Practice Post UTME GREENFIELD UNIVERSITY economics 2017 Past Questions

Question 1

Consider a firm operating in a perfectly competitive market. If the firm's average total \cost (ATC) curve intersects the average revenue (AR) curve at a point where the firm is producing at its optimal level of output, what can be concluded about the firm's profit-maximizing output level?

A. The firm is producing at its minimum point on the ATC curve.

B. The firm is producing at its maximum point on the ATC curve.

Correct C. The firm is producing at its optimal level of output.

D. The firm is producing at its minimum point on the AR curve.

Correct Answer: C

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Question 2

A country's balance of payments (BOP) accounts can be affected by the following factors. Which of the following is NOT a factor that affects the BOP?

A. Changes in the exchange rate

B. Changes in the terms of trade

C. Changes in the country's income

Correct D. Changes in the country's population

Correct Answer: D

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Question 3

A firm's production function is given by Q = 2L^0.5K^0.5, where Q is the output, L is the labor, and K is the capital. If the firm wants to increase its output by 20%, what percentage increase in labor and capital is required?

Correct A. 10% increase in labor and 10% increase in capital

B. 20% increase in labor and 20% increase in capital

C. 30% increase in labor and 30% increase in capital

D. 40% increase in labor and 40% increase in capital

Correct Answer: A

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Question 4

A country's GDP can be affected by the following factors. Which of the following is NOT a factor that affects the GDP?

A. Changes in the exchange rate

B. Changes in the terms of trade

C. Changes in the country's income

Correct D. Changes in the country's population

Correct Answer: D

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Question 5

A firm's \cost function is given by C = 2L + 3K, where C is the \cost, L is the labor, and K is the capital. If the firm wants to minimize its \cost, what is the optimal level of labor and capital?

Correct A. L = 1, K = 1

B. L = 2, K = 2

C. L = 3, K = 3

D. L = 4, K = 4

Correct Answer: A

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Question 6

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. 30%

C. 40%

D. 50%

Correct Answer: A

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Question 7

A monopolist faces a demand curve given by Qd = 100 - 2P and a marginal revenue curve given by MR = 20 - 2P. If the price elasticity of demand is -2, what is the profit-maximizing price?

A. ₦50

Correct B. ₦60

C. ₦70

D. ₦80

Correct Answer: B

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Question 8

A firm produces two goods, X and Y, u\sing two inputs, labor and capital. The production function for good X is given by QX = 10L^0.5K^0.5, where QX is the quantity of good X produced, L is the amount of labor used, and K is the amount of capital used. If the price of good X is ₦100 and the price of good Y is ₦200, and the firm's budget constraint is given by 100QX + 200QY = ₦1000, what is the optimal quantity of good X to produce?

A. 10 units

Correct B. 20 units

C. 30 units

D. 40 units

Correct Answer: B

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Question 9

A consumer has the following utility function: U = 2X + 3Y, where X and Y are the quantities of two goods consumed. The prices of the two goods are ₦50 and ₦100, respectively. If the consumer's income is ₦500, what is the optimal quantity of good X to consume?

A. 10 units

Correct B. 20 units

C. 30 units

D. 40 units

Correct Answer: B

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Question 10

A firm produces a good u\sing a production function given by Q = 10L^0.5K^0.5, where Q is the quantity produced, L is the amount of labor used, and K is the amount of capital used. If the price of the good is ₦100 and the firm's budget constraint is given by 100Q = ₦1000, what is the optimal quantity of labor to use?

A. 10 units

Correct B. 20 units

C. 30 units

D. 40 units

Correct Answer: B

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Question 11

Consider a perfectly competitive market with multiple firms producing a homogeneous product. If the market price falls below the average total \cost of production, what will be the likely outcome for the firms in the market?

A. The firms will increase production to take advantage of the lower market price.

B. The firms will decrease production to reduce their losses.

Correct C. The firms will exit the market to avoid incurring losses.

D. The firms will increase their prices to match the market price.

Correct Answer: C

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Question 12

A firm is producing a product with the following total revenue and total \cost functions: TR = 100q - 2q^2 and TC = 50 + 20q. What is the profit-maximizing quantity of the product?

A. 10 units

Correct B. 20 units

C. 30 units

D. 40 units

Correct Answer: B

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Question 13

A country is experiencing a recession, and the government wants to implement a fiscal policy to stimulate economic growth. Which of the following fiscal policy tools would be most effective in increa\sing aggregate demand?

Correct A. Increa\sing government sp\ending on infrastructure projects

B. Reducing taxes to increase disposable income

C. Increa\sing government borrowing to finance public sector investment

D. Implementing a monetary policy to reduce interest rates

Correct Answer: A

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Question 14

A firm is facing a downward-sloping demand curve, and its marginal revenue (MR) is decrea\sing as output increases. What is the likely effect on the firm's marginal \cost (MC) curve?

