Practice Post UTME COVENANT UNIVERSITY economics 2020 Past Questions

Question 1

Determine the equilibrium price and quantity of a commodity when the demand function is given by Qd = 100 - 2P and the supply function is given by Qs = 2P - 10, where P is the price in naira.

Correct A. ₦50, Q = 50

B. ₦75, Q = 25

C. ₦25, Q = 75

D. ₦100, Q = 0

Correct Answer: A

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Question 2

A firm's total revenue is given by the equation TR = 100x - 2x^2, where x is the number of units sold. Determine the price elasticity of demand when the quantity sold is 20 units.

Correct A. 0.5

B. 1.5

C. 2.5

D. 3.5

Correct Answer: A

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Question 3

A consumer's utility function is given by U(x, y) = 2x + 3y, where x and y are the quantities of two goods consumed. Determine the marginal rate of substitution of good x for good y when the consumer is at the point (2, 3).

A. 1

Correct B. 2

C. 3

D. 4

Correct Answer: B

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Question 4

A firm's \cost function is given by C(x) = 100 + 2x + 0.5x^2, where x is the number of units produced. Determine the marginal \cost when the firm produces 20 units.

A. ₦150

Correct B. ₦200

C. ₦250

D. ₦300

Correct Answer: B

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Question 5

A consumer's budget constraint is given by the equation 2x + 3y = 100, where x and y are the quantities of two goods consumed. Determine the consumer's optimal bundle of goods when the price of good x is ₦20 and the price of good y is ₦30.

Correct A. x = 10, y = 20

B. x = 20, y = 10

C. x = 30, y = 5

D. x = 5, y = 30

Correct Answer: A

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Question 6

A monopolistically competitive firm faces a demand curve with a cons\tant elasticity of -2. If the firm's marginal revenue (MR) is given by MR = 100 - 2Q, where Q is the quantity sold, what is the firm's optimal quantity?

A. 50 units

B. 75 units

Correct C. 100 units

D. 125 units

Correct Answer: C

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Question 7

A firm is producing a good with a production function Q = 2L^0.5K^0.5, where L is labor and K is capital. If the price of labor is $10 per hour and the price of capital is $20 per unit, and the firm is currently producing 100 units of output, what is the marginal product of labor (MPL) in terms of output?

Correct A. 0.5L^0.5K^0.5

B. L^0.5K^0.5

C. 2L^0.5K^0.5

D. 4L^0.5K^0.5

Correct Answer: A

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Question 8

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the prices of the two goods are $5 and $10 respectively, and the consumer's income is $100, what is the consumer's optimal bundle of goods?

A. x = 10, y = 20

Correct B. x = 15, y = 15

C. x = 20, y = 10

D. x = 25, y = 5

Correct Answer: B

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Question 9

A firm is producing a good with a production function Q = 3L^0.5K^0.5, where L is labor and K is capital. If the price of labor is $10 per hour and the price of capital is $20 per unit, and the firm is currently producing 100 units of output, what is the marginal product of capital (MPC) in terms of output?

A. 0.5L^0.5K^0.5

Correct B. L^0.5K^0.5

C. 2L^0.5K^0.5

D. 4L^0.5K^0.5

Correct Answer: B

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Question 10

A monopolist faces a demand curve with a cons\tant elasticity of -2. If the firm's marginal revenue (MR) is given by MR = 100 - 2Q, where Q is the quantity sold, what is the firm's optimal price?

A. $50

B. $75

Correct C. $100

D. $125

Correct Answer: C

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Question 11

Consider a firm operating in a perfectly competitive market with a downward-sloping demand curve. If the firm's marginal revenue (MR) curve intersects its marginal \cost (MC) curve at point A, and the firm's average revenue (AR) curve intersects its average \cost (AC) curve at point B, what is the optimal price and quantity for the firm to produce?

A. $ P = 10, Q = 20 $

Correct B. $ P = 15, Q = 30 $

C. $ P = 20, Q = 40 $

D. $ P = 25, Q = 50 $

Correct Answer: B

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Question 12

A consumer has a utility function given by ( U(x,y) = 2x + 3y ). If the consumer's budget constraint is $ 2x + 3y = 12 $, and the prices of x and y are $ P_x = 2 $ and $ P_y = 3 $, respectively, what is the consumer's optimal bundle of x and y?

Correct A. $ x = 2, y = 2 $

B. $ x = 3, y = 3 $

C. $ x = 4, y = 4 $

D. $ x = 5, y = 5 $

Correct Answer: A

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Question 13

Consider a market with a demand curve given by $ Q_d = 100 - 2P $ and a supply curve given by $ Q_s = 2P $. If the market is initially in equilibrium at a price of $ P = 20 $, what is the new equilibrium price and quantity if the demand curve shifts to the right by 10 units?

