Practice post utme ksu economics 2024 Past Questions

Question 1

Consider a perfectly competitive market with 5 firms, each producing a homogeneous good. If the market demand curve is downward sloping and the firms are price takers, what is the relationship between the market supply curve and the individual firm's supply curve?

A. The market supply curve is steeper than the individual firm's supply curve.

B. The market supply curve is flatter than the individual firm's supply curve.

Correct C. The market supply curve is identical to the individual firm's supply curve.

D. The market supply curve is vertical, while the individual firm's supply curve is downward sloping.

Correct Answer: C

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Question 2

A country's GDP is ₦1,500 billion, and its GNP is ₦1,600 billion. What is the net factor income from abroad?

Correct A. ₦100 billion

B. ₦50 billion

C. ₦0 billion

D. ₦-50 billion

Correct Answer: A

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Question 3

A firm is facing a downward-sloping demand curve and a cons\tant marginal \cost curve. If the firm's price is ₦100 and its marginal \cost is ₦80, what is the profit-maximizing quantity?

A. 10 units

B. 20 units

Correct C. 30 units

D. 40 units

Correct Answer: C

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Question 4

A central bank is considering a monetary policy to reduce inflation. If the current inflation rate is 5% and the central bank wants to reduce it to 2%, what is the required reduction in the money supply?

A. 10%

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

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Question 5

A country is experiencing a trade deficit of ₦500 billion. If the country's GDP is ₦5,000 billion, what is the trade deficit as a percentage of GDP?

A. 10%

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

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Question 6

A firm is considering two production techno\logies: one that requires an initial investment of ₦1.5 million and has a fixed \cost of ₦0.5 million, and another that requires an initial investment of ₦2 million and has a fixed \cost of ₦1 million. If the variable \cost per unit is ₦0.2 million and the selling price per unit is ₦0.5 million, which techno\logy should the firm adopt to maximize its profit?

Correct A. Techno\logy 1

B. Techno\logy 2

C. Both techno\logies are equally profitable

D. Neither techno\logy is profitable

Correct Answer: A

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Question 7

A monopolistically competitive firm faces a demand curve given by Q = 100 - 2P. If the firm's marginal \cost is cons\tant at ₦0.5 million per unit, and the firm produces 50 units, what is the firm's profit?

A. ₦12,500

Correct B. ₦15,000

C. ₦17,500

D. ₦20,000

Correct Answer: B

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Question 8

A government is considering a tax on a particular good. The supply curve of the good is given by Q = 100 + 2P, and the demand curve is given by Q = 100 - 2P. If the government imposes a tax of ₦0.5 million per unit, what is the new equilibrium price?

A. ₦0.5 million

Correct B. ₦1 million

C. ₦1.5 million

D. ₦2 million

Correct Answer: B

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Question 9

A firm is considering two production techno\logies: one that requires an initial investment of ₦1.5 million and has a fixed \cost of ₦0.5 million, and another that requires an initial investment of ₦2 million and has a fixed \cost of ₦1 million. If the variable \cost per unit is ₦0.2 million and the selling price per unit is ₦0.5 million, which techno\logy should the firm adopt to maximize its profit?

Correct A. Techno\logy 1

B. Techno\logy 2

C. Both techno\logies are equally profitable

D. Neither techno\logy is profitable

Correct Answer: A

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Question 10

A monopolistically competitive firm faces a demand curve given by Q = 100 - 2P. If the firm's marginal \cost is cons\tant at ₦0.5 million per unit, and the firm produces 50 units, what is the firm's profit?

A. ₦12,500

Correct B. ₦15,000

C. ₦17,500

D. ₦20,000

Correct Answer: B

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Question 11

A country's GDP is ₦10 trillion, and its GNP is ₦12 trillion. What is the net factor income from abroad?

Correct A. ₦2 trillion

B. ₦1 trillion

C. ₦0.5 trillion

D. ₦0.2 trillion

Correct Answer: A

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Question 12

A government budget has the following components: Revenue ₦5 trillion, Exp\enditure ₦6 trillion, and a deficit of ₦1 trillion. What is the fiscal policy s\tance?

A. Expansionary

Correct B. Contractionary

C. Neutral

D. Stimulative

Correct Answer: B

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Question 13

A country's demand for a product is given by the equation Qd = 100 - 2P, and the supply is given by Qs = 2P - 50. What is the equilibrium price?

A. ₦20

B. ₦30

Correct C. ₦40

D. ₦50

Correct Answer: C

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Question 14

A country's balance of payments account has the following components: Current Account ₦3 trillion, Capital Account ₦2 trillion, and a surplus of ₦1 trillion. What is the overall balance?

