Practice Post UTME SUMMIT UNIVERSITY economics 2021 Past Questions

Question 1

A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 2Q^2 + 10Q. What is the profit-maximizing price and quantity?

Correct A. $ P = 30, Q = 35 $

B. $ P = 25, Q = 40 $

C. $ P = 20, Q = 45 $

D. $ P = 15, Q = 50 $

Correct Answer: A

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Question 2

A firm's production function is given by Q = 2L^0.5K^0.5. If the price of labor is ₦50 per unit and the price of capital is ₦100 per unit, what is the \cost-minimizing combination of labor and capital?

A. $ L = 10, K = 5 $

B. $ L = 5, K = 10 $

Correct C. $ L = 7.071, K = 7.071 $

D. $ L = 3.535, K = 15.915 $

Correct Answer: C

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Question 3

A consumer's budget constraint is given by 2X + 3Y = 12. If the price of X is ₦2 and the price of Y is ₦3, what is the consumer's indifference curve?

A. $ X = 2, Y = 2 $

Correct B. $ X = 3, Y = 1.5 $

C. $ X = 4, Y = 1 $

D. $ X = 5, Y = 0.5 $

Correct Answer: B

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Question 4

A firm's demand function is given by Q = 100 - 2P. If the firm's marginal revenue function is MR = 200 - 2Q, what is the firm's profit-maximizing price and quantity?

Correct A. $ P = 30, Q = 35 $

B. $ P = 25, Q = 40 $

C. $ P = 20, Q = 45 $

D. $ P = 15, Q = 50 $

Correct Answer: A

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Question 5

A consumer's indifference curve is given by U = X^0.5Y^0.5. If the consumer's budget constraint is given by 2X + 3Y = 12, what is the consumer's optimal bundle?

A. $ X = 2, Y = 2 $

Correct B. $ X = 3, Y = 1.5 $

C. $ X = 4, Y = 1 $

D. $ X = 5, Y = 0.5 $

Correct Answer: B

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Question 6

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current input levels are L = 4 and K = 9, what is the marginal product of labor (MPL) at these input levels?

A. 1

Correct B. 2

C. 3

D. 4

Correct Answer: B

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Question 7

The demand for a commodity is given by Qd = 100 - 2P and the supply is given by Qs = 2P. What is the equilibrium price and quantity?

Correct A. P = 20, Q = 60

B. P = 30, Q = 50

C. P = 40, Q = 40

D. P = 50, Q = 30

Correct Answer: A

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Question 8

A farmer produces wheat and maize. The production functions are given by Qw = 2L^0.5K^0.5 and Qm = 3L^0.5K^0.5. If the farmer's current input levels are L = 4 and K = 9, what is the total output?

A. 10

B. 15

Correct C. 20

D. 25

Correct Answer: C

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Question 9

The demand for a commodity is given by Qd = 100 - 2P and the supply is given by Qs = 2P. What is the price elasticity of demand?

Correct A. 0.5

B. 1

C. 2

D. 3

Correct Answer: A

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Question 10

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current input levels are L = 4 and K = 9, what is the marginal product of capital (MPC) at these input levels?

A. 1

Correct B. 2

C. 3

D. 4

Correct Answer: B

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Question 11

The Nigerian government has implemented a policy to increase agricultural production by providing subsidies to farmers. However, the policy has led to an increase in the price of agricultural inputs. U\sing the concept of opportunity \cost, explain why the policy may not be effective in increa\sing agricultural production.

Correct A. The policy has increased the opportunity \cost of farming, making it less attractive to farmers.

B. The policy has decreased the opportunity \cost of farming, making it more attractive to farmers.

C. The policy has no effect on the opportunity \cost of farming.

D. The policy has increased the opportunity \cost of farming, but it has also increased the revenue of farmers.

Correct Answer: A

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Question 12

A firm is producing a good with the following \cost and revenue functions: C(x) = 2x^2 + 10x + 5 and R(x) = 3x^2 - 2x + 1. U\sing the concept of profit maximization, find the level of production that will maximize the firm's profit.

A. x = 1

Correct B. x = 2

C. x = 3

D. x = 4

Correct Answer: B

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Question 13

The demand for a good is given by the function D(p) = 100 - 2p, where p is the price of the good. U\sing the concept of elasticity of demand, find the price elasticity of demand when the price is ₦50.

