Practice Post UTME LEAD CITY UNIVERSITY economics 2021 Past Questions

Question 1

Determine the returns to scale in the production function Q = 2K^0.5L^0.5, where Q is output, K is capital, and L is labor.

A. Increa\sing Returns to Scale

B. Decrea\sing Returns to Scale

Correct C. Cons\tant Returns to Scale

D. No Returns to Scale

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 2

A firm's demand for labor is given by the equation L = 1000 - 2P, where L is labor and P is price. If the price of labor increases by 10%, what is the percentage change in labor demand?

Correct A. -20%

B. -10%

C. 0%

D. 10%

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 3

A country's balance of payments is given by the equation BOP = X - M, where BOP is balance of payments, X is exports, and M is imports. If exports increase by 15% and imports decrease by 10%, what is the percentage change in the balance of payments?

Correct A. -5%

B. -10%

C. 0%

D. 5%

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 4

A firm's production function is given by the equation Q = 2K^0.5L^0.5, where Q is output, K is capital, and L is labor. If the firm increases its capital by 20% and labor by 15%, what is the percentage change in output?

A. -5%

B. 0%

Correct C. 5%

D. 10%

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 5

A country's money supply is given by the equation M = 1000 + 0.5Y, where M is money supply and Y is income. If income increases by 10%, what is the percentage change in money supply?

A. -5%

B. 0%

Correct C. 5%

D. 10%

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 6

A consumer's utility function is given by ( U(x,y) = 2x + 3y ). If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, find the consumer's optimal bundle of x and y.

Correct A. x = 40, y = 20

B. x = 30, y = 30

C. x = 20, y = 40

D. x = 50, y = 10

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 7

The demand for a commodity is given by $ Q_d = 100 - 2P $ and the supply is given by $ Q_s = 2P - 10 $. Find the equilibrium price and quantity.

Correct A. P = 20, Q = 40

B. P = 30, Q = 50

C. P = 40, Q = 60

D. P = 50, Q = 70

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 8

A country's balance of payments is given by the following table:\n\n| Item | 2020 | 2021 |\n| --- | --- | --- |\n| Exports | ₦1000 | ₦1200 |\n| Imports | ₦1500 | ₦1800 |\n| Balance | ₦-500 | ₦-600 |\n\nWhat is the country's balance of payments in 2021?

Correct A. ₦-600

B. ₦-500

C. ₦-400

D. ₦-300

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 9

A farmer produces wheat and maize. The production functions are given by $ Q_w = 100 - 2L $ and $ Q_m = 50 + 3L $. If the farmer has 20 units of labor, find the optimal allocation of labor between wheat and maize.

A. L = 10, Q_w = 80, Q_m = 70

B. L = 15, Q_w = 70, Q_m = 85

Correct C. L = 20, Q_w = 60, Q_m = 100

D. L = 25, Q_w = 50, Q_m = 115

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 10

A firm's demand function is given by $ Q = 100 - 2P $ and the supply function is given by $ Q = 2P - 10 $. Find the elasticity of demand at a price of ₦20.

Correct A. 0.5

B. 1.0

C. 1.5

D. 2.0

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 11

In the context of agricultural development in Nigeria, what is the primary factor limiting the adoption of mechanized farming practices?

A. Limited access to credit facilities

Correct B. High \cost of machinery and equipment

C. Lack of technical expertise

D. Inadequate infrastructure

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 12

U\sing the Cobb-Douglas production function, derive the marginal product of labor (MPL) and explain its relationship with the marginal product of capital (MPK).

A. MPL = bQ/K

B. MPK = aQ/L

Correct C. MPL = bQ/L

D. MPK = aQ/K

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 13

A monopolist faces a demand curve given by $ P = 100 - 2Q $ and a marginal \cost curve given by $ MC = 10 + 2Q $. Find the profit-maximizing quantity and price.

Correct A. Q = 20, P = 80

B. Q = 15, P = 85

C. Q = 25, P = 75

D. Q = 30, P = 70

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 14

A central bank implements a monetary policy aimed at reducing inflation. If the initial inflation rate is 10% and the central bank reduces the money supply by 5%, what is the expected effect on the inflation rate?

Correct A. Inflation rate decreases to 5%

B. Inflation rate remains at 10%

C. Inflation rate increases to 15%

D. Inflation rate decreases to 8%

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 15

A firm produces a good with a production function given by $ Q = 2L^2 + 3K $. If the price of labor is $10 per hour and the price of capital is $20 per hour, find the profit-maximizing level of labor and capital.

