Practice Post UTME RHEMA UNIVERSITY economics 2023 Past Questions

Question 1

The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the agricultural sector. The policy includes a 10% tax on all agricultural produce sold in the market. If the total revenue from the sale of agricultural produce is ₦1,500,000, what is the amount of tax paid by the farmers?

Correct A. ₦150,000

B. ₦1,500,000

C. ₦1,000,000

D. ₦200,000

Correct Answer: A

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Question 2

A consumer's utility function is given by U(x, y) = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's income is ₦1,000 and the prices of the two goods are ₦5 and ₦10 respectively, what is the consumer's optimal bundle of goods?

Correct A. x = 100, y = 50

B. x = 50, y = 100

C. x = 200, y = 0

D. x = 0, y = 200

Correct Answer: A

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Question 3

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 supply of the product is given by the equation Qs = 2P - 50, what is the equilibrium price and quantity?

Correct A. P = 25, Q = 75

B. P = 50, Q = 100

C. P = 75, Q = 125

D. P = 100, Q = 150

Correct Answer: A

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Question 4

A firm's production function is given by Q = 2L + 3K, where Q is the output, L is the labor and K is the capital. If the firm's labor and capital are 100 and 200 respectively, what is the output?

A. 400

Correct B. 500

C. 600

D. 700

Correct Answer: B

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Question 5

The central bank of Nigeria has increased the reserve requirement from 10% to 15%. If the commercial banks have a total deposit of ₦1,000,000, what is the increase in the reserve requirement?

A. ₦50,000

Correct B. ₦75,000

C. ₦100,000

D. ₦125,000

Correct Answer: B

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Question 6

A firm operating in a perfectly competitive market produces two goods, A and B. The production of good A generates a positive externality for the production of good B. U\sing the concept of opportunity \cost, explain why the firm's production of good A will increase if the government imposes a tax on the production of good B.

A. The firm will increase production of good A to compensate for the decrease in the production of good B.

B. The firm will decrease production of good A to avoid the tax on good B.

Correct C. The firm will increase production of good A to take advantage of the positive externality.

D. The firm will decrease production of good A to reduce the opportunity \cost of producing good B.

Correct Answer: C

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Question 7

A country's GDP is calculated as the sum of the value of all final goods and services produced within its borders. However, the country also has a significant amount of foreign investment. U\sing the concept of GDP, explain why the country's GDP will increase if it attracts more foreign investment.

Correct A. The country's GDP will increase because foreign investment is a component of GDP.

B. The country's GDP will increase because foreign investment generates a positive externality.

C. The country's GDP will not increase because foreign investment is not a component of GDP.

D. The country's GDP will decrease because foreign investment reduces the opportunity \cost of producing domestic goods.

Correct Answer: A

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Question 8

A monopolistically competitive firm faces a downward-sloping demand curve. U\sing the concept of marginal revenue, explain why the firm will produce at the level where MR = MC.

Correct A. The firm will produce at the level where MR = MC because it maximizes profit.

B. The firm will produce at the level where MR = MC because it minimizes \cost.

C. The firm will produce at the level where MR = MC because it faces a downward-sloping demand curve.

D. The firm will produce at the level where MR = MC because it is a monopolistically competitive firm.

Correct Answer: A

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Question 9

A country's inflation rate is 5% per annum. U\sing the concept of the Fisher equation, explain why the real interest rate will be higher than the nominal interest rate.

Correct A. The real interest rate will be higher than the nominal interest rate because the Fisher equation states that the real interest rate is equal to the nominal interest rate minus the inflation rate.

B. The real interest rate will be lower than the nominal interest rate because the Fisher equation states that the real interest rate is equal to the nominal interest rate plus the inflation rate.

C. The real interest rate will be equal to the nominal interest rate because the Fisher equation states that the real interest rate is equal to the nominal interest rate minus the inflation rate.

D. The real interest rate will be lower than the nominal interest rate because the Fisher equation states that the real interest rate is equal to the nominal interest rate minus the inflation rate.

Correct Answer: A

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Question 10

A firm's demand curve is given by Qd = 100 - 2P. U\sing the concept of elasticity, explain why the firm's demand is inelastic at a price of 20.

Correct A. The firm's demand is inelastic at a price of 20 because the elasticity of demand is less than 1.

B. The firm's demand is elastic at a price of 20 because the elasticity of demand is greater than 1.

C. The firm's demand is inelastic at a price of 20 because the elasticity of demand is equal to 1.

D. The firm's demand is elastic at a price of 20 because the elasticity of demand is less than 1.

Correct Answer: A

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Question 11

Determine the equilibrium price and quantity of a commodity in a perfectly competitive market, given the following demand and supply functions: Qd = 100 - 2P, Qs = 20 + 3P.

