Practice Post UTME LASU economics 2017 Past Questions

Question 1

The opportunity \cost of producing one more unit of a good is equal to the marginal benefit of producing that good. This is an example of which economic concept?

A. Law of Diminishing Returns

B. Law of Increa\sing Opportunity Cost

Correct C. Law of Diminishing Marginal Utility

D. Law of Increa\sing Marginal Utility

Correct Answer: C

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Question 2

A country's balance of payments is in equilibrium when the value of its imports equals the value of its exports. This is an example of which economic concept?

A. Trade Deficit

B. Trade Surplus

Correct C. Balance of Payments Equilibrium

D. Current Account Deficit

Correct Answer: C

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Question 3

The demand for a good is inversely related to its price. This is an example of which economic concept?

Correct A. Law of Demand

B. Law of Supply

C. Law of Diminishing Marginal Utility

D. Law of Increa\sing Marginal Utility

Correct Answer: A

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Question 4

The opportunity \cost of producing one more unit of a good is equal to the marginal \cost of producing that good. This is an example of which economic concept?

Correct A. Law of Diminishing Returns

B. Law of Increa\sing Opportunity Cost

C. Law of Diminishing Marginal Utility

D. Law of Increa\sing Marginal Utility

Correct Answer: A

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Question 5

The supply of a good is directly related to its price. This is an example of which economic concept?

Correct A. Law of Supply

B. Law of Demand

C. Law of Diminishing Marginal Utility

D. Law of Increa\sing Marginal Utility

Correct Answer: A

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Question 6

The following table shows the relationship between the price of a commodity and its quantity demanded. U\sing the midpoint method, calculate the price elasticity of demand for the commodity when the price is ₦120.

Correct A. 0.5

B. 1.2

C. 2.5

D. 3.8

Correct Answer: A

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Question 7

A firm has a production function 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, find the optimal level of labor and capital that will maximize the firm's profits.

Correct A. L = 100, K = 50

B. L = 50, K = 100

C. L = 200, K = 100

D. L = 100, K = 200

Correct Answer: A

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Question 8

A consumer has the following utility function: U = 2x + 3y. If the prices of x and y are ₦10 and ₦20 respectively, and the consumer has a budget of ₦100, find the optimal quantities of x and y that will maximize the consumer's utility.

Correct A. x = 5, y = 2

B. x = 2, y = 5

C. x = 10, y = 5

D. x = 5, y = 10

Correct Answer: A

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Question 9

A firm has a \cost function given by C = 2L + 3K. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, find the optimal level of labor and capital that will minimize the firm's \costs.

Correct A. L = 50, K = 100

B. L = 100, K = 50

C. L = 200, K = 100

D. L = 100, K = 200

Correct Answer: A

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Question 10

A consumer has the following budget constraint: 2x + 3y = 100. If the prices of x and y are ₦10 and ₦20 respectively, find the optimal quantities of x and y that will maximize the consumer's utility.

Correct A. x = 20, y = 10

B. x = 10, y = 20

C. x = 30, y = 10

D. x = 10, y = 30

Correct Answer: A

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Question 11

A firm has a revenue function given by R = 2x + 3y. If the price of x is ₦10 per unit and the price of y is ₦20 per unit, find the optimal quantities of x and y that will maximize the firm's revenue.

Correct A. x = 20, y = 10

B. x = 10, y = 20

C. x = 30, y = 10

D. x = 10, y = 30

Correct Answer: A

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Question 12

A consumer has the following utility function: U = 2x + 3y. If the prices of x and y are ₦10 and ₦20 respectively, and the consumer has a budget of ₦100, find the optimal quantities of x and y that will maximize the consumer's utility.

Correct A. x = 5, y = 2

B. x = 2, y = 5

C. x = 10, y = 5

D. x = 5, y = 10

Correct Answer: A

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Question 13

A firm has a \cost function given by C = 2L + 3K. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, find the optimal level of labor and capital that will minimize the firm's \costs.

Correct A. L = 50, K = 100

B. L = 100, K = 50

C. L = 200, K = 100

D. L = 100, K = 200

Correct Answer: A

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Question 14

Consider a country with a fixed exchange rate regime. If the country's central bank decides to increase the money supply by 10%, what will be the effect on the balance of payments?

