Practice post utme futo economics 2019 Past Questions

Question 1

A firm's demand function is given by 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%?

Correct A. 5%

B. 10%

C. 15%

D. 20%

Correct Answer: A

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Question 2

A consumer's utility function is given by U(x,y) = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's income is ₦1000 and the prices of the two goods are ₦5 and ₦10 respectively, what is the optimal combination of x and y?

Correct A. x = 100, y = 50

B. x = 150, y = 25

C. x = 200, y = 0

D. x = 0, y = 100

Correct Answer: A

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Question 3

A monopoly firm produces a product with a cons\tant marginal \cost of ₦10 and a demand function Q = 100 - 2P. If the firm's objective is to maximize profit, what is the optimal price and quantity to produce?

A. P = ₦20, Q = 40

Correct B. P = ₦30, Q = 60

C. P = ₦40, Q = 80

D. P = ₦50, Q = 100

Correct Answer: B

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Question 4

A firm's supply function is given by Qs = 2P + 10, where Qs is the quantity supplied and P is the price. If the price elasticity of supply is 0.2, what is the percentage change in quantity supplied when the price increases by 5%?

Correct A. 2.5%

B. 5%

C. 7.5%

D. 10%

Correct Answer: A

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Question 5

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

Correct A. x = 20, y = 20

B. x = 30, y = 10

C. x = 40, y = 0

D. x = 0, y = 33.33

Correct Answer: A

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Question 6

A government seeks to reduce poverty by implementing a cash transfer program. The program provides a monthly stip\end to low-income households. If the program is successful in reducing poverty, which of the following is a likely consequence?

A. An increase in the poverty rate

Correct B. A decrease in the poverty rate

C. No change in the poverty rate

D. An increase in the income inequality

Correct Answer: B

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Question 7

A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. If the firm produces 20 units, what is the total \cost?

A. ₦150

B. ₦250

Correct C. ₦350

D. ₦450

Correct Answer: C

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Question 8

A country's balance of payments is given by the following equation: BOP = X - M. If the country's exports (X) are ₦100 billion and imports (M) are ₦80 billion, what is the balance of payments?

Correct A. ₦20 billion

B. ₦30 billion

C. ₦40 billion

D. ₦50 billion

Correct Answer: A

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Question 9

A firm's demand function is given by Qd = 100 - 2P. If the price of the good is ₦20, how many units will be demanded?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 10

A government wants to reduce the budget deficit by increa\sing taxes. If the government increases the tax rate by 10%, what is the new tax revenue?

A. ₦100 million

Correct B. ₦110 million

C. ₦120 million

D. ₦130 million

Correct Answer: B

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Question 11

The government of Nigeria has introduced a new policy to increase the production of rice in the country. The policy involves providing subsidies to rice farmers and increa\sing the import duty on rice. Assuming that the demand for rice is inelastic and the supply of rice is elastic, what will be the effect of the policy on the price of rice?

A. The price of rice will increase

Correct B. The price of rice will decrease

C. The price of rice will remain the same

D. The effect on the price of rice is uncertain

Correct Answer: B

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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 the good is $10 and the price of labor is $5 per unit, and the price of capital is $10 per unit, what is the optimal level of labor and capital for the firm?

Correct A. L = 100, K = 100

B. L = 50, K = 50

C. L = 200, K = 200

D. L = 150, K = 150

Correct Answer: A

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Question 13

The demand for a good is given by the equation: Qd = 100 - 2P. The supply of the good is given by the equation: Qs = 2P. What is the equilibrium price and quantity of the good?

A. P = $20, Q = 60

Correct B. P = $10, Q = 40

C. P = $5, Q = 30

D. P = $15, Q = 50

Correct Answer: B

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Question 14

A country is experiencing a recession and the government wants to stimulate the economy. The government can either increase government sp\ending or cut taxes. Which policy is more effective in stimulating the economy?

Correct A. Increa\sing government sp\ending

B. Cutting taxes

C. Both policies are equally effective

D. Neither policy is effective

Correct Answer: A

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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 the good is $10 and the price of labor is $5 per unit, and the price of capital is $10 per unit, what is the marginal product of labor?

