Practice post utme crawford university economics 2021 Past Questions

Question 1

The government of a country imposes a tax on imports to raise revenue. This tax is an example of a(n)

A. specific tax

B. ad valorem tax

C. excise tax

Correct D. customs duty

Correct Answer: D

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Question 2

The supply curve of a firm is given by the equation Q = 100 - 2P, where Q is the quantity supplied and P is the price. If the firm's fixed \cost is ₦1000, the total revenue function is given by

Correct A. \text{TR} = 100P - 2P^2

B. \text{TR} = 100P - P^2

C. \text{TR} = 100P + 2P^2

D. \text{TR} = 100P + P^2

Correct Answer: A

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Question 3

The following diagram shows the demand and supply curves of a market. If the price of the good is ₦100, the quantity demanded is

A. 10 units

Correct B. 20 units

C. 30 units

D. 40 units

Correct Answer: B

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Question 4

The following table shows the production function of a firm. If the firm uses 10 units of labor, the output is

A. 100 units

Correct B. 120 units

C. 140 units

D. 160 units

Correct Answer: B

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Question 5

The following diagram shows the production possibilities frontier of a country. If the country allocates 10 units of labor to the production of good X, the quantity of good Y produced is

A. 20 units

B. 30 units

Correct C. 40 units

D. 50 units

Correct Answer: C

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Question 6

A firm's production function is given by Q = 2L^0.5K^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%

Correct B. 12%

C. 15%

D. 18%

Correct Answer: B

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Question 7

A consumer's budget constraint is given by P1Q1 + P2Q2 = I, where P1 and P2 are prices, Q1 and Q2 are quantities, and I is income. If the consumer's income increases by 10% and the prices of the two goods remain cons\tant, what is the new budget constraint equation?

Correct A. P1Q1 + P2Q2 = 1.1I

B. P1Q1 + P2Q2 = 1.2I

C. P1Q1 + P2Q2 = 1.3I

D. P1Q1 + P2Q2 = 1.4I

Correct Answer: A

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Question 8

A firm's demand function is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the firm's marginal revenue function is given by MR = -2, what is the firm's optimal price?

A. 20

Correct B. 30

C. 40

D. 50

Correct Answer: B

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Question 9

A country's GDP is given by GDP = C + I + G + \( X - M \), where C is consumption, I is investment, G is government sp\ending, X is exports, and M is imports. If the country's consumption is 100, investment is 50, government sp\ending is 75, exports are 150, and imports are 100, what is the country's GDP?

A. 225

Correct B. 275

C. 325

D. 375

Correct Answer: B

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Question 10

A firm's production function is given by Q = 2L^0.5K^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%

Correct B. 12%

C. 15%

D. 18%

Correct Answer: B

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Question 11

A government imposes a tax on imports to reduce the trade deficit. However, the tax also increases the \cost of production for domestic firms. U\sing the concept of supply and demand, explain how the tax affects the equilibrium price and quantity of the good.

Correct A. The tax increases the equilibrium price and decreases the equilibrium quantity.

B. The tax decreases the equilibrium price and increases the equilibrium quantity.

C. The tax has no effect on the equilibrium price and quantity.

D. The tax increases the equilibrium price and increases the equilibrium quantity.

Correct Answer: A

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Question 12

A monopolistically competitive firm faces a demand curve given by Q = 100 - 2P and a marginal revenue curve given by MR = 50 - 2Q. Find the firm's profit-maximizing output and price.

Correct A. Q = 20, P = 40

B. Q = 30, P = 35

C. Q = 40, P = 30

D. Q = 50, P = 25

Correct Answer: A

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Question 13

A country's balance of payments is given by the following equation: BOP = \( X - M \) + \( F - I \). If the country's exports (X) are 100, imports (M) are 80, foreign investment (F) is 20, and domestic investment (I) is 30, what is the balance of payments?

Correct A. 20

B. 30

C. 40

D. 50

Correct Answer: A

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Question 14

A firm's \cost function is given by C(Q) = 100 + 2Q. If the firm produces 20 units of output, what is the total \cost?

A. 200

Correct B. 220

C. 240

D. 260

Correct Answer: B

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Question 15

A government's budget constraint is given by the equation: G + T = R + \( ΔM/Δt \). If the government's sp\ending (G) is 100, taxes (T) are 80, revenue (R) is 120, and the rate of change of money supply \( ΔM/Δt \) is 20, what is the government's budget deficit?

Correct A. 20

B. 30

C. 40

D. 50

Correct Answer: A

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Question 16

Consider a firm operating in a perfectly competitive market with a production function Q = 2L^\( 1/2 \)H^\( 1/2 \), where L is labor and H is capital. If the firm's current input levels are L = 4 and H = 9, calculate the marginal product of labor (MPL) and the marginal product of capital (MPK).

