Practice Post UTME UI economics 2025 Past Questions

Question 1

Consider a firm operating in a perfectly competitive market. If the firm's average \cost curve intersects the demand curve at a point where the firm is producing at the minimum of the average variable \cost curve, what is the likely outcome for the firm's profit?

A. The firm will experience a loss.

B. The firm will break even.

Correct C. The firm will earn a normal profit.

D. The firm will earn an economic profit.

Correct Answer: C

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Question 2

A country's balance of payments account shows a trade deficit of $100 million. If the country's exchange rate is fixed at $1 = ₦200, what is the likely effect on the domestic price level?

Correct A. The domestic price level will increase.

B. The domestic price level will decrease.

C. The domestic price level will remain unchanged.

D. The effect on the domestic price level is uncertain.

Correct Answer: A

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Question 3

A consumer has a budget constraint of $100 and a preference for two goods: X and Y. The prices of X and Y are $20 and $30, respectively. If the consumer sp\ends the entire budget on good X, what is the opportunity \cost of good Y?

A. $10

Correct B. $20

C. $30

D. $40

Correct Answer: B

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Question 4

A firm is considering investing in a new project with the following cash flows: Year 1: -$100,000; Year 2: $50,000; Year 3: $70,000. If the firm's \cost of capital is 10%, what is the net present value (NPV) of the project?

Correct A. -$10,000

B. $0

C. $10,000

D. $20,000

Correct Answer: A

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Question 5

A country's money supply is $100 billion, and the velocity of money is 2. If the country's GDP is $200 billion, what is the likely effect on the price level?

Correct A. The price level will increase.

B. The price level will decrease.

C. The price level will remain unchanged.

D. The effect on the price level is uncertain.

Correct Answer: A

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Question 6

In a perfectly competitive market, the demand curve for a firm's product is perfectly elastic. If the firm increases its price by 10%, what will be the effect on the quantity demanded of its product?

A. The quantity demanded will increase by 10%

Correct B. The quantity demanded will decrease by 10%

C. The quantity demanded will remain unchanged

D. The quantity demanded will increase by 20%

Correct Answer: B

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Question 7

A country's balance of payments account shows a trade deficit of $100 million. If the country's exchange rate is fixed at 1 USD = 100 Naira, what will be the effect on the value of the Naira?

A. The value of the Naira will appreciate by 10%

Correct B. The value of the Naira will depreciate by 10%

C. The value of the Naira will remain unchanged

D. The value of the Naira will appreciate by 20%

Correct Answer: B

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Question 8

A monopolist faces a demand curve given by Q = 100 - 2P. If the firm's marginal \cost curve is MC = 10, what will be the optimal price and quantity for the firm?

Correct A. P = 40, Q = 30

B. P = 50, Q = 25

C. P = 60, Q = 20

D. P = 70, Q = 15

Correct Answer: A

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Question 9

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

Correct A. X = 2, Y = 1

B. X = 3, Y = 1

C. X = 4, Y = 1

D. X = 5, Y = 1

Correct Answer: A

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Question 10

A firm's production function is given by Q = 2L + 3K. If the firm's \cost function is C = 100 + 2L + 3K, what will be the optimal input combination?

A. L = 10, K = 5

Correct B. L = 20, K = 10

C. L = 30, K = 15

D. L = 40, K = 20

Correct Answer: B

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Question 11

In a perfectly competitive market, the supply curve is upward-sloping because

Correct A. Firms are willing to supply more at higher prices

B. Firms are willing to supply less at lower prices

C. Firms are willing to supply more at lower prices

D. Firms are willing to supply less at higher prices

Correct Answer: A

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Question 12

A firm's production function is given by Q = 2L^2 + 3K^2. If the firm's current inputs are L = 5 and K = 3, what is the firm's current output?

A. 50

B. 75

Correct C. 100

D. 125

Correct Answer: C

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Question 13

The demand for a product is given by the equation Qd = 100 - 2P. If the price of the product is currently 20, what is the quantity demanded?

A. 30

Correct B. 40

C. 50

D. 60

Correct Answer: B

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Question 14

A country's GDP can be calculated u\sing the formula: GDP = C + I + G + $ X - M $. If the country's current GDP is 100 billion, and the current values of C, I, G, X, and M are 20, 30, 10, 40, and 20 respectively, what is the value of the country's net exports?

A. 10

B. 20

Correct C. 30

D. 40

Correct Answer: C

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Question 15

A firm's production function is given by Q = 2L^2 + 3K^2. If the firm's current inputs are L = 5 and K = 3, what is the firm's current output?

A. 50

B. 75

Correct C. 100

D. 125

Correct Answer: C

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Question 16

The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the informal sector. The policy requires all bu\sinesses with annual turnover above ₦5 million to register and pay taxes. However, the policy has been met with resis\tance from some bu\siness owners who argue that it will increase their \costs and reduce their competitiveness. U\sing the concept of opportunity \cost, explain why the government's policy may be justified.

A. The government's policy will lead to a decrease in the opportunity \cost of tax evasion, making it more attractive for bu\sinesses to evade taxes.