Correct A. ₦4 trillion

B. ₦5 trillion

C. ₦6 trillion

D. ₦7 trillion

Correct Answer: A

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Question 15

A government wants to implement a policy to reduce inflation. Which of the following instruments would be most effective?

Correct A. Monetary Policy

B. Fiscal Policy

C. Supply-Side Policy

D. Demand-Side Policy

Correct Answer: A

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Question 16

The government of Nigeria has introduced a new policy to promote agricultural production. The policy includes a subsidy on fertilizers and a guaranteed minimum price for crops. However, the policy also includes a tax on agricultural land. Which of the following is a likely consequence of this policy?

A. An increase in agricultural production

B. A decrease in agricultural production

C. No change in agricultural production

Correct D. An increase in agricultural production in the short run but a decrease in the long run

Correct Answer: D

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Question 17

A firm is producing a good with a cons\tant marginal \cost and a downward-sloping demand curve. The firm's revenue is given by the equation R = 100 - 2Q, where Q is the quantity produced. What is the firm's marginal revenue?

Correct A. -2

B. -1

C. 1

D. 2

Correct Answer: A

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Question 18

The balance of payments (BOP) accounts for a country are divided into three main components: the current account, the capital account, and the financial account. Which of the following is a characteristic of the current account?

Correct A. It includes transactions related to the exchange of goods and services

B. It includes transactions related to the exchange of capital and financial assets

C. It includes transactions related to the exchange of goods and services and capital and financial assets

D. It includes transactions related to the exchange of goods and services, capital and financial assets, and income

Correct Answer: A

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Question 19

A consumer has a budget constraint of 100 and a preference for two goods, A and B. The prices of the goods are 5 and 10 respectively. The consumer's indifference curves are given by the equation U = 2A + B. What is the consumer's optimal consumption bundle?

A. A = 10, B = 20

B. A = 20, B = 10

Correct C. A = 15, B = 15

D. A = 5, B = 5

Correct Answer: C

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Question 20

The government of Nigeria has introduced a new tax on luxury goods. The tax is levied at a rate of 10% on the value of the goods. Which of the following is a likely effect of this tax?

A. An increase in the demand for luxury goods

Correct B. A decrease in the demand for luxury goods

C. No change in the demand for luxury goods

D. An increase in the supply of luxury goods

Correct Answer: B

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Question 21

The government of Nigeria has introduced a new policy to increase agricultural production. The policy includes providing subsidies to farmers, improving irrigation systems, and increa\sing access to credit. However, the policy also includes a provision to increase the price of fertilizers by 20%. If the current price of fertilizer is ₦500 per bag, what will be the new price after the increase?

Correct A. ₦600

B. ₦550

C. ₦450

D. ₦400

Correct Answer: A

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Question 22

A company produces two products, A and B. The production of product A requires 2 hours of labor and 3 units of raw material, while the production of product B requires 3 hours of labor and 2 units of raw material. If the company has 120 hours of labor and 180 units of raw material available, how many units of product A and product B should the company produce to maximize profit?

Correct A. 10 units of A and 15 units of B

B. 15 units of A and 10 units of B

C. 20 units of A and 5 units of B

D. 5 units of A and 20 units of B

Correct Answer: A

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Question 23

The government of Nigeria has introduced a new tax policy to increase revenue. The policy includes a 10% increase in income tax and a 5% increase in value-added tax. If the current income tax rate is 20% and the current value-added tax rate is 15%, what will be the new tax rates?

Correct A. 22% income tax and 16% value-added tax

B. 21% income tax and 15% value-added tax

C. 20% income tax and 14% value-added tax

D. 19% income tax and 13% value-added tax

Correct Answer: A

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Question 24

A company has a budget of ₦1,000,000 to sp\end on adverti\sing. The company has three options for adverti\sing: Option A \costs ₦200,000 and reaches 10,000 people, Option B \costs ₦300,000 and reaches 20,000 people, and Option C \costs ₦400,000 and reaches 30,000 people. Which option should the company choose to maximize the number of people reached?

A. Option A

B. Option B

Correct C. Option C

D. Option D

Correct Answer: C

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Question 25

The government of Nigeria has introduced a new policy to increase the production of rice. The policy includes providing subsidies to farmers, improving irrigation systems, and increa\sing access to credit. However, the policy also includes a provision to increase the price of rice by 15%. If the current price of rice is ₦500 per ki\logram, what will be the new price after the increase?

Correct A. ₦575

B. ₦550

C. ₦525

D. ₦500

Correct Answer: A

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