Practice post utme ims u economics 2025 Past Questions

Question 1

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 ₦10 respectively, find the consumer's optimal bundle of x and y.

Correct A. x = 40, y = 20

B. x = 60, y = 10

C. x = 80, y = 5

D. x = 100, y = 0

Correct Answer: A

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Question 2

The demand function for a product is given by \( Q_d = 100 - 2P \). If the supply function is given by \( Q_s = 2P - 20 \), find the equilibrium price and quantity.

Correct A. P = 30, Q = 40

B. P = 40, Q = 30

C. P = 50, Q = 20

D. P = 60, Q = 10

Correct Answer: A

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Question 3

A firm produces a product u\sing two inputs, labor and capital. The production function is given by \( Q = 2L^{0.5}K^{0.5} \). If the firm's \cost function is given by \( C = 10L + 20K \), find the firm's optimal input bundle of labor and capital.

Correct A. L = 100, K = 50

B. L = 50, K = 100

C. L = 20, K = 200

D. L = 10, K = 400

Correct Answer: A

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Question 4

The government of Nigeria is planning to increase the production of agricultural products to reduce the country's dep\endence on imported food. If the government's budget for agricultural production is ₦500 million and the \cost of producing one unit of agricultural product is ₦100,000, how many units of agricultural product can the government produce?

Correct A. 5000 units

B. 500 units

C. 50 units

D. 5 units

Correct Answer: A

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Question 5

A firm is producing a product u\sing a production function given by \( Q = 3L^{0.5}K^{0.5} \). If the firm's \cost function is given by \( C = 20L + 30K \), find the firm's optimal input bundle of labor and capital.

Correct A. L = 100, K = 50

B. L = 50, K = 100

C. L = 20, K = 200

D. L = 10, K = 400

Correct Answer: A

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Question 6

Elasticity of demand for a product is measured by the percentage change in the quantity demanded in response to a 10% increase in the price of the product. If the elasticity of demand is 0.5, what is the percentage change in the quantity demanded?

Correct A. 5%

B. 10%

C. 20%

D. 50%

Correct Answer: A

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Question 7

A firm's \cost function is given by C(q) = 2q^2 + 10q + 100. If the firm produces 20 units of output, what is the total \cost?

A. ₦1500

B. ₦2000

Correct C. ₦2500

D. ₦3000

Correct Answer: C

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Question 8

A consumer has a utility function given by U(x, y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, what is the optimal bundle of x and y?

A. (10, 50)

Correct B. (20, 20)

C. (30, 10)

D. (40, 5)

Correct Answer: B

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Question 9

A firm is considering two different production processes. Process A has a fixed \cost of ₦1000 and a variable \cost of ₦5 per unit, while Process B has a fixed \cost of ₦500 and a variable \cost of ₦10 per unit. If the firm produces 100 units of output, what is the total \cost of each process?

Correct A. Process A: ₦1500, Process B: ₦1000

B. Process A: ₦2000, Process B: ₦1500

C. Process A: ₦2500, Process B: ₦2000

D. Process A: ₦3000, Process B: ₦2500

Correct Answer: A

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Question 10

A country's GDP is given by the equation GDP = C + I + G + \( X - M \). If the country's consumption is ₦500 billion, investment is ₦200 billion, government sp\ending is ₦300 billion, exports are ₦400 billion, and imports are ₦200 billion, what is the country's GDP?

A. ₦1500 billion

B. ₦1600 billion

C. ₦1700 billion

Correct D. ₦1800 billion

Correct Answer: D

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Question 11

The opportunity \cost of producing one more unit of a good is the value of the next best alternative that could have been produced with the same resources. This concept is closely related to the law of increa\sing opportunity \costs, which states that as the production of a good increases, the opportunity \cost of producing one more unit also increases. Which of the following statements is a correct interpretation of the law of increa\sing opportunity \costs?

A. The law of increa\sing opportunity \costs implies that as the production of a good increases, the opportunity \cost of producing one more unit decreases.

B. The law of increa\sing opportunity \costs implies that as the production of a good increases, the opportunity \cost of producing one more unit remains cons\tant.

Correct C. The law of increa\sing opportunity \costs implies that as the production of a good increases, the opportunity \cost of producing one more unit also increases.

D. The law of increa\sing opportunity \costs implies that as the production of a good increases, the opportunity \cost of producing one more unit decreases and then increases.

Correct Answer: C

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Question 12

A country's balance of payments (BOP) is a statistical statement that summarizes all economic transactions between residents and non-residents over a specific period. The BOP accounts for all international transactions, including trade in goods and services, income, and capital flows. Which of the following is a correct component of a country's BOP?

A. Current account

B. Capital account

C. Financial account

Correct D. All of the above

Correct Answer: D

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Question 13

The concept of scarcity is a fundamental principle in economics, which states that the needs and wants of individuals are unlimited, but the resources available to satisfy those needs and wants are limited. This leads to the necessity of making choices and trade-offs. Which of the following is a correct example of a trade-off?

