Practice post utme caleb university economics 2025 Past Questions

Question 1

A firm's production function is given by Q = 2L^0.5 * K^0.5, where Q is output, L is labor, and K is capital. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?

A. 10%

B. 12%

Correct C. 15%

D. 18%

Correct Answer: C

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Question 2

A country's GDP is ₦1,000,000,000 and its GNP is ₦1,100,000,000. What is the net factor income from abroad?

Correct A. ₦100,000,000

B. ₦200,000,000

C. ₦300,000,000

D. ₦400,000,000

Correct Answer: A

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Question 3

A consumer's budget constraint is given by 2x + 3y = 12, where x is the quantity of good x and y is the quantity of good y. If the consumer's income increases by 20%, what is the new budget constraint?

A. 4x + 6y = 24

Correct B. 4x + 6y = 28

C. 4x + 6y = 32

D. 4x + 6y = 36

Correct Answer: B

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Question 4

A firm's production function is given by Q = 2L^0.5 * K^0.5, where Q is output, L is labor, and K is capital. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?

A. 10%

B. 12%

Correct C. 15%

D. 18%

Correct Answer: C

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Question 5

A country's GDP is ₦1,000,000,000 and its GNP is ₦1,100,000,000. What is the net factor income from abroad?

Correct A. ₦100,000,000

B. ₦200,000,000

C. ₦300,000,000

D. ₦400,000,000

Correct Answer: A

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Question 6

A firm's marginal revenue (MR) and marginal \cost (MC) curves intersect at point E, where MR = 100 and MC = 80. If the firm's average revenue (AR) is 120, what is the firm's price elasticity of demand (PED) at point E?

A. 0.5

Correct B. 1.25

C. 2.5

D. 5

Correct Answer: B

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Question 7

A country's GDP at market price is ₦1,500 billion, while its GDP at factor \cost is ₦1,400 billion. What is the value of the indirect tax (IT) in the country?

Correct A. ₦100 billion

B. ₦50 billion

C. ₦75 billion

D. ₦25 billion

Correct Answer: A

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Question 8

A firm's demand curve is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the firm's supply curve is given by the equation Qs = 2P - 50, what is the equilibrium price (P) and quantity (Q) in the market?

A. P = 25, Q = 75

Correct B. P = 50, Q = 100

C. P = 75, Q = 125

D. P = 100, Q = 150

Correct Answer: B

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Question 9

A country's balance of payments (BOP) accounts show a trade deficit of ₦500 billion, a capital account surplus of ₦200 billion, and a financial account deficit of ₦300 billion. What is the country's overall BOP position?

Correct A. ₦300 billion deficit

B. ₦200 billion surplus

C. ₦500 billion deficit

D. ₦700 billion surplus

Correct Answer: A

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Question 10

A firm's production function is given by the equation Q = 2L^0.5K^0.5, where Q is the output, L is the labor, and K is the capital. If the firm's \cost function is given by the equation C = 100L + 200K, what is the firm's profit-maximizing level of labor (L) and capital (K)?

A. L = 100, K = 100

B. L = 200, K = 200

Correct C. L = 400, K = 400

D. L = 800, K = 800

Correct Answer: C

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Question 11

Determine the price elasticity of demand for a product whose price elasticity of supply is 0.5 and the cross-price elasticity of demand is 0.8.

A. 0.2

Correct B. 0.5

C. 0.8

D. 1.2

Correct Answer: B

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Question 12

A country's GDP is ₦1,500 billion, and its GNP is ₦1,600 billion. What is the net factor income from abroad?

Correct A. ₦100 billion

B. ₦50 billion

C. ₦200 billion

D. ₦300 billion

Correct Answer: A

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Question 13

A firm's demand function is given by Q = 100 - 2P. If the price elasticity of demand is 0.5, what is the price at which the quantity demanded is 80?

A. ₦20

B. ₦30

Correct C. ₦40

D. ₦50

Correct Answer: C

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Question 14

A consumer's utility function is given by U = 2x + 3y. If the consumer's income is ₦1,000 and the prices of x and y are ₦50 and ₦75 respectively, what is the consumer's optimal bundle?

A. (10, 5)

Correct B. (15, 10)

C. (20, 15)

D. (25, 20)

Correct Answer: B

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Question 15

A firm's supply function is given by Q = 50 + 2P. If the price elasticity of supply is 2, what is the price at which the quantity supplied is 120?

