Practice post utme eksu economics 2023 Past Questions

Question 1

The Marshall-Lerner condition states that a country's balance of payments will improve if the sum of the percentage changes in its export and import prices exceeds the percentage change in its exchange rate. Which of the following scenarios would lead to an improvement in the balance of payments?

Correct A. An increase in the price of a country's exports and a decrease in the price of its imports

B. A decrease in the price of a country's exports and an increase in the price of its imports

C. An increase in the price of a country's exports and an increase in the price of its imports

D. A decrease in the price of a country's exports and a decrease in the price of its imports

Correct Answer: A

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Question 2

A central bank uses open market operations to increase the money supply. Which of the following would be a consequence of this action?

Correct A. A decrease in the interest rate

B. An increase in the interest rate

C. A decrease in the money supply

D. No change in the interest rate

Correct Answer: A

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Question 3

A government imposes a tax on a particular good to reduce its consumption. Which of the following would be a consequence of this action?

Correct A. An increase in the price of the good

B. A decrease in the price of the good

C. No change in the price of the good

D. A decrease in the quantity demanded of the good

Correct Answer: A

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Question 4

A country's agricultural sector is characterized by a high degree of inefficiency and low productivity. Which of the following policies would be most effective in addres\sing this issue?

A. Providing subsidies to farmers

B. Implementing price controls

Correct C. Investing in agricultural research and development

D. Impo\sing tariffs on imported agricultural products

Correct Answer: C

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Question 5

A firm is considering investing in a new project that has a high expected return but also a high level of risk. Which of the following would be a consequence of this investment?

A. An increase in the firm's expected return

B. A decrease in the firm's expected return

Correct C. An increase in the firm's risk

D. A decrease in the firm's risk

Correct Answer: C

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Question 6

A country's GDP is $100 billion, and its population is 10 million. If the average annual income is $10,000, what is the GDP per capita?

A. $1,000

Correct B. $10,000

C. $100,000

D. $1,000,000

Correct Answer: B

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Question 7

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm wants to produce 16 units of output, and the price of labor is $10 per unit, and the price of capital is $20 per unit, what is the minimum \cost of production?

A. $400

B. $800

Correct C. $1,200

D. $2,000

Correct Answer: C

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Question 8

A country's balance of payments is given by the following table:\n\n| | Exports | Imports | Balance |\n| --- | --- | --- | --- |\n| 2020 | $100 | $150 | -$50 |\n| 2021 | $120 | $180 | -$60 |\n| 2022 | $140 | $210 | -$70 |\n\nWhat is the tr\end of the balance of payments over the three years?

Correct A. Increa\sing deficit

B. Decrea\sing deficit

C. Increa\sing surplus

D. Decrea\sing surplus

Correct Answer: A

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Question 9

A firm's supply function is given by Q = 2P + 10. If the price of the good is $5, what is the quantity supplied?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 10

A country's national income is $100 billion, and its government exp\enditure is $20 billion. If the marginal propensity to consume is 0.8, what is the multiplier?

A. 2.5

Correct B. 5

C. 10

D. 20

Correct Answer: B

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Question 11

A perfectly competitive market has a downward-sloping demand curve. If the market price falls from ₦100 to ₦80, and the quantity demanded increases from 100 units to 120 units, what is the price elasticity of demand?

A. 0.5

Correct B. 1

C. 2

D. 3

Correct Answer: B

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Question 12

A monopolist faces a market demand curve given by Q = 100 - 2P. The monopolist's marginal \cost curve is MC = 10 + 2Q. What is the profit-maximizing price and quantity?

Correct A. P = 40, Q = 30

B. P = 50, Q = 25

C. P = 60, Q = 20

D. P = 70, Q = 15

Correct Answer: A

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Question 13

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

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

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Question 14

A country's GDP at market price is ₦100 billion. If the GDP at factor \cost is ₦120 billion, what is the indirect tax rate?

A. 10%

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

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Question 15

A central bank uses an open market operation to increase the money supply. What is the effect on the interest rate?