A. $ P = 25, Q = 50 $

Correct B. $ P = 30, Q = 60 $

C. $ P = 35, Q = 70 $

D. $ P = 40, Q = 80 $

Correct Answer: B

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Question 14

A firm has a production function given by $ Q = 2L^{1/2}K^{1/2} $. If the firm's labor and capital inputs are $ L = 4 $ and $ K = 9 $, respectively, what is the firm's output?

A. $ Q = 12 $

B. $ Q = 16 $

Correct C. $ Q = 20 $

D. $ Q = 24 $

Correct Answer: C

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Question 15

Consider a country with a GDP given by $ GDP = 100 + 0.2Y $, where Y is the country's income. If the country's income is $ Y = 500 $, what is the country's GDP?

A. $ GDP = 150 $

B. $ GDP = 160 $

Correct C. $ GDP = 170 $

D. $ GDP = 180 $

Correct Answer: C

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Question 16

Calculate the marginal propensity to consume (MPC) when the total consumption function is given by C = 100 + 0.8Y, where Y is the national income.

Correct A. 0.8

B. 0.9

C. 0.7

D. 0.6

Correct Answer: A

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Question 17

A firm produces a product with a production function Q = 2L^0.5K^0.5, where L is labor and K is capital. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, find the \cost-minimizing combination of labor and capital.

Correct A. L = 100, K = 100

B. L = 200, K = 50

C. L = 50, K = 200

D. L = 100, K = 200

Correct Answer: A

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Question 18

A consumer has an indifference curve given by U = 2x^0.5y^0.5, where x is the quantity of good X and y is the quantity of good Y. If the price of good X is ₦50 per unit and the price of good Y is ₦100 per unit, find the consumer's optimal bundle of goods.

Correct A. x = 100, y = 50

B. x = 50, y = 100

C. x = 200, y = 25

D. x = 25, y = 200

Correct Answer: A

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Question 19

A firm faces a demand curve given by Q = 100 - 2P, where P is the price of the product. If the firm's marginal \cost is ₦50 per unit, find the profit-maximizing price and quantity.

Correct A. P = ₦50, Q = 50

B. P = ₦75, Q = 25

C. P = ₦25, Q = 75

D. P = ₦100, Q = 0

Correct Answer: A

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Question 20

A consumer has an income of ₦1000 and faces a budget constraint given by P1x + P2y = 1000, where P1 and P2 are the prices of goods X and Y, respectively. If the consumer's indifference curve is given by U = 2x^0.5y^0.5, find the consumer's optimal bundle of goods.

Correct A. x = 100, y = 50

B. x = 50, y = 100

C. x = 200, y = 25

D. x = 25, y = 200

Correct Answer: A

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Question 21

A firm produces a product with a production function Q = 2L^0.5K^0.5, where L is labor and K is capital. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, find the \cost-minimizing combination of labor and capital.

Correct A. L = 100, K = 100

B. L = 200, K = 50

C. L = 50, K = 200

D. L = 100, K = 200

Correct Answer: A

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Question 22

A consumer has an indifference curve given by U = 2x^0.5y^0.5, where x is the quantity of good X and y is the quantity of good Y. If the price of good X is ₦50 per unit and the price of good Y is ₦100 per unit, find the consumer's optimal bundle of goods.

A. x = 100, y = 50

B. x = 50, y = 100

C. x = 200, y = 25

D. x = 25, y = 200

Correct Answer: VIEW ANSWER

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Question 23

The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the agricultural sector. The policy involves a 10% tax on all agricultural produce sold in the market. If the total revenue from the sale of agricultural produce is ₦1,500,000, what is the amount of tax paid by the farmers?

Correct A. ₦150,000

B. ₦1,500,000

C. ₦1,000,000

D. ₦200,000

Correct Answer: A

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Question 24

A firm is producing a good u\sing two inputs, labor and capital. The production function is given by Q = 2L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, and the firm is currently producing 10 units of the good, what is the total \cost of production?

A. ₦1,000

Correct B. ₦2,000

C. ₦3,000

D. ₦4,000

Correct Answer: B

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Question 25

The Nigerian government has introduced a policy to promote industrialization in the country. The policy involves providing subsidies to firms that produce goods u\sing local raw materials. If a firm is producing a good u\sing 100 units of local raw materials and the subsidy is ₦50 per unit, what is the total subsidy received by the firm?

A. ₦5,000

B. ₦10,000

C. ₦15,000

Correct D. ₦20,000

Correct Answer: D

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