Practice Post UTME BABCOCK UNIVERSITY economics 2018 Past Questions

Question 1

A consumer's indifference curve is represented 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 ₦3 respectively, what is the consumer's optimal bundle of x and y?

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 2

A firm's demand function is given by \( Q = 100 - 2P \). If the firm's marginal \cost is ₦20, what is the profit-maximizing price?

A. ₦40

Correct B. ₦50

C. ₦60

D. ₦70

Correct Answer: B

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Question 3

A country's GDP is ₦100 billion, its imports are ₦20 billion, and its exports are ₦30 billion. What is its balance of trade?

Correct A. ₦10 billion surplus

B. ₦10 billion deficit

C. ₦20 billion surplus

D. ₦20 billion deficit

Correct Answer: A

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Question 4

A government imposes a tax of ₦10 on a good that is sold at ₦50. What is the new price of the good?

A. ₦60

Correct B. ₦70

C. ₦80

D. ₦90

Correct Answer: B

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Question 5

A firm's production function is given by \( Q = 2K^0.5L^0.5 \). If the firm's capital is ₦100,000 and its labor is 10 workers, what is its output?

A. 100 units

Correct B. 200 units

C. 300 units

D. 400 units

Correct Answer: B

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Question 6

A firm's production function is given by Q = 100L^0.5K^0.5, where Q is output, L is labor, and K is capital. If the firm increases labor from 100 to 121 units and capital from 100 to 121 units, what is the percentage change in output?

A. 10%

B. 20%

Correct C. 30%

D. 40%

Correct Answer: C

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Question 7

Suppose the demand for a product is given by Qd = 100 - 2P and the supply is given by Qs = 2P. If the price is initially set at ₦10, what is the equilibrium quantity?

A. 20

B. 30

Correct C. 40

D. 50

Correct Answer: C

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Question 8

A country's balance of payments is given by the following equation: BOP = X - M, where X is exports and M is imports. If the country's exports are ₦100 billion and imports are ₦120 billion, what is the balance of payments?

Correct A. ₦20 billion

B. ₦30 billion

C. ₦40 billion

D. ₦50 billion

Correct Answer: A

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Question 9

A firm's \cost function is given by C = 100 + 2L + 3K, where C is \cost, L is labor, and K is capital. If the firm increases labor from 50 to 60 units and capital from 50 to 60 units, what is the percentage change in \cost?

A. 10%

B. 20%

Correct C. 30%

D. 40%

Correct Answer: C

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Question 10

A country's inflation rate is given by the following equation: inflation rate = \( P1 - P0 \) / P0, where P1 is the current price level and P0 is the previous price level. If the current price level is ₦100 and the previous price level is ₦90, what is the inflation rate?

A. 10%

B. 20%

Correct C. 30%

D. 40%

Correct Answer: C

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Question 11

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. 10%

C. 5%

D. 15%

Correct Answer: A

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Question 12

A firm produces two goods, X and Y, u\sing two inputs, labor (L) and capital (K). The production function for good X is given by QX = 10L^0.5K^0.5, and the production function for good Y is given by QY = 5L^0.2K^0.8. If the firm has 100 units of labor and 50 units of capital, how many units of good X and good Y should the firm produce to maximize profits?

Correct A. QX = 50, QY = 25

B. QX = 75, QY = 30

C. QX = 25, QY = 50

D. QX = 30, QY = 75

Correct Answer: A

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Question 13

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. 10%

C. 5%

D. 15%

Correct Answer: A

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Question 14

A firm produces two goods, X and Y, u\sing two inputs, labor (L) and capital (K). The production function for good X is given by QX = 10L^0.5K^0.5, and the production function for good Y is given by QY = 5L^0.2K^0.8. If the firm has 100 units of labor and 50 units of capital, how many units of good X and good Y should the firm produce to maximize profits?

Correct A. QX = 50, QY = 25

B. QX = 75, QY = 30

C. QX = 25, QY = 50

D. QX = 30, QY = 75

Correct Answer: A

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Question 15

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. 10%

C. 5%

D. 15%

Correct Answer: A

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Question 16

The opportunity \cost of producing one more unit of a good is measured by the

Correct A. marginal \cost

B. marginal revenue

C. average variable \cost

D. average fixed \cost

Correct Answer: A

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Question 17

A country's balance of payments is in equilibrium when the value of its exports equals the value of its

Correct A. imports

B. exports

C. capital inflows

D. foreign direct investment

Correct Answer: A

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Question 18

The law of diminishing marginal utility states that as the quantity of a good consumed increases, the marginal utility derived from each additional unit

A. increases

Correct B. decreases

C. remains cons\tant

D. becomes negative

Correct Answer: B

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Question 19

Agricultural development in Nigeria has been hindered by the lack of

A. adequate funding

B. modern techno\logy

C. skilled labor

Correct D. all of the above

Correct Answer: D

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Question 20

The supply curve shifts to the right when there is an increase in the

A. price of the good

B. price of a complementary good

C. price of a substitute good

Correct D. techno\logy

Correct Answer: D

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Question 21

Suppose the demand function for a commodity is given by Q = 100 - 2P and the supply function is given by Q = 2P + 10. Find the equilibrium price and quantity.

A. ₦50, 50 units

B. ₦75, 75 units

Correct C. ₦100, 100 units

D. ₦125, 125 units

Correct Answer: C

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Question 22

A firm produces two products, A and B. The production of A requires 2 hours of labor and 1 hour of capital, while the production of B requires 1 hour of labor and 2 hours of capital. If the firm has 10 hours of labor and 10 hours of capital available, and the prices of A and B are ₦100 and ₦200 respectively, find the optimal production levels of A and B.

A. A = 5 units, B = 5 units

B. A = 10 units, B = 0 units

C. A = 0 units, B = 10 units

Correct D. A = 5 units, B = 10 units

Correct Answer: D

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Question 23

The demand function for a commodity is given by Q = 100 - 2P and the supply function is given by Q = 2P + 10. If the government imposes a tax of ₦20 per unit on the commodity, find the new equilibrium price and quantity.

A. ₦60, 60 units

Correct B. ₦80, 80 units

C. ₦100, 100 units

D. ₦120, 120 units

Correct Answer: B

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Question 24

A firm produces two products, A and B. The production of A requires 2 hours of labor and 1 hour of capital, while the production of B requires 1 hour of labor and 2 hours of capital. If the firm has 10 hours of labor and 10 hours of capital available, and the prices of A and B are ₦100 and ₦200 respectively, find the optimal production levels of A and B, assuming that the firm's objective is to maximize profit.

A. A = 5 units, B = 5 units

B. A = 10 units, B = 0 units

C. A = 0 units, B = 10 units

Correct D. A = 5 units, B = 10 units

Correct Answer: D

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Question 25

The demand function for a commodity is given by Q = 100 - 2P and the supply function is given by Q = 2P + 10. If the government imposes a tax of ₦20 per unit on the commodity, find the new equilibrium price and quantity, assuming that the tax is passed on to the consumer.

A. ₦60, 60 units

Correct B. ₦80, 80 units

C. ₦100, 100 units

D. ₦120, 120 units

Correct Answer: B

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