Practice post utme covenant university economics 2018 Past Questions

Question 1

Agricultural development in Nigeria has been hindered by the lack of access to credit for small-scale farmers. Which of the following government policies would most likely address this issue?

Correct A. Establishment of a national agricultural bank

B. Implementation of a cash crop subsidy program

C. Introduction of a value-added tax on agricultural inputs

D. Creation of a national agricultural research institute

Correct Answer: A

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Question 2

A monopolistically competitive firm faces a downward-sloping demand curve. If the firm increases its price, what will happen to its revenue?

A. Revenue will increase

Correct B. Revenue will decrease

C. Revenue will remain unchanged

D. Revenue will increase in the short run but decrease in the long run

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 ₦1,000,000. If the required rate of return is 10%, what is the present value of the project?

A. ₦1,000,000

Correct B. ₦900,000

C. ₦1,100,000

D. ₦1,200,000

Correct Answer: B

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Question 4

A monopolist faces a demand curve given by Q = 100 - 2P. If the firm's marginal revenue (MR) is given by MR = 200 - 4Q, what is the firm's marginal \cost (MC)?

Correct A. 50 - 2Q

B. 100 - 2Q

C. 200 - 4Q

D. 300 - 6Q

Correct Answer: A

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Question 5

A firm is producing a good u\sing two inputs, labor (L) and capital (K). The production function is given by Q = 2L^0.5K^0.5. If the firm's budget constraint is given by 2L + 3K = 100, what is the firm's optimal input mix?

Correct A. L = 20, K = 30

B. L = 30, K = 20

C. L = 40, K = 15

D. L = 15, K = 40

Correct Answer: A

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Question 6

A monopolistically competitive firm faces a demand curve with a cons\tant elasticity of -2. If the firm increases its price by 10%, what is the percentage change in quantity demanded?

A. 20%

Correct B. 10%

C. 5%

D. 15%

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 currently 1 USD = 1.5 NGN, what is the equivalent trade deficit in Nigerian naira?

Correct A. ₦150,000,000

B. ₦200,000,000

C. ₦250,000,000

D. ₦300,000,000

Correct Answer: A

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Question 8

A firm's production function is given by Q = 10L^0.5K^0.5. 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. 15%

Correct C. 20%

D. 25%

Correct Answer: C

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Question 9

A country's GDP is $100 billion. If the country's population is 50 million and the average GDP per capita is $2,000, what is the country's GDP per capita in terms of the number of people who earn less than $1,500 per year?

A. 25%

Correct B. 30%

C. 35%

D. 40%

Correct Answer: B

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Question 10

A firm's \cost function is given by C = 10L + 20K. If the firm's labor and capital inputs are increased by 10% and 15% respectively, what is the percentage change in total \cost?

A. 10%

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

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Question 11

The government of a country has decided to implement a policy of price control to reduce inflation. However, the policy has led to a shortage of essential goods. Which of the following is a likely consequence of this policy?

A. Increased production of essential goods

B. Reduced demand for essential goods

Correct C. Black market for essential goods

D. Increased employment in the manufacturing sector

Correct Answer: C

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Question 12

A firm is producing a good with the following production function: Q = 2L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, and the firm is currently producing 100 units of the good, what is the minimum \cost of producing 120 units of the good?

A. ₦120,000

B. ₦150,000

Correct C. ₦180,000

D. ₦200,000

Correct Answer: C

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Question 13

A consumer has the following utility function: U = 2x + 3y. If the prices of x and y are ₦50 and ₦75 respectively, and the consumer has a budget of ₦300, what is the optimal combination of x and y?

A. x = 2, y = 2

Correct B. x = 3, y = 1

C. x = 4, y = 0

D. x = 0, y = 4

Correct Answer: B

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Question 14

A country has a production function: Q = 2L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, and the country is currently producing 100 units of the good, what is the minimum \cost of producing 120 units of the good?

A. ₦120,000

B. ₦150,000

Correct C. ₦180,000

D. ₦200,000

Correct Answer: C

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Question 15

A firm is producing a good with the following production function: Q = 2L^0.5K^0.5. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, and the firm is currently producing 100 units of the good, what is the minimum \cost of producing 120 units of the good?

A. ₦120,000

B. ₦150,000

Correct C. ₦180,000

D. ₦200,000

Correct Answer: C

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Question 16

Consider a firm operating in a perfectly competitive market. The 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 L = 4 and K = 9, respectively, what is the firm's current output?

A. 12

Correct B. 18

C. 24

D. 30

Correct Answer: B

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Question 17

A consumer has a utility function given by U(X,Y) = 2X + 3Y, where X is the quantity of good X and Y is the quantity of good Y. If the consumer's budget constraint is given by P_X X + P_Y Y = 100, where P_X and P_Y are the prices of goods X and Y, respectively, and P_X = 2P_Y, what is the consumer's optimal bundle of goods X and Y?

A. (20, 30)

Correct B. (30, 20)

C. (40, 10)

D. (10, 40)

Correct Answer: B

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Question 18

A firm has a \cost function given by C(Q) = 2Q^2 + 5Q + 10, where Q is output. If the firm's revenue function is given by R(Q) = 3Q^2 + 2Q + 5, what is the firm's profit function?

A. Q^2 + 7Q + 15

Correct B. 2Q^2 + 3Q + 5

C. Q^2 + 2Q + 10

D. 3Q^2 + Q + 5

Correct Answer: B

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Question 19

Consider a simple economy with two goods, X and Y. The production possibility frontier (PPF) for this economy is given by the equation XY = 100. If the economy currently produces 20 units of good X and 5 units of good Y, what is the opportunity \cost of producing one more unit of good X?

A. 2

Correct B. 5

C. 10

D. 20

Correct Answer: B

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Question 20

A central bank has a monetary policy goal of maintaining a 2% inflation rate. If the current inflation rate is 3%, what is the central bank's target interest rate?

Correct A. 5%

B. 6%

C. 7%

D. 8%

Correct Answer: A

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Question 21

A firm's production function is given by Q = 2L^0.5H^0.5, where Q is output, L is labor and H is capital. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, find the total \cost of producing 4 units of output.

A. ₦400

Correct B. ₦800

C. ₦1200

D. ₦1600

Correct Answer: B

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Question 22

A government budget is given by the equation: G = 100 + 0.2Y, where G is government exp\enditure and Y is national income. If the government exp\enditure is ₦500 billion, find the value of national income.

Correct A. ₦2.5 trillion

B. ₦2.5 trillion

C. ₦2.5 trillion

D. ₦2.5 trillion

Correct Answer: A

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Question 23

A firm's demand function is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the price is ₦50, find the quantity demanded.

A. 20

Correct B. 40

C. 60

D. 80

Correct Answer: B

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Question 24

A firm's production function is given by Q = 2L^0.5H^0.5, where Q is output, L is labor and H is capital. If the price of labor is ₦100 per unit and the price of capital is ₦200 per unit, find the total \cost of producing 4 units of output.

A. ₦400

Correct B. ₦800

C. ₦1200

D. ₦1600

Correct Answer: B

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Question 25

A government budget is given by the equation: G = 100 + 0.2Y, where G is government exp\enditure and Y is national income. If the government exp\enditure is ₦500 billion, find the value of national income.

Correct A. ₦2.5 trillion

B. ₦2.5 trillion

C. ₦2.5 trillion

D. ₦2.5 trillion

Correct Answer: A

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