Practice Post UTME BELLS UNIVERSITY economics 2022 Past Questions

Question 1

Consider a firm operating in a perfectly competitive market with a production function Q = 2L^0.5K^0.5. If the firm's current input prices are w = 10 and r = 20, and it currently employs 4 units of labor and 2 units of capital, calculate the firm's current output and the returns to scale.

A. Q = 8, Decrea\sing Returns to Scale

Correct B. Q = 16, Increa\sing Returns to Scale

C. Q = 4, Cons\tant Returns to Scale

D. Q = 2, Decrea\sing Returns to Scale

Correct Answer: B

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Question 2

A government is considering implementing a new tax on luxury goods to reduce income inequality. The tax is expected to increase the price of luxury goods by 20% and reduce the demand for these goods by 15%. If the initial price of luxury goods is ₦1000 and the initial demand is 1000 units, calculate the new price and demand for luxury goods.

Correct A. New Price = ₦1200, New Demand = 850 units

B. New Price = ₦1200, New Demand = 900 units

C. New Price = ₦1000, New Demand = 850 units

D. New Price = ₦1000, New Demand = 900 units

Correct Answer: A

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Question 3

A central bank is considering implementing a monetary policy to reduce inflation. The central bank has two options: Option A, which involves increa\sing the reserve requirement for commercial banks, or Option B, which involves increa\sing the discount rate for commercial banks. If the current inflation rate is 8% and the central bank wants to reduce it to 4%, calculate the expected effect of each option on the money supply.

Correct A. Option A will reduce the money supply by 10%

B. Option B will reduce the money supply by 5%

C. Option A will increase the money supply by 5%

D. Option B will increase the money supply by 10%

Correct Answer: A

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Question 4

A government is considering implementing a new budget that allocates 60% of its revenue to education and 20% to healthcare. If the government's total revenue is ₦10 billion, calculate the amount allocated to education and healthcare.

Correct A. Education = ₦6 billion, Healthcare = ₦2 billion

B. Education = ₦4 billion, Healthcare = ₦2 billion

C. Education = ₦6 billion, Healthcare = ₦1.5 billion

D. Education = ₦4 billion, Healthcare = ₦1.5 billion

Correct Answer: A

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Question 5

A firm is considering investing in a new project that has a net present value (NPV) of ₦1.5 million and a payback period of 2 years. If the firm's \cost of capital is 10%, calculate the internal rate of return (IRR) of the project.

Correct A. IRR = 12%

B. IRR = 15%

C. IRR = 18%

D. IRR = 20%

Correct Answer: A

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Question 6

The opportunity \cost of a choice is the value of the next best alternative that is given up when a choice is made. Which of the following is an example of opportunity \cost?

A. The \cost of producing a good

Correct B. The value of a good that is not produced

C. The \cost of a good that is not consumed

D. The value of a good that is consumed

Correct Answer: B

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Question 7

The money supply in an economy is the total amount of money available for use in the economy. Which of the following is a component of the money supply?

A. Currency in circulation

B. Deposits in commercial banks

C. Time deposits in commercial banks

Correct D. All of the above

Correct Answer: D

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Question 8

The agricultural sector in Nigeria is a significant contributor to the country's GDP. Which of the following is a major challenge facing the agricultural sector in Nigeria?

A. Lack of access to credit

B. Lack of access to markets

C. Lack of access to techno\logy

Correct D. All of the above

Correct Answer: D

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Question 9

The elasticity of demand is a measure of how responsive the quantity demanded of a good is to changes in its price. Which of the following is an example of a good with a high elasticity of demand?

A. A luxury good

B. A necessity good

Correct C. A good with a high income elasticity of demand

D. A good with a low income elasticity of demand

Correct Answer: C

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Question 10

The revenue of a firm is the total amount of money received from the sale of its goods or services. Which of the following is a component of the revenue of a firm?

A. Sales revenue

B. Cost of goods sold

C. Operating expenses

Correct D. All of the above

Correct Answer: D

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Question 11

Consider a production function given by $ Q = 100K^{\frac{1}{3}}L^{\frac{2}{3}} $, where Q is the output, K is the capital, and L is the labor. If the marginal product of capital is 20, what is the value of the marginal product of labor?

Correct A. 40

B. 60

C. 80

D. 100

Correct Answer: A

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Question 12

A country's GDP is ₦1,500,000,000, and its GNP is ₦1,600,000,000. What is the net factor income from abroad?

Correct A. ₦100,000,000

B. ₦200,000,000

C. ₦300,000,000

D. ₦400,000,000

Correct Answer: A

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Question 13

Suppose the demand for a product is given by $ Q_d = 100 - 2P $ and the supply is given by $ Q_s = 2P - 10 $. What is the equilibrium price and quantity?

A. P = 20, Q = 30

Correct B. P = 30, Q = 40

C. P = 40, Q = 50

D. P = 50, Q = 60

Correct Answer: B

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Question 14

A firm's production function is given by $ Q = 2K^{\frac{1}{2}}L^{\frac{1}{2}} $. If the marginal product of capital is 10, what is the value of the marginal product of labor?

