Practice Post UTME MADONNA UNIVERSITY economics 2019 Past Questions

Question 1

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

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Question 2

A firm has a production function given by Q = 2L^0.5K^0.5, where Q is the output, L is the labor and K is the capital. If the price of labor is 10 and the price of capital is 20, and the firm wants to maximize its profit, what is the optimal level of labor?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 3

The Central Bank of Nigeria (CBN) has a monetary policy of increa\sing the money supply by 10% per annum. If the current money supply is ₦100 billion, what is the new money supply after one year?

A. ₦110 billion

Correct B. ₦120 billion

C. ₦130 billion

D. ₦140 billion

Correct Answer: B

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Question 4

A consumer has a budget of ₦1000 and a utility function given by U = 2x + 3y, where x and y are the quantities of two goods. If the prices of the two goods are ₦5 and ₦10 respectively, and the consumer wants to maximize her utility, what is the optimal quantity of the first good?

A. 100

B. 200

Correct C. 300

D. 400

Correct Answer: C

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Question 5

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

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Question 6

A firm is operating under cons\tant returns to scale. If it increases its output by 10%, what will be the percentage change in its total \cost?

Correct A. 0%

B. 5%

C. 10%

D. 15%

Correct Answer: A

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Question 7

A government is considering a tax on a particular good. The tax will be levied on the producer, and the revenue generated will be used to fund a public project. Which of the following is a characteristic of this tax?

A. It is a direct tax.

Correct B. It is an indirect tax.

C. It is a regressive tax.

D. It is a progressive tax.

Correct Answer: B

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Question 8

A consumer has the following utility function: U(x, y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦3 respectively, what is the consumer's optimal bundle?

A. x = 40, y = 20

Correct B. x = 30, y = 30

C. x = 20, y = 40

D. x = 10, y = 50

Correct Answer: B

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Question 9

A firm is a pure monopolist in a market. If the firm's demand function is given by Q = 100 - 2P and the firm's marginal \cost function is given by MC = 10, what is the firm's optimal price?

A. ₦20

B. ₦30

Correct C. ₦40

D. ₦50

Correct Answer: C

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Question 10

A government is considering a policy to reduce poverty in a country. Which of the following is a characteristic of this policy?

Correct A. It is a demand-side policy.

B. It is a supply-side policy.

C. It is a fiscal policy.

D. It is a monetary policy.

Correct Answer: A

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Question 11

A firm is operating on a long-run average \cost curve. If the firm experiences a decrease in the price of a key input, what will happen to its long-run average \cost curve?

A. It will shift to the left

B. It will shift to the right

C. It will remain unchanged

Correct D. It will shift downwards

Correct Answer: D

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Question 12

A monopolist faces a demand curve with the following equation: Q = 100 - 2P. If the firm's marginal revenue function is MR = 50 - 2Q, what is the firm's optimal price?

A. ₦50

Correct B. ₦75

C. ₦100

D. ₦125

Correct Answer: B

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Question 13

A consumer's utility function is given by U(x,y) = 2x + 3y. If the consumer's budget constraint is 2x + 3y = 12, what is the consumer's optimal bundle?

Correct A. x = 2, y = 4

B. x = 3, y = 3

C. x = 4, y = 2

D. x = 6, y = 0

Correct Answer: A

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Question 14

A firm's production function is given by Q = 2L + 3K. If the firm's \cost function is C = 10L + 20K, what is the firm's profit-maximizing level of labor?

A. L = 5

Correct B. L = 10

C. L = 15

D. L = 20

Correct Answer: B

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Question 15

A country's GDP is given by the equation: GDP = C + I + G + $ X - M $. If the country's consumption function is C = 100 + 0.8Y, its investment function is I = 50 + 0.2Y, its government sp\ending function is G = 200, its export function is X = 500, and its import function is M = 300, what is the country's GDP?

A. ₦1500

B. ₦2000

C. ₦2500

Correct D. ₦3000

Correct Answer: D

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Question 16

A consumer's indifference curve is represented by the equation u(x, y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦3 respectively, what is the consumer's optimal bundle of x and y?

Correct A. x = 60, y = 80

B. x = 80, y = 60

C. x = 100, y = 50

D. x = 50, y = 100

Correct Answer: A

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Question 17

The Central Bank of Nigeria (CBN) has a monetary policy of increa\sing the money supply by 10% per annum. If the current money supply is ₦100 billion, what will be the money supply after 5 years?

A. ₦163.93 billion

B. ₦181.91 billion

Correct C. ₦199.89 billion

D. ₦217.87 billion

Correct Answer: C

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Question 18

A firm produces two goods, x and y, u\sing two inputs, labor (L) and capital (K). The production function is given by x = 2L^0.5K^0.5 and y = L^0.5K^0.5. If the firm has 100 units of labor and 200 units of capital, what is the total output of the firm?

A. 1000

B. 1200

Correct C. 1400

D. 1600

Correct Answer: C

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Question 19

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

Correct A. ₦20 billion

B. ₦30 billion

C. ₦40 billion

D. ₦50 billion

Correct Answer: A

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Question 20

A country's balance of payments is given by the following table:\n| Item | Value |\n| --- | --- |\n| Exports | ₦100 billion |\n| Imports | ₦120 billion |\n| Net Factor Income | ₦20 billion |\n| Net Transfer | ₦10 billion |\nWhat is the country's balance of payments deficit?

A. ₦30 billion

B. ₦40 billion

Correct C. ₦50 billion

D. ₦60 billion

Correct Answer: C

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Question 21

A firm's production function is given by Q = 2L^$ 1/2 $K^$ 1/2 $, where Q is output, L is labor, and K is capital. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?

A. 10%

Correct B. 12%

C. 15%

D. 18%

Correct Answer: B

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Question 22

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's budget constraint is given by 2x + 3y = 12, and the prices of the two goods are $2 and $3 respectively, what is the consumer's optimal consumption bundle?

Correct A. (2, 4)

B. (4, 2)

C. (3, 3)

D. (6, 0)

Correct Answer: A

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Question 23

A firm's \cost function is given by C = 2L + 3K, where C is \cost, L is labor, and K is capital. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in \cost?

A. 10%

Correct B. 12%

C. 15%

D. 18%

Correct Answer: B

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Question 24

A country's GDP is given by GNP = 100 + 0.2Y, where Y is national income. If the country's national income is $500, what is its GDP?

A. $100

B. $110

Correct C. $120

D. $130

Correct Answer: C

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Question 25

A firm's revenue function is given by R = 2x + 3x^2, where R is revenue and x is the quantity sold. If the firm sells 10 units, what is its revenue?

A. $50

B. $60

Correct C. $70

D. $80

Correct Answer: C

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