A. The MC curve will shift upward to the right.

Correct B. The MC curve will shift downward to the left.

C. The MC curve will remain unchanged.

D. The MC curve will shift upward to the left.

Correct Answer: B

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Question 15

A monopolist is facing a downward-sloping demand curve, and its marginal revenue (MR) is decrea\sing as output increases. What is the likely effect on the firm's price?

A. The price will increase.

Correct B. The price will decrease.

C. The price will remain unchanged.

D. The price will fluctuate.

Correct Answer: B

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Question 16

Consider a perfectly competitive market with n firms, each producing a homogeneous product. If the market demand curve is downward sloping and the firms are price takers, what is the relationship between the market price and the marginal revenue (MR) of each firm?

A. MR = P

B. MR = P + \( ΔP/ΔQ \) * Q

Correct C. MR = P - \( ΔP/ΔQ \) * Q

D. MR = P + \( ΔP/ΔQ \) * Q + \( Δ^2P/ΔQ^2 \) * Q^2

Correct Answer: C

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Question 17

A monopolist faces a demand curve given by Q = 100 - 2P. The monopolist's marginal \cost (MC) is given by MC = 10 + 2Q. What is the profit-maximizing price and quantity for the monopolist?

A. P = 50, Q = 25

Correct B. P = 75, Q = 12.5

C. P = 25, Q = 50

D. P = 12.5, Q = 75

Correct Answer: B

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Question 18

Consider a firm that produces a homogeneous product and faces a market demand curve given by Q = 100 - 2P. The firm's marginal \cost (MC) is given by MC = 10 + 2Q. What is the firm's profit-maximizing price and quantity?

A. P = 50, Q = 25

Correct B. P = 75, Q = 12.5

C. P = 25, Q = 50

D. P = 12.5, Q = 75

Correct Answer: B

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Question 19

A firm is considering two different production processes to produce a homogeneous product. Process A has a fixed \cost of ₦100,000 and a variable \cost of ₦50 per unit. Process B has a fixed \cost of ₦150,000 and a variable \cost of ₦30 per unit. If the market price of the product is ₦75 per unit, which production process should the firm choose?

Correct A. Process A

B. Process B

C. Both processes are equally profitable

D. Neither process is profitable

Correct Answer: A

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Question 20

A firm is considering two different production processes to produce a homogeneous product. Process A has a fixed \cost of ₦100,000 and a variable \cost of ₦50 per unit. Process B has a fixed \cost of ₦150,000 and a variable \cost of ₦30 per unit. If the market price of the product is ₦75 per unit, what is the profit-maximizing quantity for the firm?

A. Q = 1000

Correct B. Q = 1500

C. Q = 2000

D. Q = 2500

Correct Answer: B

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Question 21

The opportunity \cost of producing one more unit of wheat is the amount of wheat that could have been produced by diverting resources from the production of another good. If the opportunity \cost of producing one more unit of wheat is 2 units of rice, and the price of wheat is ₦50 per unit, and the price of rice is ₦30 per unit, what is the opportunity \cost in terms of rice if the price of wheat increases to ₦60 per unit?

A. 4 units of rice

Correct B. 6 units of rice

C. 8 units of rice

D. 10 units of rice

Correct Answer: B

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Question 22

A firm is producing two goods, X and Y, u\sing two inputs, labor and capital. The production function for good X is given by Q_X = 2L^0.5K^0.5, where Q_X is the quantity of good X produced, L is the amount of labor used, and K is the amount of capital used. The production function for good Y is given by Q_Y = 3L^0.2K^0.8. If the firm is currently u\sing 100 units of labor and 200 units of capital, and the price of good X is ₦100 per unit, and the price of good Y is ₦200 per unit, what is the total revenue of the firm?

A. ₦60,000

B. ₦80,000

Correct C. ₦100,000

D. ₦120,000

Correct Answer: C

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Question 23

The government of a country imposes a tax on the importation of a good. The tax is ₦10 per unit of the good. If the price of the good before the tax is ₦50 per unit, and the quantity of the good demanded is 100 units, what is the total tax revenue collected by the government?

A. ₦1,000

B. ₦2,000

Correct C. ₦3,000

D. ₦4,000

Correct Answer: C

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Question 24

A country's balance of payments account shows a trade deficit of ₦100 billion, a current account deficit of ₦50 billion, and a capital account surplus of ₦30 billion. What is the overall balance of payments deficit?

A. ₦20 billion

B. ₦30 billion

C. ₦40 billion

Correct D. ₦50 billion

Correct Answer: D

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Question 25

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

A. ₦60,000

B. ₦80,000

Correct C. ₦100,000

D. ₦120,000

Correct Answer: C

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