Practice post utme covenant university economics 2025 Past Questions

Question 1

The Central Bank of Nigeria (CBN) uses the monetary policy instrument of Open Market Operations (OMO) to increase the money supply in the economy. What is the primary effect of OMO on the money supply?

A. Increase the reserve requirement of commercial banks

B. Sell government securities to commercial banks

Correct C. Increase the money supply by injecting liquidity into the economy

D. Decrease the money supply by absorbing liquidity from the economy

Correct Answer: C

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Question 2

A firm is considering the production of two goods, X and Y. The production function for good X is given by Q_X = 2L^0.5K^0.5, where L is labor and K is capital. The production function for good Y is given by Q_Y = 3L^0.2K^0.8. If the firm has 100 units of labor and 200 units of capital, what is the optimal combination of labor and capital that maximizes the production of good X?

A. L = 50, K = 100

B. L = 75, K = 150

Correct C. L = 100, K = 200

D. L = 150, K = 100

Correct Answer: C

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Question 3

The demand for a commodity is given by the equation Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the price is increased by 10%, what is the new quantity demanded?

A. 80

Correct B. 90

C. 100

D. 110

Correct Answer: B

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Question 4

A firm is considering the production of a new product. The \cost function is given by C = 100 + 2Q, where C is the total \cost and Q is the quantity produced. If the firm produces 50 units of the product, what is the total \cost?

A. ₦1500

Correct B. ₦2000

C. ₦2500

D. ₦3000

Correct Answer: B

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Question 5

A diagram of a simple circuit is shown below. If the resis\tance of the circuit is 10 ohms, what is the current flowing through the circuit?

A. 1A

B. 2A

Correct C. 3A

D. 4A

Correct Answer: C

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Question 6

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 = 80, y = 40

B. x = 60, y = 60

C. x = 40, y = 80

D. x = 20, y = 100

Correct Answer: A

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Question 7

The government of a country has a budget of ₦500 billion to sp\end on healthcare and education. If the marginal benefit of healthcare is ₦10 billion and the marginal benefit of education is ₦8 billion, how much should the government sp\end on healthcare and education respectively?

Correct A. Healthcare: ₦300 billion, Education: ₦200 billion

B. Healthcare: ₦200 billion, Education: ₦300 billion

C. Healthcare: ₦250 billion, Education: ₦250 billion

D. Healthcare: ₦400 billion, Education: ₦100 billion

Correct Answer: A

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Question 8

A firm has a \cost function given by ( C(q) = 2q^2 + 5q + 10 ). If the firm sells its product at a price of ₦20 per unit, find the firm's revenue function.

Correct A. R(q) = 20q - 2q^2 - 5q - 10

B. R(q) = 20q - 2q^2 + 5q + 10

C. R(q) = 20q + 2q^2 - 5q - 10

D. R(q) = 20q + 2q^2 + 5q + 10

Correct Answer: A

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Question 9

A country's GDP is ₦10 trillion, its GNP is ₦12 trillion, and its net factor income from abroad is ₦2 trillion. Find the country's net national product.

Correct A. ₦14 trillion

B. ₦16 trillion

C. ₦18 trillion

D. ₦20 trillion

Correct Answer: A

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Question 10

A country's balance of payments is given by the following table:\n| Item | Value |\n| --- | --- |\n| Exports | ₦5 trillion |\n| Imports | ₦6 trillion |\n| Net factor income from abroad | ₦2 trillion |\n| Net transfer | ₦1 trillion |\nFind the country's balance of payments.

A. ₦2 trillion deficit

Correct B. ₦1 trillion surplus

C. ₦3 trillion deficit

D. ₦4 trillion surplus

Correct Answer: B

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Question 11

A monopolistically competitive firm is characterized by a downward-sloping demand curve. What is the primary reason for this downward-sloping demand curve?

Correct A. Product differentiation

B. Barriers to entry

C. Economies of scale

D. Perfectly elastic demand

Correct Answer: A

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Question 12

A consumer's indifference curve is downward-sloping. What does this indicate about the consumer's preferences?

