Practice Post UTME LASU economics 2024 Past Questions

Question 1

The Marshall-Lerner condition states that a country's balance of payments will improve if the sum of the price elasticities of demand for imports and exports is greater than 1. Which of the following statements is a correct interpretation of this condition?

A. The country's trade balance will improve if the price elasticity of demand for imports is greater than 1.

Correct B. The country's trade balance will improve if the sum of the price elasticities of demand for imports and exports is greater than 1.

C. The country's trade balance will improve if the price elasticity of demand for exports is greater than 1.

D. The country's trade balance will improve if the price elasticity of demand for imports is less than 1.

Correct Answer: B

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Question 2

A firm's demand curve is given by the equation Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's revenue function is R(P) = P$ 100 - 2P $, what is the price at which the firm's revenue is maximized?

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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Question 3

The government of a country has a budget deficit of ₦100 billion. If the government decides to finance this deficit by printing more money, what will be the effect on the general price level?

A. The general price level will decrease.

Correct B. The general price level will increase.

C. The general price level will remain unchanged.

D. The general price level will be unaffected.

Correct Answer: B

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Question 4

A farmer produces wheat and sells it to a miller. The supply curve of the farmer is given by the equation Q = 100 + 2P, where Q is the quantity supplied and P is the price. If the miller's demand curve is given by the equation Q = 100 - 2P, what is the equilibrium price and quantity?

Correct A. P = ₦20, Q = 80

B. P = ₦30, Q = 70

C. P = ₦40, Q = 60

D. P = ₦50, Q = 50

Correct Answer: A

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Question 5

A country's balance of payments is given by the equation BOP = X - M, where BOP is the balance of payments, X is the value of exports, and M is the value of imports. If the value of exports is ₦100 billion and the value of imports is ₦120 billion, what is the balance of payments?

A. ₦20 billion surplus

Correct B. ₦20 billion deficit

C. ₦40 billion surplus

D. ₦40 billion deficit

Correct Answer: B

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Question 6

The government of a country decides to implement a new tax policy to reduce income inequality. The tax policy involves a progressive tax system where higher income earners are taxed at a higher rate. However, the tax revenue generated from this policy is not enough to cover the \cost of implementing the policy. U\sing the concept of opportunity \cost, explain why the government may still decide to implement this policy.

Correct A. The government may still decide to implement the policy because the benefits of reducing income inequality outweigh the \costs.

B. The government may still decide to implement the policy because the tax revenue generated from this policy is enough to cover the \cost of implementing the policy.

C. The government may still decide to implement the policy because the opportunity \cost of not implementing the policy is higher than the \cost of implementing it.

D. The government may still decide to implement the policy because the tax policy is a necessary evil to achieve economic growth.

Correct Answer: A

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Question 7

A country's GDP is $100 billion, its GNP is $120 billion, and its net factor income from abroad is $10 billion. What is the country's net national income?

Correct A. $130 billion

B. $120 billion

C. $110 billion

D. $100 billion

Correct Answer: A

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Question 8

A firm's demand curve is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. The firm's supply curve is given by the equation Qs = 2P - 10, where Qs is the quantity supplied. Find the equilibrium price and quantity.

A. P = $20, Q = 40

Correct B. P = $30, Q = 50

C. P = $40, Q = 60

D. P = $50, Q = 70

Correct Answer: B

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Question 9

A country's balance of payments account shows a trade deficit of $10 billion, a current account deficit of $5 billion, and a capital account surplus of $15 billion. What is the country's overall balance of payments position?

A. Surplus of $10 billion

B. Deficit of $5 billion

Correct C. Surplus of $15 billion

D. Deficit of $20 billion

Correct Answer: C

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Question 10

A government decides to implement a policy to reduce unemployment. The policy involves increa\sing government sp\ending and cutting taxes. U\sing the concept of fiscal policy, explain how this policy will affect the economy.

Correct A. The policy will increase aggregate demand and reduce unemployment.

B. The policy will decrease aggregate demand and increase unemployment.

C. The policy will have no effect on aggregate demand and unemployment.

D. The policy will increase aggregate demand but increase unemployment.

Correct Answer: A

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Question 11

The concept of comparative advantage in international trade is based on the idea that countries should specialize in producing goods for which they have a lower opportunity \cost. Which of the following statements best describes the opportunity \cost of a country?

Correct A. The value of the next best alternative use of resources

B. The quantity of a good that a country is willing to give up in order to produce another good

C. The price of a good that a country is willing to pay for another good

D. The quantity of a good that a country is willing to produce in order to meet domestic demand

Correct Answer: A

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Question 12

Agricultural development in Nigeria has been hindered by several factors, including lack of access to credit, inadequate infrastructure, and limited market access. Which of the following policies would most likely address these issues?

A. Providing subsidies to farmers to reduce the \cost of production

Correct B. Establishing agricultural cooperatives to facilitate market access and credit access

C. Implementing price controls to stabilize prices and reduce market volatility

D. Investing in irrigation systems to increase crop yields

Correct Answer: B

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Question 13

The production function for a firm is given by Q = 2L^0.5K^0.5, where Q is the quantity produced, L is the number of labor hours, and K is the amount of capital invested. If the firm wants to increase production by 20%, what percentage increase in labor hours and capital investment is required?

