Practice Post UTME IMS U economics 2017 Past Questions

Question 1

A consumer's indifference curve is given by the equation ( U(x,y) = 2x + 3y ). If the consumer's income is ₦1000 and the price of good x is ₦5, find the optimal bundle of goods x and y.

A. (x,y) = (100, 100)

Correct B. (x,y) = (80, 120)

C. (x,y) = (120, 80)

D. (x,y) = (60, 140)

Correct Answer: B

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Question 2

A firm's production function is given by \( Q = 2L^2 + 3K^2 \). If the firm's output is 100 units and the price of labor is ₦10, find the optimal input combination of labor and capital.

A. (L,K) = (5, 5)

B. (L,K) = (10, 10)

Correct C. (L,K) = (15, 15)

D. (L,K) = (20, 20)

Correct Answer: C

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Question 3

A government imposes a tax of ₦10 on a good that is sold at a price of ₦50. If the demand for the good is given by \( Q = 100 - 2P \) and the supply of the good is given by \( Q = 2P - 100 \), find the new equilibrium price and quantity.

Correct A. P = 40, Q = 60

B. P = 30, Q = 70

C. P = 20, Q = 80

D. P = 10, Q = 90

Correct Answer: A

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Question 4

A firm's \cost function is given by \( C = 2L + 3K \). If the firm's output is 100 units and the price of labor is ₦10, find the optimal input combination of labor and capital.

A. (L,K) = (5, 5)

B. (L,K) = (10, 10)

Correct C. (L,K) = (15, 15)

D. (L,K) = (20, 20)

Correct Answer: C

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Question 5

A government imposes a tax of ₦10 on a good that is sold at a price of ₦50. If the demand for the good is given by \( Q = 100 - 2P \) and the supply of the good is given by \( Q = 2P - 100 \), find the new equilibrium price and quantity.

Correct A. P = 40, Q = 60

B. P = 30, Q = 70

C. P = 20, Q = 80

D. P = 10, Q = 90

Correct Answer: A

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Question 6

A monopolistically competitive firm faces a downward-sloping demand curve. If the firm increases its price, what will happen to its total revenue?

A. Total revenue will increase

Correct B. Total revenue will decrease

C. Total revenue will remain unchanged

D. Total revenue will increase in the short run but decrease in the long run

Correct Answer: B

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Question 7

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

A. Money supply will increase

Correct B. Money supply will decrease

C. Money supply will remain unchanged

D. Money supply will increase in the short run but decrease in the long run

Correct Answer: B

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Question 8

A firm is producing at the point where its marginal revenue equals its marginal \cost. What is the firm's profit-maximizing output?

Correct A. The firm's profit-maximizing output is the quantity where MR = MC

B. The firm's profit-maximizing output is the quantity where MR > MC

C. The firm's profit-maximizing output is the quantity where MR < MC

D. The firm's profit-maximizing output is the quantity where MR = MC and MR > MC

Correct Answer: A

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Question 9

A government increases the tax on a good. What will be the effect on the supply curve?

Correct A. The supply curve will shift to the left

B. The supply curve will shift to the right

C. The supply curve will remain unchanged

D. The supply curve will shift to the left in the short run but to the right in the long run

Correct Answer: A

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Question 10

A central bank implements a monetary policy that increases the money supply. What will be the effect on the price level?

Correct A. The price level will increase

B. The price level will decrease

C. The price level will remain unchanged

D. The price level will increase in the short run but decrease in the long run

Correct Answer: A

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Question 11

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 \cost function is C(x) = 3x^2 + 2x + 5, what is the profit function?

Correct A. -x^2 + 3x - 4

B. x^2 - 3x + 4

C. x^2 + 3x - 4

D. -x^2 - 3x + 4

Correct Answer: A

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Question 12

The demand function for a product is given by p = 100 - 2q, where p is the price and q is the quantity demanded. If the supply function is given by p = 2q + 10, what is the equilibrium price and quantity?

Correct A. p = 40, q = 15

B. p = 60, q = 20

C. p = 80, q = 25

D. p = 100, q = 30

Correct Answer: A

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Question 13

A country's GDP is given by GNP = 1000 + 0.2Y, where Y is the national income. If the national income is 5000, what is the GDP?

Correct A. 2000

B. 3000

C. 4000

D. 5000

Correct Answer: A

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Question 14

A firm's tax liability is given by T = 0.1I, where I is the income. If the income is 10000, what is the tax liability?

Correct A. 1000

B. 2000

C. 3000

D. 4000

Correct Answer: A

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Question 15

A country's budget is given by B = 1000 + 0.2G, where G is the government exp\enditure. If the government exp\enditure is 5000, what is the budget?

Correct A. 2000

B. 3000

C. 4000

D. 5000

Correct Answer: A

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Question 16

A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. What is the profit-maximizing price and quantity?

Correct A. P = 50, Q = 25

B. P = 75, Q = 12

C. P = 25, Q = 50

D. P = 12, Q = 75

Correct Answer: A

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Question 17

A country's budget is given by B = 100 + 0.2Y, where Y is the GDP. If the GDP is 500, what is the budget?

Correct A. ₦150

B. ₦120

C. ₦180

D. ₦200

Correct Answer: A

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Question 18

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm uses 4 units of labor and 9 units of capital, what is the output?

A. 12

B. 16

Correct C. 20

D. 24

Correct Answer: C

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Question 19

A country's balance of payments is given by BOP = X - M. If the country's exports are 100 and imports are 80, what is the balance of payments?

Correct A. ₦20

B. ₦10

C. ₦5

D. ₦15

Correct Answer: A

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Question 20

A firm's \cost function is given by C(Q) = 2Q^2 + 10Q. If the firm produces 5 units of output, what is the total \cost?

A. ₦50

B. ₦60

Correct C. ₦70

D. ₦80

Correct Answer: C

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Question 21

A perfectly competitive firm's supply curve is downward-sloping because it is a

Correct A. price-taker

B. price-maker

C. price-setter

D. price-follower

Correct Answer: A

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Question 22

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 23

A country's balance of payments account can be in equilibrium even if its current account is not in equilibrium because

Correct A. the capital account can offset the current account deficit

B. the current account can offset the capital account deficit

C. the balance of payments account is always in equilibrium

D. the current account is always in equilibrium

Correct Answer: A

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Question 24

A government's budget can be in surplus even if its tax revenue is less than its exp\enditure because

A. the government has a surplus of capital

B. the government has a surplus of current revenue

C. the government has a deficit of current exp\enditure

Correct D. the government has a surplus of current revenue and a deficit of capital exp\enditure

Correct Answer: D

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Question 25

A monopolistically competitive firm's demand curve is downward-sloping because it is a

A. price-taker

Correct B. price-maker

C. price-setter

D. price-follower

Correct Answer: B

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