Correct A. The consumer is willing to trade off one good for another

B. The consumer has a fixed budget constraint

C. The consumer is indifferent between the two goods

D. The consumer has a perfect substitute for one good

Correct Answer: A

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Question 13

A firm is considering investing in a new project with a net present value (NPV) of ₦10,000. What does this indicate about the project's profitability?

Correct A. The project is profitable

B. The project is unprofitable

C. The project has a zero NPV

D. The project's profitability is uncertain

Correct Answer: A

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Question 14

A country's balance of payments (BOP) is in surplus. What does this indicate about the country's trade balance?

Correct A. The country is exporting more than it is importing

B. The country is importing more than it is exporting

C. The country's trade balance is in equilibrium

D. The country's trade balance is uncertain

Correct Answer: A

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Question 15

A firm is facing a perfectly elastic demand curve. What is the firm's optimal price?

A. The firm's marginal revenue (MR) equals its marginal \cost (MC)

B. The firm's price equals its average revenue (AR)

Correct C. The firm's price equals its marginal revenue (MR)

D. The firm's price equals its average \cost (AC)

Correct Answer: C

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Question 16

A consumer is faced with a budget constraint of ₦100. The consumer's indifference curve is downward-sloping. What is the consumer's optimal bundle of goods?

Correct A. The consumer will choose the bundle with the highest utility

B. The consumer will choose the bundle with the lowest price

C. The consumer will choose the bundle with the highest quantity

D. The consumer will choose the bundle with the lowest quantity

Correct Answer: A

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Question 17

A firm is facing a downward-sloping demand curve. What is the firm's optimal price?

A. The firm's marginal revenue (MR) equals its marginal \cost (MC)

B. The firm's price equals its average revenue (AR)

Correct C. The firm's price equals its marginal revenue (MR)

D. The firm's price equals its average \cost (AC)

Correct Answer: C

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Question 18

A country's inflation rate is 5%. What does this indicate about the country's monetary policy?

A. The country's central bank is tightening monetary policy

Correct B. The country's central bank is loosening monetary policy

C. The country's monetary policy is neutral

D. The country's monetary policy is uncertain

Correct Answer: B

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Question 19

A firm is facing a perfectly competitive market. What is the firm's optimal price?

Correct A. The firm's price equals its marginal revenue (MR)

B. The firm's price equals its average revenue (AR)

C. The firm's price equals its marginal \cost (MC)

D. The firm's price equals its average \cost (AC)

Correct Answer: A

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Question 20

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 21

A country's GDP is 100 billion naira. If the government decides to increase the price of a product by 10% and the demand for the product is inelastic, what will be the effect on the country's GDP?

A. Increase by 10 billion naira

B. Decrease by 10 billion naira

Correct C. No change

D. Increase by 5 billion naira

Correct Answer: C

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Question 22

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

A. 5% increase in capital and 5% increase in labor

Correct B. 10% increase in capital and 10% increase in labor

C. 15% increase in capital and 15% increase in labor

D. 20% increase in capital and 20% increase in labor

Correct Answer: B

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Question 23

A consumer's utility function is given by U = 2x + 3y, where U is the utility and x and y are the quantities of two goods. If the consumer's budget constraint is 100 and the prices of the two goods are 2 and 3 respectively, what is the consumer's optimal consumption bundle?

Correct A. x = 20, y = 30

B. x = 30, y = 20

C. x = 40, y = 10

D. x = 10, y = 40

Correct Answer: A

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Question 24

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

A. 5% increase in capital and 5% increase in labor

Correct B. 10% increase in capital and 10% increase in labor

C. 15% increase in capital and 15% increase in labor

D. 20% increase in capital and 20% increase in labor

Correct Answer: B

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Question 25

A consumer's utility function is given by U = 2x + 3y, where U is the utility and x and y are the quantities of two goods. If the consumer's budget constraint is 100 and the prices of the two goods are 2 and 3 respectively, what is the consumer's optimal consumption bundle?

Correct A. x = 20, y = 30

B. x = 30, y = 20

C. x = 40, y = 10

D. x = 10, y = 40

Correct Answer: A

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