A. The balance of payments will improve due to increased exports.

Correct B. The balance of payments will worsen due to increased imports.

C. The balance of payments will remain unchanged.

D. The balance of payments will improve due to increased foreign investment.

Correct Answer: B

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Question 15

A firm is producing a good with a cons\tant returns to scale production function. If the price of the good increases by 20%, what will be the effect on the firm's output?

A. The firm's output will increase by 20%.

B. The firm's output will decrease by 20%.

Correct C. The firm's output will remain unchanged.

D. The firm's output will increase by 10%.

Correct Answer: C

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Question 16

A government is considering a tax on a particular good. If the tax is implemented, what will be the effect on the supply of the good?

A. The supply of the good will increase.

Correct B. The supply of the good will decrease.

C. The supply of the good will remain unchanged.

D. The supply of the good will increase at a decrea\sing rate.

Correct Answer: B

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Question 17

A central bank is considering a monetary policy to reduce inflation. If the central bank increases the reserve requirement for commercial banks, what will be the effect on the money supply?

A. The money supply will increase.

Correct B. The money supply will decrease.

C. The money supply will remain unchanged.

D. The money supply will increase at a decrea\sing rate.

Correct Answer: B

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Question 18

A firm is producing a good with a decrea\sing returns to scale production function. If the price of the good increases by 20%, what will be the effect on the firm's output?

A. The firm's output will increase by 20%.

Correct B. The firm's output will decrease by 20%.

C. The firm's output will remain unchanged.

D. The firm's output will increase by 10%.

Correct Answer: B

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Question 19

A government is considering a tax on a particular good. If the tax is implemented, what will be the effect on the demand for the good?

A. The demand for the good will increase.

Correct B. The demand for the good will decrease.

C. The demand for the good will remain unchanged.

D. The demand for the good will increase at a decrea\sing rate.

Correct Answer: B

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Question 20

A central bank is considering a monetary policy to reduce inflation. If the central bank increases the interest rate, what will be the effect on the money supply?

A. The money supply will increase.

Correct B. The money supply will decrease.

C. The money supply will remain unchanged.

D. The money supply will increase at a decrea\sing rate.

Correct Answer: B

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Question 21

A firm is producing a good with a cons\tant returns to scale production function. If the price of the good decreases by 20%, what will be the effect on the firm's output?

A. The firm's output will increase by 20%.

B. The firm's output will decrease by 20%.

Correct C. The firm's output will remain unchanged.

D. The firm's output will increase by 10%.

Correct Answer: C

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Question 22

A government is considering a tax on a particular good. If the tax is implemented, what will be the effect on the supply of the good?

A. The supply of the good will increase.

Correct B. The supply of the good will decrease.

C. The supply of the good will remain unchanged.

D. The supply of the good will increase at a decrea\sing rate.

Correct Answer: B

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Question 23

A central bank is considering a monetary policy to reduce inflation. If the central bank decreases the reserve requirement for commercial banks, what will be the effect on the money supply?

A. The money supply will increase.

B. The money supply will decrease.

C. The money supply will remain unchanged.

D. The money supply will increase at a decrea\sing rate.

Correct Answer: VIEW ANSWER

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Question 24

A country's inflation rate is 8% per annum, and its nominal interest rate is 10% per annum. If the real interest rate is 2% per annum, what is the expected rate of return on a 2-year bond?

Correct A. \( 1.02^2 \)

B. \( 1.08^2 \)

C. \( 1.10^2 \)

D. \( 1.02 \times 1.10 \)

Correct Answer: A

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Question 25

A firm's production function is given by \( Q = 100K^0.5L^0.5 \), where Q is output, K is capital, and L is labor. If the firm's capital stock is 100 units and labor is 100 units, what is the marginal product of labor?

A. \( 0.5 \times 100^{0.5} \times L^{-0.5} \)

Correct B. \( 0.5 \times 100^{0.5} \times L^{0.5} \)

C. \( 100^{0.5} \times L^{0.5} \)

D. \( 100^{0.5} \times L^{-0.5} \)

Correct Answer: B

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