A. 5

Correct B. 10

C. 15

D. 20

Correct Answer: B

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Question 15

A country's balance of payments is given by $ BOP = 100 - 20X + 30Y $, where X is the exports and Y is the imports. If the exports are ₦50,000,000 and the imports are ₦60,000,000, what is the balance of payments?

Correct A. ₦100,000,000

B. ₦200,000,000

C. ₦300,000,000

D. ₦400,000,000

Correct Answer: A

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Question 16

U\sing the concept of comparative advantage, explain why Nigeria should specialize in the production of agricultural products and import manufactured goods from other countries.

Correct A. Nigeria has a comparative advantage in agricultural production due to its favorable climate and soil conditions.

B. Nigeria should specialize in manufacturing goods to reduce its reliance on imports.

C. Comparative advantage is not relevant in international trade.

D. Nigeria should focus on producing both agricultural and manufactured goods to achieve economic diversification.

Correct Answer: A

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Question 17

A firm is producing 100 units of a good at a \cost of ₦100 per unit. If the firm increases its production to 120 units, the \cost per unit decreases to ₦90. What is the total \cost of producing 120 units of the good?

A. ₦10,800

Correct B. ₦11,000

C. ₦11,200

D. ₦11,400

Correct Answer: B

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Question 18

U\sing the concept of returns to scale, explain why a firm may experience decrea\sing returns to scale in the short run but increa\sing returns to scale in the long run.

Correct A. In the short run, a firm may experience decrea\sing returns to scale due to fixed \costs, but in the long run, it can increase its production and experience increa\sing returns to scale.

B. A firm always experiences increa\sing returns to scale in the long run.

C. Decrea\sing returns to scale is a characteristic of the long run, not the short run.

D. Increa\sing returns to scale is a characteristic of the short run, not the long run.

Correct Answer: A

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Question 19

A consumer's demand for a good is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the price of the good is ₦50, what is the quantity demanded?

A. 50

Correct B. 75

C. 100

D. 125

Correct Answer: B

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Question 20

U\sing the concept of supply and demand, explain why a price ceiling may lead to a shortage in the market.

Correct A. A price ceiling may lead to a shortage in the market because it restricts the supply of a good.

B. A price ceiling may lead to a shortage in the market because it increases the demand for a good.

C. A price ceiling may lead to a shortage in the market because it has no effect on the supply and demand of a good.

D. A price ceiling may lead to a shortage in the market because it decreases the demand for a good.

Correct Answer: A

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Question 21

A firm's revenue function is given by R(x) = 2x^2 + 5x + 1, where x is the number of units produced. If the firm's total \cost function is given by C(x) = 3x^2 + 2x + 10, find the profit-maximizing level of production.

Correct A. $ \frac{-5 \pm \sqrt{5^2 - 4\( 2 \ $(1)}}{2(2)} \)

B. $ \frac{-5 \pm \sqrt{5^2 - 4\( 2 \ $(10)}}{2(2)} \)

C. $ \frac{-5 \pm \sqrt{5^2 - 4\( 3 \ $(1)}}{2(3)} \)

D. $ \frac{-5 \pm \sqrt{5^2 - 4\( 3 \ $(10)}}{2(3)} \)

Correct Answer: A

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Question 22

The government of a country imposes a tax on a particular good, cau\sing the supply curve to shift to the left. If the demand curve is inelastic and the supply curve is elastic, what will be the effect on the equilibrium price and quantity?

Correct A. The equilibrium price will increase and the equilibrium quantity will decrease.

B. The equilibrium price will decrease and the equilibrium quantity will increase.

C. The equilibrium price will increase and the equilibrium quantity will increase.

D. The equilibrium price will decrease and the equilibrium quantity will decrease.

Correct Answer: A

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Question 23

A country's GDP is given by the equation GDP = C + I + G + $ X - M $, where C is consumption, I is investment, G is government sp\ending, X is exports, and M is imports. If the country's GDP is $100 billion, consumption is $50 billion, investment is $20 billion, government sp\ending is $30 billion, exports are $40 billion, and imports are $20 billion, what is the value of the country's net exports?

Correct A. $10 billion

B. $20 billion

C. $30 billion

D. $40 billion

Correct Answer: A

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Question 24

A firm's demand function is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the firm's supply function is given by Qs = 2P - 10, what is the equilibrium price and quantity?

Correct A. P = $20, Q = 30

B. P = $30, Q = 40

C. P = $40, Q = 50

D. P = $50, Q = 60

Correct Answer: A

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Question 25

A country's money supply is given by the equation M = kPY, where M is the money supply, k is a cons\tant, P is the price level, and Y is the real GDP. If the country's money supply is $100 billion, the price level is 2, and the real GDP is 50, what is the value of the cons\tant k?

A. 0.5

Correct B. 1

C. 2

D. 5

Correct Answer: B

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