the equation Qs = 2P - 50, where Qs is the quantity supplied, find the equilibrium price and quantity.

A. ₦150

Correct B. ₦200

C. ₦250

D. ₦300

Correct Answer: B

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Question 12

A country's balance of payments (BOP) is given by the equation BOP = X - M, where X is the value of exports and M is the value of imports. If the value of exports is ₦500 billion and the value of imports is ₦600 billion, find the balance of payments.

A. ₦100 billion surplus

Correct B. ₦100 billion deficit

C. ₦500 billion surplus

D. ₦500 billion deficit

Correct Answer: B

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Question 13

A monopolist faces a demand curve given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. The monopolist's marginal \cost (MC) is given by the equation MC = 10 + 2Q, where Q is the quantity produced. Find the monopolist's profit-maximizing quantity and price.

A. Q = 20, P = ₦150

B. Q = 30, P = ₦200

Correct C. Q = 40, P = ₦250

D. Q = 50, P = ₦300

Correct Answer: C

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Question 14

A consumer has a budget of ₦1000 and faces the following prices for two goods: Good A \costs ₦200 per unit and Good B \costs ₦300 per unit. If the consumer's utility function is given by U = 2x + 3y, where x is the quantity of Good A and y is the quantity of Good B, find the consumer's optimal consumption bundle.

Correct A. x = 2, y = 1

B. x = 3, y = 2

C. x = 4, y = 3

D. x = 5, y = 4

Correct Answer: A

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Question 15

A country's economic growth rate is given by the equation GDP = 100 + 2t, where GDP is the Gross Domestic Product and t is the time period. If the initial GDP is ₦100 billion and the growth rate is 2% per annum, find the GDP after 5 years.

A. ₦120 billion

B. ₦140 billion

Correct C. ₦160 billion

D. ₦180 billion

Correct Answer: C

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Question 16

A perfectly competitive firm's supply curve is a rec\tangular hyperbola. What is the relationship between the firm's marginal \cost (MC) and its average total \cost (ATC) in the short run?

A. MC = ATC

Correct B. MC < ATC

C. MC > ATC

D. MC = ATC - Fixed Costs

Correct Answer: B

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Question 17

A monopolist faces a demand curve given by Q = 100 - 2P. If the firm's marginal revenue (MR) is equal to its marginal \cost (MC), what is the price at which the firm will produce?

A. ₦50

Correct B. ₦75

C. ₦100

D. ₦125

Correct Answer: B

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Question 18

A firm is producing at the point where its marginal product of labor (MPL) is equal to its wage rate (W). If the firm's total product of labor (TPL) is given by TPL = 10L^2 - 2L, what is the firm's marginal product of labor (MPL)?

Correct A. 2L

B. 10L

C. 20L

D. 30L

Correct Answer: A

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Question 19

A firm is producing at the point where its marginal product of labor (MPL) is equal to its wage rate (W). If the firm's total product of labor (TPL) is given by TPL = 10L^2 - 2L, what is the firm's average product of labor (APL)?

Correct A. 10L - 2

B. 10L + 2

C. 10L - 1

D. 10L + 1

Correct Answer: A

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Question 20

A firm is producing at the point where its marginal product of labor (MPL) is equal to its wage rate (W). If the firm's total product of labor (TPL) is given by TPL = 10L^2 - 2L, what is the firm's total revenue (TR)?

Correct A. 100L^2 - 2L

B. 10L^2 - 2L

C. 10L^2 + 2L

D. 10L^2 - L

Correct Answer: A

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Question 21

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 0.5, what is the percentage change in quantity demanded when the price increases by 10%?

Correct A. 5%

B. 10%

C. 15%

D. 20%

Correct Answer: A

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Question 22

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 1.5, what is the price of the good?

A. ₦500

Correct B. ₦600

C. ₦700

D. ₦800

Correct Answer: B

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Question 23

A country's GDP is ₦500 billion, and its GNP is ₦550 billion. What is the value of the country's net factor income from abroad?

Correct A. ₦50 billion

B. ₦100 billion

C. ₦150 billion

D. ₦200 billion

Correct Answer: A

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Question 24

A firm is producing a good with a marginal \cost of ₦50 and a marginal revenue of ₦60. If the firm is producing 100 units, what is the profit-maximizing quantity?

A. 50 units

B. 75 units

Correct C. 100 units

D. 125 units

Correct Answer: C

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Question 25

A country's inflation rate is 5% per annum. If the price of a good is ₦100, what is the price after one year?

A. ₦105

Correct B. ₦110

C. ₦115

D. ₦120

Correct Answer: B

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