Correct A. Choo\sing between a higher salary and a shorter working week

B. Choo\sing between a new car and a vacation

C. Choo\sing between a higher education and a career in the arts

D. Choo\sing between a new smartphone and a laptop

Correct Answer: A

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Question 14

A perfectly competitive market is characterized by a large number of firms producing a homogeneous product, and each firm has complete knowledge of market conditions. In such a market, firms are price-takers and produce at the point where marginal revenue equals marginal \cost. Which of the following is a correct characteristic of a perfectly competitive market?

A. Firms produce at the point where marginal revenue equals marginal \cost

B. Firms have complete knowledge of market conditions

C. Firms produce a homogeneous product

Correct D. All of the above

Correct Answer: D

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Question 15

The concept of opportunity \cost is closely related to the concept of scarcity. Opportunity \cost refers to the value of the next best alternative that could have been produced with the same resources. Which of the following is a correct example of an opportunity \cost?

A. The \cost of producing a good

B. The \cost of not producing a good

Correct C. The value of the next best alternative that could have been produced with the same resources

D. The \cost of producing a service

Correct Answer: C

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Question 16

The concept of diminishing marginal utility is a fundamental principle in economics, which states that as the consumption of a good increases, the marginal utility derived from each additional unit decreases. Which of the following is a correct example of diminishing marginal utility?

A. The consumption of a good increases, but the marginal utility derived from each additional unit remains cons\tant

B. The consumption of a good increases, but the marginal utility derived from each additional unit increases

Correct C. The consumption of a good increases, but the marginal utility derived from each additional unit decreases

D. The consumption of a good decreases, but the marginal utility derived from each additional unit increases

Correct Answer: C

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Question 17

The concept of comparative advantage is a fundamental principle in international trade, which states that countries should specialize in producing goods for which they have a lower opportunity \cost. Which of the following is a correct example of comparative advantage?

Correct A. Country A has a lower opportunity \cost of producing good X compared to country B

B. Country A has a higher opportunity \cost of producing good X compared to country B

C. Country A has a lower opportunity \cost of producing good Y compared to country B

D. Country A has a higher opportunity \cost of producing good Y compared to country B

Correct Answer: A

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Question 18

The concept of national income is a fundamental principle in economics, which states that the national income of a country is the total value of all final goods and services produced within the country over a specific period. Which of the following is a correct component of national income?

A. Gross Domestic Product (GDP)

B. Gross National Product (GNP)

C. Net Domestic Product (NDP)

D. All of the above

Correct Answer: VIEW ANSWER

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Question 19

A firm operating under perfect competition faces a market demand curve given by Q = 100 - 2P. The firm's marginal revenue (MR) is given by MR = 50 - 2Q. If the firm's marginal \cost (MC) is cons\tant at ₦20, what is the profit-maximizing quantity of output?

A. ₦40

B. ₦60

Correct C. ₦80

D. ₦100

Correct Answer: C

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Question 20

A monopolist faces a market demand curve given by Q = 100 - 2P. The firm's marginal revenue (MR) is given by MR = 50 - 2Q. If the firm's marginal \cost (MC) is cons\tant at ₦20, what is the profit-maximizing quantity of output?

A. ₦40

B. ₦60

Correct C. ₦80

D. ₦100

Correct Answer: C

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Question 21

A consumer's utility function is given by U = 2x + 3y. The consumer's budget constraint is given by 2x + 3y = ₦100. If the consumer's income is ₦100, what is the optimal bundle 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 22

A firm's \cost function is given by C = 2x^2 + 3x. The firm's revenue function is given by R = 4x^2. If the firm produces x units of output, what is the profit?

A. ₦20

B. ₦30

Correct C. ₦40

D. ₦50

Correct Answer: C

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Question 23

A government imposes a tax of ₦10 on a firm's output. The firm's supply curve is given by Q = 2P. If the firm produces x units of output, what is the new supply curve?

Correct A. Q = 2P + 10

B. Q = 2P - 10

C. Q = 2P + 20

D. Q = 2P - 20

Correct Answer: A

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Question 24

A firm's demand curve is given by Q = 100 - 2P. The firm's marginal revenue (MR) is given by MR = 50 - 2Q. If the firm's marginal \cost (MC) is cons\tant at ₦20, what is the profit-maximizing quantity of output?

A. ₦40

B. ₦60

Correct C. ₦80

D. ₦100

Correct Answer: C

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Question 25

A monopolist faces a market demand curve given by Q = 100 - 2P. The firm's marginal revenue (MR) is given by MR = 50 - 2Q. If the firm's marginal \cost (MC) is cons\tant at ₦20, what is the profit-maximizing quantity of output?

A. ₦40

B. ₦60

Correct C. ₦80

D. ₦100

Correct Answer: C

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