A. ₦30

B. ₦40

C. ₦50

Correct D. ₦60

Correct Answer: D

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Question 16

The government of Nigeria has introduced a new policy to increase agricultural production. The policy includes providing subsidies to farmers, improving irrigation systems, and increa\sing the use of fertilizers. However, some critics argue that the policy will lead to an increase in food prices, which will negatively affect the poor. U\sing the concept of supply and demand, explain why the critics' argument may be valid.

A. The policy will lead to an increase in food prices because the demand for food is inelastic, meaning that people will continue to buy food even if the price increases.

Correct B. The policy will lead to an increase in food prices because the supply of food will increase, but the demand for food will not increase proportionally.

C. The policy will lead to an increase in food prices because the government's subsidies will increase the \cost of production, which will be passed on to consumers.

D. The policy will lead to an increase in food prices because the policy will lead to a decrease in the supply of food, which will cause prices to rise.

Correct Answer: B

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Question 17

A firm is producing a good with the following \cost and revenue functions: C(q) = 2q^2 + 10q + 5 and R(q) = 3q^2 - 2q + 1. Find the profit-maximizing quantity of the good.

A. q = 1

B. q = 2

Correct C. q = 3

D. q = 4

Correct Answer: C

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Question 18

The Nigerian government has introduced a new tax policy to increase revenue. The policy includes a 10% tax on all goods and services. However, some critics argue that the policy will lead to a decrease in economic growth because it will increase the \cost of production. U\sing the concept of taxation and economic growth, explain why the critics' argument may be valid.

Correct A. The policy will lead to a decrease in economic growth because the tax will increase the \cost of production, which will lead to a decrease in the supply of goods and services.

B. The policy will lead to a decrease in economic growth because the tax will increase the \cost of production, which will lead to a decrease in the demand for goods and services.

C. The policy will lead to a decrease in economic growth because the tax will increase the \cost of production, which will lead to a decrease in the investment in the economy.

D. The policy will lead to a decrease in economic growth because the tax will increase the \cost of production, which will lead to a decrease in the employment in the economy.

Correct Answer: A

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Question 19

A firm is producing a good with the following production function: Q = 2L^0.5K^0.5. Find the returns to scale of the firm.

Correct A. Increa\sing returns to scale

B. Decrea\sing returns to scale

C. Cons\tant returns to scale

D. No returns to scale

Correct Answer: A

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Question 20

The Nigerian government has introduced a new policy to increase agricultural production. The policy includes providing subsidies to farmers, improving irrigation systems, and increa\sing the use of fertilizers. However, some critics argue that the policy will lead to an increase in food prices, which will negatively affect the poor. U\sing the concept of supply and demand, explain why the critics' argument may be valid.

A. The policy will lead to an increase in food prices because the demand for food is inelastic, meaning that people will continue to buy food even if the price increases.

Correct B. The policy will lead to an increase in food prices because the supply of food will increase, but the demand for food will not increase proportionally.

C. The policy will lead to an increase in food prices because the government's subsidies will increase the \cost of production, which will be passed on to consumers.

D. The policy will lead to an increase in food prices because the policy will lead to a decrease in the supply of food, which will cause prices to rise.

Correct Answer: B

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Question 21

Consider a perfectly competitive market with 5 firms, each producing a homogeneous good. If the market demand curve is downward sloping and the firms are price takers, what is the effect of an increase in the price of the good on the quantity supplied by each firm?

A. The quantity supplied by each firm increases

Correct B. The quantity supplied by each firm decreases

C. The quantity supplied by each firm remains unchanged

D. The quantity supplied by each firm increases in the short run but decreases in the long run

Correct Answer: B

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Question 22

A firm's total revenue (TR) is given by the equation TR = P × Q, where P is the price per unit and Q is the quantity sold. If the price per unit increases by 10% and the quantity sold increases by 20%, what is the percentage change in total revenue?

A. 10%

B. 20%

Correct C. 30%

D. 40%

Correct Answer: C

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Question 23

A consumer has a budget of ₦1000 and faces the following prices for two goods: Good X \costs ₦200 per unit and Good Y \costs ₦300 per unit. If the consumer sp\ends all of their budget on the two goods, what is the opportunity \cost of buying one more unit of Good X?

A. ₦100

Correct B. ₦200

C. ₦300

D. ₦400

Correct Answer: B

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Question 24

A monopolist faces a demand curve given by Q = 100 - 2P and has a cons\tant marginal \cost of ₦50 per unit. If the firm produces 50 units, what is the profit-maximizing price?

A. ₦75

B. ₦80

C. ₦85

Correct D. ₦90

Correct Answer: D

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Question 25

A firm's marginal revenue (MR) is given by the equation MR = 2P, where P is the price per unit. If the price per unit increases by 10%, what is the percentage change in marginal revenue?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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