A. ₦50, 80 units

B. ₦75, 40 units

C. ₦30, 120 units

Correct D. ₦60, 60 units

Correct Answer: D

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Question 12

A monopolist faces a demand curve given by Q = 100 - 2P and a marginal revenue function MR = 20 - 2Q. Determine the profit-maximizing price and quantity.

Correct A. ₦40, 60 units

B. ₦60, 40 units

C. ₦80, 20 units

D. ₦20, 80 units

Correct Answer: A

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Question 13

A firm's production function is given by Q = 2L^2 + 5K, where Q is output, L is labor, and K is capital. Determine the returns to scale.

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

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Question 14

A country's import demand function is given by M = 100 - 2P, where M is imports and P is the price of imports. Determine the price elasticity of demand.

A. Unit elastic

Correct B. Inelastic

C. Perfectly elastic

D. Perfectly inelastic

Correct Answer: B

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Question 15

A country's balance of payments is given by the following accounts: Current account: -₦100, Capital account: +₦200, Financial account: +₦300. Determine the overall balance.

Correct A. +₦400

B. +₦300

C. +₦200

D. +₦100

Correct Answer: A

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Question 16

Determine the price elasticity of demand for a product whose price elasticity of demand is 0.5 and the quantity demanded decreases by 20% when the price increases by 10%.

A. Unit Elastic

B. Inelastic

Correct C. Elastic

D. Perfectly Elastic

Correct Answer: C

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Question 17

A farmer in Nigeria produces 1000 bags of maize per year. The price of maize is ₦1500 per bag. If the government imposes a 20% tax on the sale of maize, what is the new price of maize per bag?

Correct A. ₦1800

B. ₦1800

C. ₦1800

D. ₦1800

Correct Answer: A

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Question 18

A country's GDP grows at a rate of 5% per annum. If the population of the country grows at a rate of 2% per annum, what is the rate of growth of per capita income?

Correct A. 3%

B. 4%

C. 5%

D. 6%

Correct Answer: A

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Question 19

A central bank in Nigeria uses the monetary policy instrument of open market operations to increase the money supply in the economy. What is the effect of this action on the interest rate?

A. Increase

Correct B. Decrease

C. No change

D. Dep\end on the type of open market operation

Correct Answer: B

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Question 20

A government in Nigeria imposes a tax of ₦1000 on every liter of fuel sold. If the price of fuel is ₦150 per liter, what is the new price of fuel per liter?

Correct A. ₦1600

B. ₦1600

C. ₦1600

D. ₦1600

Correct Answer: A

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Question 21

The Marshall-Lerner condition states that if the sum of the elasticities of demand for imports and exports is greater than 1, then a devaluation of the currency will lead to an improvement in the balance of payments. Which of the following scenarios would lead to a violation of the Marshall-Lerner condition?

A. A decrease in the price of imports and an increase in the price of exports

Correct B. An increase in the price of imports and a decrease in the price of exports

C. A decrease in the price of imports and a decrease in the price of exports

D. An increase in the price of imports and an increase in the price of exports

Correct Answer: B

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Question 22

A perfectly competitive firm produces a good with a cons\tant marginal \cost of ₦100 per unit. If the market price is ₦120 per unit, what is the firm's profit-maximizing quantity of output?

A. 100 units

B. 120 units

Correct C. 150 units

D. 200 units

Correct Answer: C

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Question 23

A monopolist faces a demand curve given by Q = 100 - 2P. If the monopolist's marginal \cost is ₦50 per unit, what is the profit-maximizing price?

A. ₦50

Correct B. ₦75

C. ₦100

D. ₦125

Correct Answer: B

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Question 24

A consumer has a budget of ₦1000 and faces the following prices for two goods: Good X \costs ₦200 per unit and Good Y \costs ₦300 per unit. If the consumer's indifference curves are given by U = 2X + 3Y, what is the consumer's optimal bundle?

Correct A. 2 units of Good X and 1 unit of Good Y

B. 3 units of Good X and 2 units of Good Y

C. 4 units of Good X and 3 units of Good Y

D. 5 units of Good X and 4 units of Good Y

Correct Answer: A

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Question 25

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's input prices are w = ₦100 per unit of labor and r = ₦200 per unit of capital, what is the firm's optimal input bundle?

A. 10 units of labor and 20 units of capital

Correct B. 20 units of labor and 10 units of capital

C. 30 units of labor and 15 units of capital

D. 40 units of labor and 25 units of capital

Correct Answer: B

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