Practice Post UTME VERITAS UNIVERSITY economics 2019 Past Questions

Question 1

A consumer's indifference curve is given 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, find the consumer's optimal bundle of x and y.

Correct A. x = 40, y = 20

B. x = 30, y = 30

C. x = 20, y = 40

D. x = 10, y = 50

Correct Answer: A

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Question 2

A firm's \cost function is given by ( C(x) = 2x^2 + 10x + 5 ). Find the firm's average \cost function.

Correct A. ( AC(x) = 2x + 5 )

B. ( AC(x) = 4x + 10 )

C. ( AC(x) = x^2 + 5 )

D. ( AC(x) = 2x^2 + 10x )

Correct Answer: A

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Question 3

A farmer produces wheat and maize. The production functions are given by ( W(x,y) = 2x + 3y ) and ( M(x,y) = x^2 + 2y ). If the farmer has 100 units of labour and 50 units of capital, find the optimal input mix to maximize wheat production.

Correct A. x = 20, y = 30

B. x = 30, y = 20

C. x = 40, y = 10

D. x = 50, y = 0

Correct Answer: A

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Question 4

A country's GDP is given by \( GDP = C + I + G + \( X - M \ \) ). If the country's consumption is ₦500 billion, investment is ₦200 billion, government sp\ending is ₦300 billion, exports are ₦400 billion, and imports are ₦200 billion, find the country's GDP.

Correct A. ₦1.3 trillion

B. ₦1.5 trillion

C. ₦1.7 trillion

D. ₦2.0 trillion

Correct Answer: A

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Question 5

A central bank uses the money multiplier to determine the money supply. If the reserve requirement is 10%, the money multiplier is 10, and the initial money supply is ₦100 billion, find the new money supply after one year.

A. ₦1.1 trillion

B. ₦1.2 trillion

Correct C. ₦1.3 trillion

D. ₦1.4 trillion

Correct Answer: C

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Question 6

Consider a production function given by \( Q = 100K^0.4L^0.6 \), where Q is the output, K is the capital, and L is the labor. If the price of capital is ₦100 and the price of labor is ₦50, and if the firm's objective is to maximize profit, what is the optimal combination of capital and labor?

A. \( K = 10, L = 20 \)

B. \( K = 20, L = 10 \)

Correct C. \( K = 15, L = 15 \)

D. \( K = 25, L = 5 \)

Correct Answer: C

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Question 7

A firm is producing a good u\sing the production function \( Q = 2K^0.5L^0.5 \). If the price of the good is ₦200, the price of capital is ₦50, and the price of labor is ₦25, what is the optimal level of capital and labor if the firm wants to maximize profit?

A. \( K = 10, L = 10 \)

B. \( K = 20, L = 5 \)

C. \( K = 5, L = 20 \)

Correct D. \( K = 15, L = 15 \)

Correct Answer: D

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Question 8

Consider a market with a demand function given by \( Q_d = 100 - 2P \) and a supply function given by \( Q_s = 2P - 20 \). If the market is in equilibrium, what is the price and quantity?

A. \( P = 30, Q = 40 \)

Correct B. \( P = 20, Q = 60 \)

C. \( P = 40, Q = 30 \)

D. \( P = 50, Q = 20 \)

Correct Answer: B

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Question 9

A firm is producing a good u\sing the production function \( Q = 3K^0.7L^0.3 \). If the price of the good is ₦300, the price of capital is ₦75, and the price of labor is ₦30, what is the optimal level of capital and labor if the firm wants to maximize profit?

A. \( K = 15, L = 5 \)

B. \( K = 10, L = 10 \)

Correct C. \( K = 20, L = 5 \)

D. \( K = 25, L = 3 \)

Correct Answer: C

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Question 10

Consider a market with a demand function given by \( Q_d = 150 - 3P \) and a supply function given by \( Q_s = 3P - 30 \). If the market is in equilibrium, what is the price and quantity?

A. \( P = 40, Q = 50 \)

Correct B. \( P = 30, Q = 60 \)

C. \( P = 50, Q = 40 \)

D. \( P = 60, Q = 30 \)

Correct Answer: B

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Question 11

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 12

A firm is producing a good with a production function Q = 2L^0.5K^0.5, where Q is the quantity produced, L is the labor input, and K is the capital input. If the firm is currently producing 100 units of output with 10 units of labor and 20 units of capital, what is the marginal product of labor?

A. 5

Correct B. 10

C. 15

D. 20

Correct Answer: B

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Question 13

The government of a country is considering a tax on a particular good. The demand for the good is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the government imposes a tax of 10 on the good, what is the new price elasticity of demand?

A. 0.4

Correct B. 0.5

C. 0.6

D. 0.7

Correct Answer: B

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Question 14

A country is experiencing an inflation rate of 10%. If the central bank wants to reduce the inflation rate to 5% within the next year, what should be the target inflation rate for the next quarter?

Correct A. 7.5%

B. 8%

C. 8.5%

D. 9%

Correct Answer: A

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Question 15

A government is considering a budget that allocates 60% of its revenue to education, 20% to healthcare, and 20% to defense. If the total revenue is 100 billion naira, what is the budget for education?

A. 60 billion

Correct B. 62.5 billion

C. 65 billion

D. 67.5 billion

Correct Answer: B

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Question 16

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%?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 17

A firm's production function is given by Q = 100L^0.5K^0.5, where Q is the output, L is the labor and K is the capital. If the firm wants to increase its output by 10% and the price of labor increases by 5%, what is the percentage change in the price of capital?

Correct A. -5%

B. -10%

C. -15%

D. -20%

Correct Answer: A

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Question 18

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 budget constraint is 10x + 5y = 100, what is the optimal combination of x and y?

A. x = 5, y = 10

Correct B. x = 10, y = 5

C. x = 15, y = 3

D. x = 20, y = 2

Correct Answer: B

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Question 19

A firm's \cost function is given by C = 100 + 2L + 3K, where C is the \cost, L is the labor and K is the capital. If the firm wants to minimize its \cost and the price of labor is 10, what is the optimal level of capital?

A. 10

B. 20

Correct C. 30

D. 40

Correct Answer: C

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Question 20

A consumer's indifference curve is given by the equation U = 2x + 3y, where x and y are the quantities of two goods. If the consumer's budget constraint is 10x + 5y = 100, what is the optimal combination of x and y?

A. x = 5, y = 10

Correct B. x = 10, y = 5

C. x = 15, y = 3

D. x = 20, y = 2

Correct Answer: B

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Question 21

The money multiplier is a measure of the change in the money supply resulting from a change in the reserve requirement. If the reserve requirement is increased from 10% to 15%, and the money multiplier is 5, what is the percentage change in the money supply?

A. 25%

B. 50%

Correct C. 75%

D. 100%

Correct Answer: C

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Question 22

A firm is producing a good with a total revenue of ₦1,500 and a total \cost of ₦1,200. If the price elasticity of demand is 0.5, what is the price elasticity of supply?

A. 2

Correct B. 3

C. 4

D. 5

Correct Answer: B

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Question 23

A government is considering a tax on a good with a price of ₦100 and a quantity demanded of 100 units. If the tax is ₦20 per unit, what is the deadweight loss?

A. ₦1,000

Correct B. ₦2,000

C. ₦3,000

D. ₦4,000

Correct Answer: B

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Question 24

A firm is producing a good with a marginal revenue of ₦50 and a marginal \cost of ₦30. If the price elasticity of demand is 0.5, what is the optimal quantity?

A. 50

B. 75

Correct C. 100

D. 125

Correct Answer: C

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Question 25

A government is considering a budget with a total revenue of ₦1,500 and a total exp\enditure of ₦1,200. If the price elasticity of demand is 0.5, what is the fiscal policy?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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