Correct B. The government's policy will increase the opportunity \cost of tax evasion, making it less attractive for bu\sinesses to evade taxes.

C. The government's policy will have no impact on the opportunity \cost of tax evasion.

D. The government's policy will lead to a decrease in the opportunity \cost of tax compliance, making it more attractive for bu\sinesses to comply with taxes.

Correct Answer: B

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Question 17

A farmer in Nigeria has two plots of land, one with a high-yielding crop and the other with a low-yielding crop. The farmer can only cultivate one plot per season. U\sing the concept of elasticity of demand, explain why the farmer may choose to cultivate the high-yielding crop.

Correct A. The high-yielding crop has a higher price elasticity of demand, making it more profitable for the farmer to cultivate.

B. The high-yielding crop has a lower price elasticity of demand, making it less profitable for the farmer to cultivate.

C. The high-yielding crop has a higher income elasticity of demand, making it more profitable for the farmer to cultivate.

D. The high-yielding crop has a lower income elasticity of demand, making it less profitable for the farmer to cultivate.

Correct Answer: A

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Question 18

The Central Bank of Nigeria has increased the reserve requirement for commercial banks from 10% to 15%. U\sing the concept of money supply, explain why this increase may lead to a decrease in the money supply.

Correct A. The increase in reserve requirement will lead to a decrease in the money multiplier, resulting in a decrease in the money supply.

B. The increase in reserve requirement will lead to an increase in the money multiplier, resulting in an increase in the money supply.

C. The increase in reserve requirement will have no impact on the money supply.

D. The increase in reserve requirement will lead to a decrease in the velocity of money, resulting in a decrease in the money supply.

Correct Answer: A

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Question 19

A company in Nigeria is considering investing in a new project that requires an initial investment of ₦10 million. The company expects the project to generate a return of ₦5 million per year for 5 years. U\sing the concept of net present value, explain why the company may choose to invest in the project.

Correct A. The project has a positive net present value, making it a profitable investment for the company.

B. The project has a negative net present value, making it an unprofitable investment for the company.

C. The project has a zero net present value, making it a break-even investment for the company.

D. The project has a high risk, making it an unprofitable investment for the company.

Correct Answer: A

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Question 20

The government of Nigeria has introduced a new agricultural policy aimed at increa\sing food production and reducing imports. The policy includes subsidies for fertilizers and pesticides, as well as support for irrigation projects. U\sing the concept of opportunity \cost, explain why the government's policy may be justified.

Correct A. The government's policy will lead to a decrease in the opportunity \cost of food production, making it more attractive for farmers to produce food.

B. The government's policy will increase the opportunity \cost of food production, making it less attractive for farmers to produce food.

C. The government's policy will have no impact on the opportunity \cost of food production.

D. The government's policy will lead to a decrease in the opportunity \cost of imports, making it more attractive for the government to import food.

Correct Answer: A

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Question 21

A company in Nigeria is considering investing in a new project that requires an initial investment of ₦20 million. The company expects the project to generate a return of ₦10 million per year for 10 years. U\sing the concept of net present value, explain why the company may choose to invest in the project.

Correct A. The project has a positive net present value, making it a profitable investment for the company.

B. The project has a negative net present value, making it an unprofitable investment for the company.

C. The project has a zero net present value, making it a break-even investment for the company.

D. The project has a high risk, making it an unprofitable investment for the company.

Correct Answer: A

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Question 22

The government of Nigeria has introduced a new policy aimed at reducing inflation. The policy includes a reduction in the money supply and an increase in interest rates. U\sing the concept of the Phillips curve, explain why the government's policy may be effective in reducing inflation.

A. The government's policy will lead to a decrease in the inflation rate, as the Phillips curve shifts to the left.

B. The government's policy will lead to an increase in the inflation rate, as the Phillips curve shifts to the right.

C. The government's policy will have no impact on the inflation rate.

D. The government's policy will lead to a decrease in the unemployment rate, as the Phillips curve shifts to the left.

Correct Answer: VIEW ANSWER

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Question 23

The Central Bank of Nigeria (CBN) uses monetary policy tools to control inflation. Which of the following tools is NOT a monetary policy tool?

A. Open Market Operations (OMO)

B. Reserve Requirements

Correct C. Fiscal Policy

D. Monetary Policy Committee (MPC)

Correct Answer: C

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Question 24

The demand for a commodity is said to be elastic if a small change in price leads to a large change in quantity demanded. Which of the following is a characteristic of an elastic demand?

A. A small change in price leads to a small change in quantity demanded

B. A large change in price leads to a small change in quantity demanded

Correct C. A small change in price leads to a large change in quantity demanded

D. A large change in price leads to a large change in quantity demanded

Correct Answer: C

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Question 25

The Agricultural sector is a major contributor to Nigeria's GDP. Which of the following is a major challenge facing the agricultural sector in Nigeria?

A. Lack of access to credit

B. Lack of access to markets

C. Lack of access to techno\logy

Correct D. All of the above

Correct Answer: D

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