Correct A. 0.5

B. 1

C. 2

D. 3

Correct Answer: A

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Question 14

A bank has a reserve requirement of 10% and a cash reserve ratio of 20%. If the bank has ₦100,000 in cash reserves, how much can it l\end to its customers?

A. ₦80,000

Correct B. ₦90,000

C. ₦100,000

D. ₦110,000

Correct Answer: B

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Question 15

The Nigerian government has implemented a policy to reduce inflation by reducing the money supply. U\sing the concept of the money multiplier, explain why the policy may not be effective in reducing inflation.

A. The policy will reduce the money supply, which will reduce the price level.

B. The policy will increase the money supply, which will reduce the price level.

C. The policy will have no effect on the money supply.

Correct D. The policy will increase the money supply, which will increase the price level.

Correct Answer: D

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Question 16

Consider a firm that produces two goods, X and Y, with the following production functions: X = 2L + 3K and Y = 4L + 2K. The firm's objective is to maximize profits, which are given by π = 10X + 20Y - 100L - 50K. Assuming that the firm has a budget constraint of 1000, which is given by 2L + 3K = 1000, find the optimal values of L and K that maximize profits.

A. L = 100, K = 200

B. L = 200, K = 100

Correct C. L = 150, K = 150

D. L = 250, K = 50

Correct Answer: C

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Question 17

A consumer has the following utility function: U = 2x + 3y. The prices of x and y are given by p_x = 2 and p_y = 3, respectively. The consumer's budget is 100. Find the optimal values of x and y that maximize utility, subject to the budget constraint.

A. x = 20, y = 30

B. x = 30, y = 20

Correct C. x = 25, y = 25

D. x = 40, y = 10

Correct Answer: C

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Question 18

Consider a firm that produces a \single good, X, with a production function of X = 2L + 3K. The firm's objective is to minimize \costs, which are given by C = 10L + 20K. Assuming that the firm has a budget constraint of 1000, which is given by 2L + 3K = 1000, find the optimal values of L and K that minimize \costs.

A. L = 100, K = 200

B. L = 200, K = 100

Correct C. L = 150, K = 150

D. L = 250, K = 50

Correct Answer: C

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Question 19

A consumer has the following utility function: U = 2x + 3y. The prices of x and y are given by p_x = 2 and p_y = 3, respectively. The consumer's budget is 100. Find the optimal values of x and y that maximize utility, subject to the budget constraint.

A. x = 20, y = 30

B. x = 30, y = 20

Correct C. x = 25, y = 25

D. x = 40, y = 10

Correct Answer: C

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Question 20

Consider a firm that produces two goods, X and Y, with the following production functions: X = 2L + 3K and Y = 4L + 2K. The firm's objective is to maximize profits, which are given by π = 10X + 20Y - 100L - 50K. Assuming that the firm has a budget constraint of 1000, which is given by 2L + 3K = 1000, find the optimal values of L and K that maximize profits.

A. L = 100, K = 200

B. L = 200, K = 100

Correct C. L = 150, K = 150

D. L = 250, K = 50

Correct Answer: C

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Question 21

A firm's demand curve for a product is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's supply curve is given by Q = 2P - 50, what is the equilibrium price and quantity?

A. P = 25, Q = 50

Correct B. P = 30, Q = 70

C. P = 35, Q = 90

D. P = 40, Q = 110

Correct Answer: B

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Question 22

A country's government imposes a tax on a particular good, cau\sing the supply curve to shift to the left. What is the effect on the equilibrium price and quantity?

Correct A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

D. Price decreases, quantity decreases

Correct Answer: A

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Question 23

A firm's elasticity of demand is given by E = -2P/Q. If the price is $10 and the quantity demanded is 20, what is the elasticity of demand?

Correct A. 0.2

B. 0.5

C. 1.0

D. 2.0

Correct Answer: A

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Question 24

A country's central bank increases the money supply by 10%. What is the effect on the general price level?

A. Increases by 5%

Correct B. Increases by 10%

C. Increases by 15%

D. Remains unchanged

Correct Answer: B

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Question 25

A firm's budget constraint is given by 2Q + 3I = 100, where Q is the quantity of a good and I is the income. If the income is $50, what is the quantity of the good?

A. 20

Correct B. 30

C. 40

D. 50

Correct Answer: B

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