Practice Post UTME CALEB UNIVERSITY economics 2022 Past Questions

Question 1

A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \), where Q is output, L is labor, and K is capital. If the firm's labor and capital inputs are increased by 20% and 15%, respectively, what is the percentage change in output?

A. 10%

B. 12%

Correct C. 15%

D. 18%

Correct Answer: C

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Question 2

A central bank increases the reserve requirement for commercial banks. What is the likely effect on the money supply?

A. Increase

Correct B. Decrease

C. No change

D. Uncertain

Correct Answer: B

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Question 3

A consumer's budget constraint is given by P1Q1 + P2Q2 = I, where P1 and P2 are prices, Q1 and Q2 are quantities, and I is income. If the consumer's income increases by 10% and the prices of both goods remain cons\tant, what is the likely effect on the consumer's budget line?

Correct A. Shift to the right

B. Shift to the left

C. No change

D. Uncertain

Correct Answer: A

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Question 4

A firm's \cost function is given by C = 2L + 3K, where C is \cost, L is labor, and K is capital. If the firm's labor and capital inputs are increased by 20% and 15%, respectively, what is the percentage change in \cost?

A. 10%

B. 12%

C. 15%

Correct D. 18%

Correct Answer: D

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Question 5

A central bank implements an expansionary monetary policy by lowering the discount rate. What is the likely effect on the money supply?

Correct A. Increase

B. Decrease

C. No change

D. Uncertain

Correct Answer: A

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Question 6

Consider a small open economy with a fixed exchange rate. If the economy experiences an increase in aggregate demand, what will be the effect on the balance of payments?

A. The balance of payments will improve due to the increase in exports.

B. The balance of payments will worsen due to the increase in imports.

Correct C. The balance of payments will remain unchanged as the exchange rate is fixed.

D. The balance of payments will improve due to the increase in foreign investment.

Correct Answer: C

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Question 7

A firm is considering the production of two goods, A and B. The production function for good A is given by Q_A = 2L^0.5K^0.5, where L is labor and K is capital. The production function for good B is given by Q_B = 3L^0.7K^0.3. If the firm has 100 units of labor and 50 units of capital, what is the marginal rate of technical substitution (MRTS) between labor and capital for good A?

Correct A. 0.5

B. 1

C. 2

D. 3

Correct Answer: A

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Question 8

A country is experiencing a trade deficit due to an increase in imports and a decrease in exports. If the country's exchange rate is fixed, what will be the effect on the balance of payments?

A. The balance of payments will improve due to the increase in exports.

Correct B. The balance of payments will worsen due to the increase in imports.

C. The balance of payments will remain unchanged as the exchange rate is fixed.

D. The balance of payments will improve due to the increase in foreign investment.

Correct Answer: B

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Question 9

A firm is considering the production of two goods, A and B. The production function for good A is given by Q_A = 2L^0.5K^0.5, where L is labor and K is capital. The production function for good B is given by Q_B = 3L^0.7K^0.3. If the firm has 100 units of labor and 50 units of capital, what is the total product of good A?

A. 100

B. 150

Correct C. 200

D. 250

Correct Answer: C

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Question 10

A country is experiencing a trade surplus due to an increase in exports and a decrease in imports. If the country's exchange rate is flexible, what will be the effect on the balance of payments?

A. The balance of payments will worsen due to the increase in imports.

Correct B. The balance of payments will improve due to the increase in exports.

C. The balance of payments will remain unchanged as the exchange rate is flexible.

D. The balance of payments will worsen due to the increase in foreign investment.

Correct Answer: B

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Question 11

The elasticity of demand for a product is estimated to be -2. If the price of the product increases by 10%, what is the percentage change in the quantity demanded?

Correct A. -20%

B. -10%

C. 0%

D. +10%

Correct Answer: A

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Question 12

A firm's production function is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is the labor input, and K is the capital input. If the firm increases its labor input from 100 to 120 units, and its capital input from 100 to 120 units, what is the percentage change in the quantity produced?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 13

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's income is ₦1000, and the prices of the two goods are ₦5 and ₦10 respectively, what is the consumer's optimal bundle of goods?

