Practice Post UTME MADONNA UNIVERSITY economics 2021 Past Questions

Question 1

The money multiplier is the ratio of the change in the money supply to the change in the reserve requirement. If the central bank increases the reserve requirement from 10% to 15%, and the money supply is initially ₦100 billion, what is the new money supply if the money multiplier is 5?

A. ₦125 billion

Correct B. ₦150 billion

C. ₦175 billion

D. ₦200 billion

Correct Answer: B

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Question 2

A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. If the firm produces 20 units of output, what is the total \cost?

A. ₦150

B. ₦200

Correct C. ₦250

D. ₦300

Correct Answer: C

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Question 3

The demand function for a product is given by p = 100 - 2q. If the price is ₦80, how many units of the product will be demanded?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 4

A firm's revenue function is given by R(q) = 50q. If the firm produces 10 units of output, what is the total revenue?

Correct A. ₦500

B. ₦600

C. ₦700

D. ₦800

Correct Answer: A

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Question 5

The production function for a firm is given by q = 2K^0.5. If the firm's capital is ₦100,000, what is the output?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 6

A firm's production function is given by Q = 2L^0.5 + 3K^0.5, where Q is output, L is labor, and K is capital. If the firm's labor and capital are increased by 20% and 15% respectively, what is the percentage change in output?

A. 10%

B. 12%

Correct C. 15%

D. 18%

Correct Answer: C

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Question 7

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods. If the consumer's income is ₦1000 and the prices of the two goods are ₦5 and ₦10 respectively, what is the consumer's optimal bundle of goods?

Correct A. x = 20, y = 30

B. x = 30, y = 20

C. x = 40, y = 10

D. x = 10, y = 40

Correct Answer: A

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Question 8

A firm's demand function for a good is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the firm's marginal revenue is ₦50, what is the firm's optimal price?

A. ₦25

Correct B. ₦30

C. ₦35

D. ₦40

Correct Answer: B

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Question 9

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 national income?

A. ₦110 billion

B. ₦120 billion

Correct C. ₦130 billion

D. ₦140 billion

Correct Answer: C

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Question 10

A central bank increases the money supply by 10%. What is the expected effect on the price level?

Correct A. 10% increase

B. 5% increase

C. 5% decrease

D. 10% decrease

Correct Answer: A

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Question 11

The elasticity of demand for a product is given by the formula \( eta = \frac{dQ}{dP} cdot \frac{P}{Q} \). If the price elasticity of demand for a product is 0.5 and the percentage change in quantity demanded is 10%, what is the percentage change in price?

Correct A. 5%

B. 10%

C. 15%

D. 20%

Correct Answer: A

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Question 12

A firm's production function is given by \( Q = 100L^0.5K^0.5 \). If the firm's output is 100 units and the price of labor is ₦100 per unit, while the price of capital is ₦200 per unit, what is the optimal combination of labor and capital?

A. L = 10, K = 10

B. L = 20, K = 5

C. L = 5, K = 20

Correct D. L = 15, K = 15

Correct Answer: D

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Question 13

The government of Nigeria has implemented a policy to increase the production of rice by 20% in the next year. If the current production level is 10 million metric tons, what is the expected increase in the value of rice production?

A. ₦20 billion

B. ₦40 billion

Correct C. ₦60 billion

D. ₦80 billion

Correct Answer: C

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Question 14

A consumer's budget constraint is given by the equation \( 2x + 3y = 100 \). If the consumer's income is ₦100 and the price of good x is ₦2 per unit, while the price of good y is ₦3 per unit, what is the optimal combination of good x and good y?

A. x = 20, y = 10

B. x = 10, y = 20

Correct C. x = 15, y = 15

D. x = 25, y = 5

Correct Answer: C

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Question 15

The government of Nigeria has implemented a policy to increase the production of rice by 20% in the next year. If the current production level is 10 million metric tons, what is the expected increase in the value of rice production?

A. ₦20 billion

B. ₦40 billion

Correct C. ₦60 billion

D. ₦80 billion

Correct Answer: C

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Question 16

Consider a production function given by \( Q = 100K^{\frac{1}{3}}L^{\frac{1}{2}} \), where Q is output, K is capital, and L is labor. If the marginal product of labor (MPL) is 10, and the marginal product of capital (MPK) is 5, what is the value of the output elasticity of labor?

Correct A. 0.5

B. 1.5

C. 2.5

D. 3.5

Correct Answer: A

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Question 17

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

A. (100, 0)

Correct B. (50, 50)

C. (0, 100)

D. (200, 0)

Correct Answer: B

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Question 18

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

A. ₦20 billion

Correct B. ₦30 billion

C. ₦40 billion

D. ₦50 billion

Correct Answer: B

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Question 19

Consider a firm's production function given by \( Q = 2K^{\frac{1}{2}}L^{\frac{1}{2}} \), where Q is output, K is capital, and L is labor. If the firm's current capital is ₦1000, and its current labor is 100 workers, what is the firm's marginal product of capital?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 20

A central bank increases the reserve requirement for commercial banks from 10% to 15%. What is the effect on the money supply?

A. Increase

Correct B. Decrease

C. No change

D. Uncertain

Correct Answer: B

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Question 21

A firm operating in a perfectly competitive market is characterized by which of the following?

A. Monopolistic competition

Correct B. Perfect competition

C. Oligopoly

D. Monopoly

Correct Answer: B

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Question 22

The following diagram shows the production possibilities frontier (PPF) of 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 23

A firm's \cost function is given by C(q) = 10q + 100. What is the marginal \cost when q = 10?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 24

A country's GDP is ₦100 billion. 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 25

A firm is considering importing a product from a foreign country. The domestic price of the product is ₦100, and the foreign price is ₦80. What is the opportunity \cost of importing the product?

Correct A. ₦20

B. ₦30

C. ₦40

D. ₦50

Correct Answer: A

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