Correct A. MPL = 1/2L^\( -1/2 \)H^\( 1/2 \) = 0.3536, MPK = L^\( 1/2 \)/\( 2H^\( -1/2 \ \)) = 0.3536

B. MPL = 1/2L^\( -1/2 \)H^\( 1/2 \) = 0.3536, MPK = L^\( 1/2 \)/\( 2H^\( -1/2 \ \)) = 0.1768

C. MPL = 1/2L^\( -1/2 \)H^\( 1/2 \) = 0.1768, MPK = L^\( 1/2 \)/\( 2H^\( -1/2 \ \)) = 0.3536

D. MPL = 1/2L^\( -1/2 \)H^\( 1/2 \) = 0.1768, MPK = L^\( 1/2 \)/\( 2H^\( -1/2 \ \)) = 0.1768

Correct Answer: A

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Question 17

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's budget constraint is 2x + 3y = 12, and the prices of the two goods are p_x = 2 and p_y = 3, calculate the consumer's optimal consumption bundle \( x*, y* \) and the maximum utility U*.

Correct A. x* = 3, y* = 2, U* = 12

B. x* = 2, y* = 3, U* = 12

C. x* = 3, y* = 4, U* = 15

D. x* = 4, y* = 3, U* = 15

Correct Answer: A

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Question 18

A government imposes a tax of ₦10 per unit on a good that is currently priced at ₦20 per unit. If the demand for the good is given by Q = 100 - 2P, where P is the price of the good, calculate the new equilibrium price and quantity after the tax is imposed.

A. P = 25, Q = 50

Correct B. P = 30, Q = 40

C. P = 35, Q = 30

D. P = 40, Q = 20

Correct Answer: B

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Question 19

A firm's production function is given by Q = 2L^\( 1/2 \)H^\( 1/2 \), where L is labor and H is capital. If the firm's current input levels are L = 4 and H = 9, calculate the total product (TP) and the total product curve (TPC).

Correct A. TP = 18, TPC = 2L^\( 1/2 \)H^\( 1/2 \)

B. TP = 12, TPC = 2L^\( 1/2 \)H^\( 1/2 \)

C. TP = 15, TPC = 2L^\( 1/2 \)H^\( 1/2 \)

D. TP = 20, TPC = 2L^\( 1/2 \)H^\( 1/2 \)

Correct Answer: A

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Question 20

A consumer's budget constraint is given by 2x + 3y = 12, where x and y are the quantities of two goods consumed. If the prices of the two goods are p_x = 2 and p_y = 3, calculate the consumer's optimal consumption bundle \( x*, y* \) and the maximum utility U*.

Correct A. x* = 3, y* = 2, U* = 12

B. x* = 2, y* = 3, U* = 12

C. x* = 3, y* = 4, U* = 15

D. x* = 4, y* = 3, U* = 15

Correct Answer: A

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Question 21

A firm's \cost function is given by ( C(x) = 2x^2 + 10x + 5 ). If the firm's revenue function is ( R(x) = 20x - x^2 ), what is the break-even point?

A. \( x = 5 \)

Correct B. \( x = 10 \)

C. \( x = 15 \)

D. \( x = 20 \)

Correct Answer: B

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Question 22

The demand function for a product is given by \( Q = 100 - 2P \). If the supply function is \( Q = 2P - 10 \), what is the equilibrium price?

A. \( P = 5 \)

Correct B. \( P = 10 \)

C. \( P = 15 \)

D. \( P = 20 \)

Correct Answer: B

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Question 23

A farmer produces wheat and sells it at a price of \( P = 10 \) per unit. If the \cost of production is \( C = 5x^2 + 10x + 5 \), where ( x ) is the number of units produced, what is the profit-maximizing quantity?

A. \( x = 5 \)

Correct B. \( x = 10 \)

C. \( x = 15 \)

D. \( x = 20 \)

Correct Answer: B

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Question 24

The government imposes a tax of \( T = 0.05P \) on a firm's output, where ( P ) is the price of the output. If the firm's revenue function is ( R(x) = 20x - x^2 ), what is the new revenue function?

Correct A. ( R(x) = 20x - x^2 - 0.05x^2 )

B. ( R(x) = 20x - x^2 + 0.05x^2 )

C. ( R(x) = 20x - x^2 - 0.05x )

D. ( R(x) = 20x - x^2 + 0.05x )

Correct Answer: A

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Question 25

A firm's \cost function is given by ( C(x) = 2x^2 + 10x + 5 ). If the firm's revenue function is ( R(x) = 20x - x^2 ), what is the break-even point?

A. \( x = 5 \)

Correct B. \( x = 10 \)

C. \( x = 15 \)

D. \( x = 20 \)

Correct Answer: B

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