A. x = 40, y = 20

Correct B. x = 30, y = 30

C. x = 20, y = 40

D. x = 10, y = 50

Correct Answer: B

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Question 14

The balance of payments (BOP) for a country is given by the following equation: BOP = X - M, where X is the value of exports and M is the value of imports. If the country's exports are ₦500 billion and its imports are ₦600 billion, what is the country's balance of payments?

A. ₦100 billion surplus

Correct B. ₦100 billion deficit

C. ₦200 billion surplus

D. ₦200 billion deficit

Correct Answer: B

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Question 15

A firm's production function is given by Q = 2L^0.5K^0.5, where Q is the quantity produced, L is the labor input, and K is the capital input. If the firm increases its labor input from 100 to 120 units, and its capital input from 100 to 120 units, what is the percentage change in the quantity produced?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 16

A firm's revenue function is given by R(x) = 2x^2 + 10x + 5, where x is the number of units produced. If the firm's fixed \cost is ₦1000, and its marginal \cost is ₦5 per unit, find the profit-maximizing level of production.

A. 20 units

Correct B. 30 units

C. 40 units

D. 50 units

Correct Answer: B

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Question 17

A consumer's utility function is given by U(x, y) = 2x^0.5y^0.5, where x and y are the quantities of two goods consumed. If the consumer's budget constraint is 2x + 3y = 12, find the optimal consumption bundle.

Correct A. (4, 4)

B. (6, 2)

C. (8, 0)

D. (0, 8)

Correct Answer: A

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Question 18

A firm's \cost function is given by C(x) = 2x^2 + 10x + 1000, where x is the number of units produced. If the firm's revenue function is R(x) = 2x^2 + 10x + 5, find the profit-maximizing level of production.

A. 20 units

Correct B. 30 units

C. 40 units

D. 50 units

Correct Answer: B

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Question 19

A consumer's budget constraint is 2x + 3y = 12, where x and y are the quantities of two goods consumed. If the consumer's utility function is U(x, y) = 2x^0.5y^0.5, find the optimal consumption bundle.

Correct A. (4, 4)

B. (6, 2)

C. (8, 0)

D. (0, 8)

Correct Answer: A

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Question 20

A firm's demand function is given by Q = 100 - 2P, where P is the price of the good. If the firm's marginal \cost is ₦5 per unit, find the profit-maximizing price.

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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Question 21

The concept of scarcity in economics implies that the production of one good or service is often at the expense of another. Which of the following is a correct example of this principle?

Correct A. A farmer must choose between planting wheat or corn due to limited land

B. A company must decide between investing in research and development or expanding its marketing efforts

C. A government must allocate its budget between funding education and healthcare

D. A consumer must choose between buying a new car or a new smartphone

Correct Answer: A

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Question 22

The production function for a firm is given by Q = 2L^0.5K^0.5. If the firm increases its labor input from 4 to 9 units, and keeps its capital input cons\tant at 16 units, what is the percentage change in output?

A. 25%

Correct B. 50%

C. 75%

D. 100%

Correct Answer: B

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Question 23

A government imposes a tax on a particular good, which leads to a decrease in its demand. What is the effect on the equilibrium price and quantity of the good?

Correct A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

D. Price decreases, quantity decreases

Correct Answer: A

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Question 24

A firm's production function is given by Q = 3L^0.5K^0.5. If the firm increases its labor input from 9 to 16 units, and keeps its capital input cons\tant at 4 units, what is the percentage change in output?

A. 25%

B. 50%

Correct C. 75%

D. 100%

Correct Answer: C

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Question 25

A government imposes a tax on a particular good, which leads to a decrease in its supply. What is the effect on the equilibrium price and quantity of the good?

A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

Correct D. Price decreases, quantity decreases

Correct Answer: D

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