Practice post utme bells university economics 2020 Past Questions

Question 1

In a perfectly competitive market, the equilibrium price and quantity are determined by the intersection of the supply and demand curves. If the demand curve shifts to the left, what will happen to the equilibrium price and quantity?

A. The equilibrium price will decrease, and the equilibrium quantity will increase.

Correct B. The equilibrium price will increase, and the equilibrium quantity will decrease.

C. The equilibrium price will remain the same, and the equilibrium quantity will remain the same.

D. The equilibrium price will decrease, and the equilibrium quantity will decrease.

Correct Answer: B

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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 USD = 100 Naira, what is the equivalent trade deficit in Naira?

A. ₦10,000,000

Correct B. ₦100,000,000

C. ₦1,000,000,000

D. ₦10,000,000,000

Correct Answer: B

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Question 3

A firm is considering investing in a new project with a net present value (NPV) of $1 million. If the firm's \cost of capital is 10%, what is the present value of the expected future cash flows?

Correct A. $1,000,000

B. $1,100,000

C. $1,200,000

D. $1,500,000

Correct Answer: A

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Question 4

A country's government is considering implementing a value-added tax (VAT) to increase revenue. If the VAT rate is 10% and the average price of a good is ₦100, what is the amount of VAT paid by consumers?

A. ₦10

Correct B. ₦20

C. ₦50

D. ₦100

Correct Answer: B

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Question 5

A firm is considering investing in a new project with a payback period of 5 years. If the firm's \cost of capital is 12%, what is the internal rate of return (IRR) of the project?

A. 10%

Correct B. 12%

C. 15%

D. 18%

Correct Answer: B

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Question 6

A firm's production function is given by Q = 2L^$ 1/2 $K^$ 1/2 $, where Q is output, L is labor and K is capital. If the firm's current labor and capital inputs are 16 and 9 respectively, what is the marginal product of labor?

A. 1/4

Correct B. 1/2

C. 1

D. 2

Correct Answer: B

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Question 7

A consumer's budget constraint is given by P_x x + P_y y = I, where P_x and P_y are the prices of x and y respectively, and I is income. If P_x = 2, P_y = 3, and I = 12, what is the consumer's optimal bundle of x and y?

Correct A. x = 2, y = 2

B. x = 3, y = 1

C. x = 4, y = 0

D. x = 0, y = 4

Correct Answer: A

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Question 8

A firm's demand curve is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the firm's current price is 20, what is the quantity demanded?

A. 40

Correct B. 60

C. 80

D. 100

Correct Answer: B

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Question 9

A firm's supply curve is given by Q = 2P, where Q is quantity supplied and P is price. If the firm's current price is 10, what is the quantity supplied?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 10

A firm's production function is given by Q = 2L^$ 1/2 $K^$ 1/2 $, where Q is output, L is labor and K is capital. If the firm's current labor and capital inputs are 16 and 9 respectively, what is the marginal product of capital?

A. 1/4

B. 1/2

C. 1

Correct D. 2

Correct Answer: D

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Question 11

In a perfectly competitive market, what is the relationship between the marginal revenue product (MRP) and the marginal factor \cost (MFC)?

A. MRP > MFC

B. MRP < MFC

Correct C. MRP = MFC

D. MRP = -MFC

Correct Answer: C

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Question 12

A firm is considering investing in a new project. The project has a net present value (NPV) of ₦1,500,000. If the \cost of capital is 10%, what is the internal rate of return (IRR) of the project?

A. 12%

Correct B. 15%

C. 18%

D. 20%

Correct Answer: B

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Question 13

A monopolist faces a demand curve given by Q = 100 - 2P. The marginal revenue (MR) function is given by MR = 200 - 2Q. Find the profit-maximizing price and quantity.

A. P = ₦50, Q = 25

Correct B. P = ₦75, Q = 12.5

C. P = ₦100, Q = 0

D. P = ₦200, Q = 50

Correct Answer: B

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Question 14

A firm is considering investing in a new project. The project has a net present value (NPV) of ₦1,500,000. If the \cost of capital is 10%, what is the internal rate of return (IRR) of the project?

A. 12%

Correct B. 15%

C. 18%

D. 20%

Correct Answer: B

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Question 15

A firm is considering investing in a new project. The project has a net present value (NPV) of ₦1,500,000. If the \cost of capital is 10%, what is the internal rate of return (IRR) of the project?

A. 12%

Correct B. 15%

C. 18%

D. 20%

Correct Answer: B

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Question 16

A perfectly competitive firm's supply curve is a

Correct A. Horizontal line

B. Vertical line

C. U-shaped curve

D. L-shaped curve

Correct Answer: A

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Question 17

A firm's average total \cost curve will be at its minimum point when the marginal \cost curve intersects the

Correct A. Average variable \cost curve

B. Average fixed \cost curve

C. Marginal revenue curve

D. Marginal product of labor curve

Correct Answer: A

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Question 18

A country's GDP is calculated by adding up the value of all final goods and services produced within its borders, including

A. Imports

Correct B. Exports

C. Intermediate goods

D. Capital goods

Correct Answer: B

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Question 19

A government's budget can be classified into three main components: revenue, exp\enditure, and

A. Surplus

Correct B. Deficit

C. Capital formation

D. Transfer payments

Correct Answer: B

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Question 20

A monopolist's marginal revenue curve will be

A. Less steep than the demand curve

Correct B. More steep than the demand curve

C. Parallel to the demand curve

D. Perp\endicular to the demand curve

Correct Answer: B

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Question 21

Consider a production function with returns to scale. If the production function is homogeneous of degree 2, what is the implication for the production function's behavior as the input factors increase?

A. The production function will exhibit increa\sing returns to scale.

Correct B. The production function will exhibit cons\tant returns to scale.

C. The production function will exhibit decrea\sing returns to scale.

D. The production function will exhibit no returns to scale.

Correct Answer: B

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Question 22

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

A. (10, 10)

B. (20, 5)

Correct C. (15, 7.5)

D. (25, 3)

Correct Answer: C

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Question 23

A firm's production function is given by Q = 2L^2 + 3K. If the firm's \cost function is C(L,K) = 2L + 3K, what is the firm's profit-maximizing level of L and K?

A. (5, 5)

Correct B. (10, 10)

C. (15, 15)

D. (20, 20)

Correct Answer: B

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Question 24

A country's GDP is given by the equation Y = C + I + G. If the country's consumption function is C = 100 + 0.8Y, its investment function is I = 200 + 0.2Y, and its government exp\enditure function is G = 300, what is the country's equilibrium GDP?

A. ₦1000

B. ₦1200

Correct C. ₦1500

D. ₦1800

Correct Answer: C

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Question 25

A firm's production function is given by Q = 2L^2 + 3K. If the firm's \cost function is C(L,K) = 2L + 3K, what is the firm's marginal \cost and marginal product of labor?

Correct A. MC = 4L, MP_L = 4L

B. MC = 2L, MP_L = 4L

C. MC = 4L, MP_L = 2L

D. MC = 2L, MP_L = 2L

Correct Answer: A

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