A. 10% increase in labor hours and 10% increase in capital investment

Correct B. 20% increase in labor hours and 20% increase in capital investment

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

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

Correct Answer: B

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Question 14

The Central Bank of Nigeria has implemented a monetary policy aimed at reducing inflation. Which of the following tools would most likely achieve this goal?

A. Increa\sing the reserve requirement for commercial banks

B. Implementing a price ceiling on essential goods

Correct C. Reducing the money supply by selling government securities

D. Increa\sing the discount rate to reduce borrowing \costs

Correct Answer: C

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Question 15

The following diagram shows the production possibilities frontier (PPF) for a country. What is the opportunity \cost of producing 100 units of good X?

A. 50 units of good Y

Correct B. 75 units of good Y

C. 100 units of good Y

D. 125 units of good Y

Correct Answer: B

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Question 16

Consider a firm operating in a perfectly competitive market with a given production function Q = 2L^0.5K^0.5. If the firm's current input prices are w = ₦100 and r = ₦50, and the current output price is p = ₦200, calculate the firm's optimal input bundle (L, K) u\sing the Hotelling's Lemma. Assume that the firm's objective is to maximize its profit.

Correct A. $ L = 100, K = 50 $

B. $ L = 50, K = 100 $

C. $ L = 25, K = 100 $

D. $ L = 100, K = 25 $

Correct Answer: A

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Question 17

A country's trade balance is given by the equation TB = 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 imports are ₦700 billion, calculate the trade balance.

Correct A. ₦-200 billion

B. ₦200 billion

C. ₦500 billion

D. ₦700 billion

Correct Answer: A

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Question 18

A firm's demand function is given by Q = 100 - 2P. If the firm's current price is ₦50, calculate the quantity demanded.

A. 50 units

Correct B. 75 units

C. 100 units

D. 125 units

Correct Answer: B

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Question 19

A country's money supply is given by the equation M = kY, where k is the money multiplier and Y is the national income. If the money multiplier is 0.5 and the national income is ₦100 billion, calculate the money supply.

Correct A. ₦50 billion

B. ₦100 billion

C. ₦150 billion

D. ₦200 billion

Correct Answer: A

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Question 20

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current input prices are w = ₦100 and r = ₦50, and the current output price is p = ₦200, calculate the firm's optimal input bundle (L, K) u\sing the Hotelling's Lemma. Assume that the firm's objective is to maximize its profit.

Correct A. $ L = 100, K = 50 $

B. $ L = 50, K = 100 $

C. $ L = 25, K = 100 $

D. $ L = 100, K = 25 $

Correct Answer: A

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Question 21

In a perfectly competitive market, the equilibrium price and quantity are determined by the intersection of the market demand and supply curves. However, in a monopoly market, the equilibrium price and quantity are determined by the intersection of the demand curve and the marginal revenue curve. Which of the following statements is correct?

A. The equilibrium price and quantity in a perfectly competitive market are higher than in a monopoly market.

Correct B. The equilibrium price and quantity in a monopoly market are higher than in a perfectly competitive market.

C. The equilibrium price and quantity in a perfectly competitive market are lower than in a monopoly market.

D. The equilibrium price and quantity in a monopoly market are lower than in a perfectly competitive market.

Correct Answer: B

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Question 22

A firm is considering two investment projects, A and B. Project A has a higher initial \cost but generates a higher return on investment. Project B has a lower initial \cost but generates a lower return on investment. Which of the following statements is correct?

Correct A. Project A is a better investment because it has a higher return on investment.

B. Project B is a better investment because it has a lower initial \cost.

C. Both projects are equally good investments.

D. Neither project is a good investment.

Correct Answer: A

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Question 23

A central bank uses monetary policy to control inflation by increa\sing the reserve requirement for commercial banks. This action will lead to a decrease in the money supply and a decrease in the price level. Which of the following statements is correct?

A. The money supply will decrease and the price level will increase.

B. The money supply will increase and the price level will decrease.

Correct C. The money supply will decrease and the price level will decrease.

D. The money supply will increase and the price level will increase.

Correct Answer: C

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Question 24

A government is considering a policy to reduce poverty by increa\sing the minimum wage. However, this policy may lead to higher unemployment. Which of the following statements is correct?

A. The policy will reduce poverty and increase employment.

Correct B. The policy will reduce poverty but may lead to higher unemployment.

C. The policy will increase poverty and unemployment.

D. The policy will have no effect on poverty and unemployment.

Correct Answer: B

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Question 25

A firm is considering a new investment project that requires an initial investment of ₦100 million. The project is expected to generate a return on investment of 15% per annum. Which of the following statements is correct?

Correct A. The project is a good investment because it has a high return on investment.

B. The project is a bad investment because it has a low return on investment.

C. The project is a good investment because it has a high return on investment and a low initial \cost.

D. The project is a bad investment because it has a low return on investment and a high initial \cost.

Correct Answer: A

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