Correct A. L = 5, K = 2

B. L = 3, K = 4

C. L = 4, K = 3

D. L = 2, K = 5

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 16

The government of Nigeria has implemented a policy to increase the production of rice through irrigation. However, the policy has led to a significant increase in the price of rice. U\sing the concept of opportunity \cost, explain why the price of rice has increased.

A. The increase in price is due to the increase in demand for rice.

B. The increase in price is due to the increase in supply of rice.

Correct C. The increase in price is due to the opportunity \cost of producing rice through irrigation.

D. The increase in price is due to the increase in transportation \costs.

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 17

A firm is producing a good at a level where the marginal revenue (MR) is equal to the marginal \cost (MC). However, the firm is not maximizing its profit. Explain why the firm is not maximizing its profit.

A. The firm is producing at a level where the average revenue (AR) is greater than the average \cost (AC).

Correct B. The firm is producing at a level where the marginal revenue (MR) is less than the marginal \cost (MC).

C. The firm is producing at a level where the total revenue (TR) is greater than the total \cost (TC).

D. The firm is producing at a level where the marginal revenue (MR) is equal to the marginal \cost (MC).

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 18

The government of Nigeria has implemented a policy to increase the production of electricity through the use of renewable energy sources. However, the policy has led to a significant increase in the \cost of electricity. U\sing the concept of opportunity \cost, explain why the \cost of electricity has increased.

A. The increase in \cost is due to the increase in demand for electricity.

B. The increase in \cost is due to the increase in supply of electricity.

Correct C. The increase in \cost is due to the opportunity \cost of producing electricity through renewable energy sources.

D. The increase in \cost is due to the increase in transportation \costs.

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 19

A firm is producing a good at a level where the marginal revenue (MR) is less than the marginal \cost (MC). Explain why the firm is not maximizing its profit.

Correct A. The firm is producing at a level where the average revenue (AR) is less than the average \cost (AC).

B. The firm is producing at a level where the total revenue (TR) is less than the total \cost (TC).

C. The firm is producing at a level where the marginal revenue (MR) is greater than the marginal \cost (MC).

D. The firm is producing at a level where the marginal revenue (MR) is equal to the marginal \cost (MC).

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 20

The government of Nigeria has implemented a policy to increase the production of food through the use of fertilizers. However, the policy has led to a significant increase in the price of food. U\sing the concept of opportunity \cost, explain why the price of food has increased.

A. The increase in price is due to the increase in demand for food.

B. The increase in price is due to the increase in supply of food.

Correct C. The increase in price is due to the opportunity \cost of producing food through the use of fertilizers.

D. The increase in price is due to the increase in transportation \costs.

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 21

A firm is producing a good at a level where the marginal revenue (MR) is greater than the marginal \cost (MC). Explain why the firm is maximizing its profit.

A. The firm is producing at a level where the average revenue (AR) is greater than the average \cost (AC).

Correct B. The firm is producing at a level where the total revenue (TR) is greater than the total \cost (TC).

C. The firm is producing at a level where the marginal revenue (MR) is less than the marginal \cost (MC).

D. The firm is producing at a level where the marginal revenue (MR) is equal to the marginal \cost (MC).

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 22

The government of Nigeria has implemented a policy to increase the production of electricity through the use of renewable energy sources. However, the policy has led to a significant increase in the \cost of electricity. U\sing the concept of opportunity \cost, explain why the \cost of electricity has increased.

A. The increase in \cost is due to the increase in demand for electricity.

B. The increase in \cost is due to the increase in supply of electricity.

Correct C. The increase in \cost is due to the opportunity \cost of producing electricity through renewable energy sources.

D. The increase in \cost is due to the increase in transportation \costs.

Correct Answer: C

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 23

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 0.5, what is the percentage change in quantity demanded when the price increases by 10%?

Correct A. 5%

B. 10%

C. 15%

D. 20%

Correct Answer: A

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 24

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 is the percentage change in labor required, assuming that the capital remains cons\tant?

A. 10%

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

Question 25

The supply of a product is given by the equation Qs = 50 + 2P, where Qs is the quantity supplied and P is the price. If the price elasticity of supply is 2, what is the percentage change in quantity supplied when the price increases by 5%?

A. 2.5%

Correct B. 5%

C. 7.5%

D. 10%

Correct Answer: B

Want to see the full step-by-step solution? Unlock AI Explanation & Analytics

POST UTME LEAD CITY UNIVERSITY 2021 Economics | Objective

Master the Exam!

Help others prepare! Share this practice hub: