Practice post utme afe babalola university economics 2017 Past Questions

Question 1

Consider a country with a perfectly competitive market for a particular good. The supply curve is given by \( Q_s = 100 + 2P \), where \( Q_s \) is the quantity supplied and ( P ) is the price. If the demand curve is \( Q_d = 150 - 3P \), where \( Q_d \) is the quantity demanded, find the equilibrium price and quantity.

Correct A. \( P = 20, Q = 120 \)

B. \( P = 30, Q = 90 \)

C. \( P = 40, Q = 60 \)

D. \( P = 50, Q = 30 \)

Correct Answer: A

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Question 2

A firm's production function is given by \( Q = 2L^{0.5}K^{0.5} \), where ( Q ) is the output, ( L ) is the labor and ( K ) is the capital. If the firm uses 100 units of labor and 400 units of capital, find the output.

A. \( Q = 400 \)

B. \( Q = 800 \)

Correct C. \( Q = 1600 \)

D. \( Q = 3200 \)

Correct Answer: C

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Question 3

A government imposes a tax of ₦10 on a particular good. The supply curve is given by \( Q_s = 100 + 2P \), where \( Q_s \) is the quantity supplied and ( P ) is the price. If the demand curve is \( Q_d = 150 - 3P \), where \( Q_d \) is the quantity demanded, find the new equilibrium price and quantity.

Correct A. \( P = 25, Q = 100 \)

B. \( P = 30, Q = 90 \)

C. \( P = 35, Q = 80 \)

D. \( P = 40, Q = 70 \)

Correct Answer: A

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Question 4

A country's GDP is ₦100 billion, its imports are ₦20 billion and its exports are ₦30 billion. Find the country's balance of trade.

A. ₦10 billion

Correct B. ₦20 billion

C. ₦30 billion

D. ₦40 billion

Correct Answer: B

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Question 5

A firm's production function is given by \( Q = 2L^{0.5}K^{0.5} \), where ( Q ) is the output, ( L ) is the labor and ( K ) is the capital. If the firm uses 100 units of labor and 400 units of capital, find the marginal product of labor.

A. \( MP_L = 0.5 \)

B. \( MP_L = 1 \)

Correct C. \( MP_L = 2 \)

D. \( MP_L = 4 \)

Correct Answer: C

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Question 6

A consumer's utility function is given by U(x, y) = 2x^0.5y^0.5. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦3 respectively, what is the consumer's optimal bundle of x and y?

A. x = 20, y = 10

Correct B. x = 15, y = 15

C. x = 10, y = 20

D. x = 5, y = 25

Correct Answer: B

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Question 7

A firm's \cost function is given by C(x) = 2x^2 + 10x + 5. If the firm's revenue function is given by R(x) = 3x^2 - 2x + 1, what is the firm's profit-maximizing output level?

A. x = 1

B. x = 2

Correct C. x = 3

D. x = 4

Correct Answer: C

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Question 8

A country's money supply is given by M = 1000 + 0.5Y. If the country's income is ₦100 billion, what is the country's money supply?

A. ₦50 billion

B. ₦55 billion

Correct C. ₦60 billion

D. ₦65 billion

Correct Answer: C

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Question 9

A government's budget constraint is given by B = T + M. If the government's tax revenue is ₦50 billion and its money supply is ₦20 billion, what is the government's budget deficit?

A. ₦30 billion

B. ₦35 billion

Correct C. ₦40 billion

D. ₦45 billion

Correct Answer: C

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Question 10

A firm's demand function is given by Q = 100 - 2P. If the firm's supply function is given by Q = 2P - 10, what is the firm's equilibrium price?

A. ₦20

B. ₦25

Correct C. ₦30

D. ₦35

Correct Answer: C

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Question 11

The production function for a firm is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is the units of labor, and K is the units of capital. If the firm wants to increase its output by 20% while keeping labor cons\tant, what percentage increase in capital is required?

A. 10%

B. 20%

Correct C. 30%

D. 40%

Correct Answer: C

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Question 12

A monopolistically competitive firm faces a demand curve given by P = 100 - 2Q. The firm's marginal \cost curve is MC = 20. What is the firm's optimal price and quantity?

Correct A. P = 90, Q = 45

B. P = 80, Q = 40

C. P = 70, Q = 35

D. P = 60, Q = 30

Correct Answer: A

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Question 13

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods. The consumer's budget constraint is 2x + 3y = 30. What is the consumer's optimal bundle of goods?

Correct A. x = 10, y = 5

B. x = 8, y = 6

C. x = 6, y = 8

D. x = 4, y = 10

Correct Answer: A

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Question 14

A firm's production function is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is the units of labor, and K is the units of capital. If the firm wants to increase its output by 20% while keeping labor cons\tant, what percentage increase in capital is required?

A. 10%

B. 20%

Correct C. 30%

D. 40%

Correct Answer: C

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Question 15

A monopolist faces a demand curve given by P = 100 - 2Q. The firm's marginal \cost curve is MC = 20. What is the firm's optimal price and quantity?

Correct A. P = 90, Q = 45

B. P = 80, Q = 40

C. P = 70, Q = 35

D. P = 60, Q = 30

Correct Answer: A

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Question 16

The concept of scarcity in economics implies that resources are limited, and choices must be made to allocate them efficiently. Which of the following best describes the opportunity \cost of a choice?

Correct A. The value of the next best alternative that is given up when a choice is made

B. The \cost of producing a good or service

C. The price of a good or service

D. The quantity of a good or service produced

Correct Answer: A

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Question 17

A country's GDP is the sum of the value of all final goods and services produced within its borders. Which of the following is NOT included in the calculation of GDP?

A. Personal consumption exp\enditures

B. Government purchases

C. Net exports

Correct D. Depreciation of capital assets

Correct Answer: D

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Question 18

The money supply in an economy is influenced by the actions of the central bank. Which of the following is a tool used by the central bank to increase the money supply?

Correct A. Open market operations

B. Discount rate

C. Reserve requirements

D. Fiscal policy

Correct Answer: A

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Question 19

Agricultural development is crucial for economic growth in many countries. Which of the following is a benefit of agricultural development?

A. Increased employment opportunities

B. Improved s\tandard of living

C. Increased food security

Correct D. All of the above

Correct Answer: D

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Question 20

Inflation is a sustained increase in the general price level of goods and services in an economy. Which of the following is a cause of inflation?

A. Monetary policy

B. Fiscal policy

C. Supply and demand imbalance

Correct D. All of the above

Correct Answer: D

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Question 21

Consider a country with a GDP of ₦1.2 trillion and a GNP of ₦1.3 trillion. If the net factor income from abroad is ₦50 billion, what is the value of the country's net domestic product?

Correct A. ₦1.25 trillion

B. ₦1.3 trillion

C. ₦1.35 trillion

D. ₦1.4 trillion

Correct Answer: A

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Question 22

A firm's demand function is given by Q = 100 - 2P + 3I. If the price elasticity of demand is -2 and the income elasticity of demand is 0.5, what is the cross-price elasticity of demand?

A. -1

Correct B. -2

C. -3

D. -4

Correct Answer: B

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Question 23

A consumer's utility function is given by U = 2x + 3y. If the consumer's income is ₦100 and the prices of x and y are ₦5 and ₦10 respectively, what is the consumer's optimal bundle?

A. (10, 20)

Correct B. (15, 15)

C. (20, 10)

D. (25, 5)

Correct Answer: B

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Question 24

A firm's production function is given by Q = 2L + 3K. If the firm's output is 100 units and the price of labor is ₦10 per unit and the price of capital is ₦20 per unit, what is the firm's optimal input mix?

Correct A. (50, 25)

B. (25, 50)

C. (30, 30)

D. (40, 40)

Correct Answer: A

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Question 25

A country's national income is given by Y = C + I + G. If the country's consumption is ₦500 billion, its investment is ₦200 billion and its government exp\enditure is ₦300 billion, what is the country's national income?

A. ₦1 trillion

B. ₦1.1 trillion

Correct C. ₦1.2 trillion

D. ₦1.3 trillion

Correct Answer: C

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