A. Increase

Correct B. Decrease

C. No change

D. Dep\end on other factors

Correct Answer: B

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Question 16

Consider a consumer with a utility function U(x,y) = 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, respectively, what is the consumer's optimal bundle of goods?

A. (x,y) = (2,2)

Correct B. (x,y) = (3,1)

C. (x,y) = (4,0)

D. (x,y) = (0,4)

Correct Answer: B

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Question 17

A firm produces two goods, A and B, u\sing two inputs, labor (L) and capital (K). The production functions for the two goods are given by A = 2L + 3K and B = 4L + 2K. If the firm has 10 units of labor and 8 units of capital, and the prices of the two goods are p_A = 5 and p_B = 3, respectively, what is the firm's optimal production plan?

A. A = 5, B = 0

B. A = 3, B = 4

Correct C. A = 2, B = 6

D. A = 0, B = 8

Correct Answer: C

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Question 18

A country has a trade deficit of $100 million and a GDP of $500 billion. If the country's exchange rate is 1 USD = 100 Naira, what is the country's inflation rate?

A. 2%

B. 5%

Correct C. 10%

D. 15%

Correct Answer: C

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Question 19

A firm has a production function Q = 2L^0.5K^0.5, where Q is the quantity produced, L is the labor input, and K is the capital input. If the firm has 4 units of labor and 9 units of capital, what is the firm's optimal production level?

A. 4

B. 6

Correct C. 8

D. 10

Correct Answer: C

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Question 20

A consumer has a utility function U(x,y) = x^2 + 2y^2, 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, respectively, what is the consumer's optimal bundle of goods?

A. (x,y) = (2,2)

Correct B. (x,y) = (3,1)

C. (x,y) = (4,0)

D. (x,y) = (0,4)

Correct Answer: B

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Question 21

The concept of returns to scale in production theory is closely related to the law of diminishing marginal returns. Explain how the law of diminishing marginal returns leads to the concept of returns to scale.

Correct A. The law of diminishing marginal returns leads to the concept of returns to scale because as the quantity of a variable input increases, the marginal product of that input decreases.

B. The law of diminishing marginal returns leads to the concept of returns to scale because as the quantity of a variable input increases, the marginal product of that input increases.

C. The law of diminishing marginal returns leads to the concept of returns to scale because as the quantity of a variable input increases, the marginal product of that input remains cons\tant.

D. The law of diminishing marginal returns leads to the concept of returns to scale because as the quantity of a variable input increases, the marginal product of that input decreases and then increases.

Correct Answer: A

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Question 22

A firm is producing a good u\sing two inputs, labor and capital. The production function is given by Q = 10L^0.5K^0.5. If the price of labor is $10 per unit and the price of capital is $20 per unit, what is the \cost-minimizing combination of labor and capital?

Correct A. L = 4, K = 2

B. L = 2, K = 4

C. L = 1, K = 5

D. L = 5, K = 1

Correct Answer: A

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Question 23

A consumer has the following utility function: U = 2x^0.5y^0.5. If the prices of x and y are $5 and $10 respectively, and the consumer has an income of $100, what is the consumer's optimal bundle of x and y?

Correct A. x = 4, y = 2

B. x = 2, y = 4

C. x = 1, y = 5

D. x = 5, y = 1

Correct Answer: A

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Question 24

A country is experiencing a trade deficit of $100 million. The country's imports are valued at $200 million and its exports are valued at $100 million. What is the country's balance of payments deficit?

A. $50 million

Correct B. $100 million

C. $150 million

D. $200 million

Correct Answer: B

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Question 25

A firm is producing a good u\sing two inputs, labor and capital. The production function is given by Q = 10L^0.5K^0.5. If the price of labor is $10 per unit and the price of capital is $20 per unit, what is the firm's \cost function?

Correct A. C = 20L + 40K

B. C = 10L + 20K

C. C = 5L + 10K

D. C = 2L + 4K

Correct Answer: A

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