A. MP_L = 1

Correct B. MP_L = 2

C. MP_L = 3

D. MP_L = 4

Correct Answer: B

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Question 16

The demand for a good is given by the equation: Qd = 100 - 2P. The supply of the good is given by the equation: Qs = 2P. What is the price elasticity of demand?

Correct A. PED = 0.5

B. PED = 1

C. PED = 2

D. PED = 3

Correct Answer: A

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Question 17

A country is experiencing a recession and the government wants to stimulate the economy. The government can either increase government sp\ending or cut taxes. Which policy is more effective in stimulating the economy?

Correct A. Increa\sing government sp\ending

B. Cutting taxes

C. Both policies are equally effective

D. Neither policy is effective

Correct Answer: A

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Question 18

A firm is producing a good with the following production function: Q = 2L^0.5K^0.5. If the price of the good is $10 and the price of labor is $5 per unit, and the price of capital is $10 per unit, what is the optimal level of labor and capital for the firm?

Correct A. L = 100, K = 100

B. L = 50, K = 50

C. L = 200, K = 200

D. L = 150, K = 150

Correct Answer: A

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Question 19

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, and the firm's budget constraint is 200L + 100H = ₦10000, find the optimal values of L and H.

A. L = 10, H = 20

B. L = 20, H = 10

Correct C. L = 15, H = 15

D. L = 25, H = 5

Correct Answer: C

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Question 20

The demand function for a product is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the supply function is given by Q = 2P - 100, find the equilibrium price and quantity.

Correct A. P = ₦50, Q = 50

B. P = ₦75, Q = 25

C. P = ₦100, Q = 0

D. P = ₦200, Q = 100

Correct Answer: A

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Question 21

A firm's \cost function is given by C = 2L + 3H, where C is \cost, 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, and the firm's revenue function is given by R = 4LH, find the optimal values of L and H.

A. L = 10, H = 20

B. L = 20, H = 10

Correct C. L = 15, H = 15

D. L = 25, H = 5

Correct Answer: C

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Question 22

The government imposes a tax of ₦50 per unit on a firm's output. If the firm's supply function is given by Q = 2P - 100, find the new supply function and the equilibrium price and quantity.

Correct A. Q = 2P - 150, P = ₦75, Q = 25

B. Q = 2P - 200, P = ₦100, Q = 0

C. Q = 2P - 250, P = ₦125, Q = -25

D. Q = 2P - 300, P = ₦150, Q = -50

Correct Answer: A

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Question 23

A consumer's utility function is given by U = 2X + 3Y, where U is utility, X is quantity of good X and Y is quantity of good Y. If the prices of good X and good Y are ₦100 and ₦200 respectively, and the consumer's budget constraint is 100X + 200Y = ₦10000, find the optimal values of X and Y.

A. X = 10, Y = 20

B. X = 20, Y = 10

Correct C. X = 15, Y = 15

D. X = 25, Y = 5

Correct Answer: C

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Question 24

The government imposes a tax of ₦50 per unit on a consumer's good. If the consumer's utility function is given by U = 2X + 3Y, where U is utility, X is quantity of good X and Y is quantity of good Y, and the prices of good X and good Y are ₦100 and ₦200 respectively, find the new utility function and the optimal values of X and Y.

A. U = 2X + 3Y - 50, X = 10, Y = 20

B. U = 2X + 3Y - 100, X = 20, Y = 10

Correct C. U = 2X + 3Y - 150, X = 15, Y = 15

D. U = 2X + 3Y - 200, X = 25, Y = 5

Correct Answer: C

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Question 25

The Marshall-Lerner condition states that if the sum of the elasticities of demand for imports and supply of exports is greater than 1, then a devaluation of the currency will lead to an improvement in the balance of payments. What is the implication of this condition for a country with an elasticity of demand for imports of 0.8 and an elasticity of supply of exports of 0.6?

A. The country will experience a deterioration in its balance of payments.

B. The country will experience no change in its balance of payments.

Correct C. The country will experience an improvement in its balance of payments.

D. The country will experience a worsening of its trade deficit.

Correct Answer: C

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