Practice post utme oau economics 2018 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 price of good x is ₦5, find the optimal quantity of good x that the consumer will purchase.

A. 100

B. 120

Correct C. 150

D. 180

Correct Answer: C

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Question 2

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

A. ₦150

B. ₦200

Correct C. ₦250

D. ₦300

Correct Answer: C

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Question 3

A country's balance of payments is given by the equation \( BOP = X - M \), where X is the value of exports and M is the value of imports. If the country's exports are ₦500 billion and its imports are ₦600 billion, what is the balance of payments?

Correct A. ₦-100 billion

B. ₦0 billion

C. ₦100 billion

D. ₦200 billion

Correct Answer: A

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Question 4

A firm's revenue function is given by ( R(p) = 2p^2 + 10p + 5 ). If the firm sells its product at a price of ₦10, what is the total revenue?

A. ₦50

B. ₦60

Correct C. ₦70

D. ₦80

Correct Answer: C

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Question 5

A consumer's demand function for a good is given by \( Q = 2P - 10 \). If the price of the good is ₦5, how many units of the good will the consumer purchase?

A. 0

B. 5

Correct C. 10

D. 15

Correct Answer: C

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Question 6

Consider a firm operating in a perfectly competitive market with a production function Q = 2L^0.5K^0.5. If the firm's current output is 16 units and the price per unit is ₦20, calculate the total revenue.

A. ₦320

B. ₦3200

Correct C. ₦6400

D. ₦12800

Correct Answer: C

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Question 7

A country's GDP at market price is ₦1,500,000,000. If the net indirect tax is ₦200,000,000, calculate the GDP at factor \cost.

Correct A. ₦1,300,000,000

B. ₦1,400,000,000

C. ₦1,500,000,000

D. ₦1,600,000,000

Correct Answer: A

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Question 8

A firm's demand function is given by Q = 100 - 2P. If the price elasticity of demand is 0.5, calculate the change in quantity demanded when the price increases by ₦10.

Correct A. -20 units

B. -10 units

C. 10 units

D. 20 units

Correct Answer: A

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Question 9

A firm's production function is Q = 2L^0.5K^0.5. If the firm's current output is 16 units and the price per unit is ₦20, calculate the total \cost.

A. ₦320

B. ₦3200

Correct C. ₦6400

D. ₦12800

Correct Answer: C

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Question 10

A country's GNP at market price is ₦1,800,000,000. If the net indirect tax is ₦300,000,000, calculate the GNP at factor \cost.

Correct A. ₦1,500,000,000

B. ₦1,600,000,000

C. ₦1,700,000,000

D. ₦1,800,000,000

Correct Answer: A

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Question 11

Consider a perfectly competitive market with n firms, each producing a homogeneous product. If the market demand curve is downward-sloping and the firms are price-takers, what is the relationship between the marginal revenue (MR) and the price (P) of the product?

A. MR = P

Correct B. MR > P

C. MR < P

D. MR = 0

Correct Answer: B

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Question 12

A consumer has a budget of ₦1000 and faces the following indifference curves: IC1 and IC2. If the price of good X is ₦200 and the price of good Y is ₦300, what is the consumer's optimal bundle?

Correct A. (2X, 1Y)

B. (1X, 2Y)

C. (3X, 0Y)

D. (0X, 3Y)

Correct Answer: A

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Question 13

A firm is producing a product with a total revenue (TR) of ₦1000 and a total \cost (TC) of ₦800. If the firm's profit-maximizing output is 100 units, what is the firm's average \cost (AC) per unit?

A. ₦8

Correct B. ₦10

C. ₦12

D. ₦15

Correct Answer: B

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Question 14

A country's GDP is ₦10 trillion, and its GNP is ₦11 trillion. If the country has a net factor income from abroad of ₦1 trillion, what is the country's net national product (NNP)?

A. ₦10 trillion

B. ₦11 trillion

Correct C. ₦12 trillion

D. ₦13 trillion

Correct Answer: C

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Question 15

A firm is producing a product with a production function Q = 2L^0.5K^0.5. If the firm's labor (L) is 100 units and its capital (K) is 400 units, what is the firm's marginal product of labor (MPL)?

A. 0.5

Correct B. 1

C. 2

D. 4

Correct Answer: B

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Question 16

The Central Bank of Nigeria (CBN) has implemented a monetary policy aimed at reducing inflation. The policy involves increa\sing the reserve requirement for commercial banks. What is the likely effect of this policy on the money supply?

A. Increase in money supply

Correct B. Decrease in money supply

C. No change in money supply

D. Increase in interest rates

Correct Answer: B

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Question 17

A firm is considering the introduction of a new product. The product's demand is expected to be highly elastic. What is the likely effect of a price increase on the firm's revenue?

A. Increase in revenue

Correct B. Decrease in revenue

C. No change in revenue

D. Increase in production \costs

Correct Answer: B

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Question 18

The Nigerian government has implemented a policy aimed at promoting industrialization. The policy involves providing subsidies to firms in the manufacturing sector. What is the likely effect of this policy on the firms' production \costs?

A. Increase in production \costs

Correct B. Decrease in production \costs

C. No change in production \costs

D. Increase in employment

Correct Answer: B

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Question 19

A consumer is faced with a choice between two products: Product A and Product B. Product A has a price of ₦100 and Product B has a price of ₦120. The consumer's income is ₦150. What is the likely effect of a price increase on Product A on the consumer's utility?

A. Increase in utility

Correct B. Decrease in utility

C. No change in utility

D. Increase in income

Correct Answer: B

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Question 20

The Nigerian government has implemented a policy aimed at reducing poverty. The policy involves increa\sing the minimum wage. What is the likely effect of this policy on the poverty rate?

A. Increase in poverty rate

Correct B. Decrease in poverty rate

C. No change in poverty rate

D. Increase in unemployment

Correct Answer: B

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Question 21

The government of Nigeria has introduced a new policy to increase the production of rice in the country. The policy includes providing subsidies to farmers, improving irrigation systems, and increa\sing the availability of fertilizers. However, the policy has been criticized for being too expensive and not addres\sing the root causes of the problem. Analyze the policy u\sing the concepts of opportunity \cost and Pareto optimality.

A. The policy is a good example of Pareto optimality because it benefits the majority of the population.

B. The policy is a bad example of Pareto optimality because it benefits only a few farmers.

Correct C. The policy is a good example of opportunity \cost because it involves giving up other impor\tant activities to produce more rice.

D. The policy is a bad example of opportunity \cost because it does not involve giving up other impor\tant activities.

Correct Answer: C

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Question 22

A firm is producing a good with a cons\tant elasticity of demand of 2. The price of the good is currently ₦100. If the firm wants to increase its revenue by 10%, what should be the new price of the good?

A. ₦110

Correct B. ₦120

C. ₦130

D. ₦140

Correct Answer: B

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Question 23

The government of Nigeria has introduced a new tax on luxury goods. The tax is 10% of the price of the good. If the price of a luxury good is ₦500, what is the amount of tax paid?

A. ₦50

Correct B. ₦100

C. ₦150

D. ₦200

Correct Answer: B

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Question 24

A firm is producing two goods, X and Y. The production function for good X is given by QX = 2L + 3K, where L is labor and K is capital. The production function for good Y is given by QY = 4L + 2K. If the firm wants to produce 10 units of good X and 8 units of good Y, what is the opportunity \cost of producing one more unit of good X?

A. 1 unit of good Y

B. 2 units of good Y

Correct C. 3 units of good Y

D. 4 units of good Y

Correct Answer: C

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Question 25

The government of Nigeria has introduced a new policy to increase the production of rice in the country. The policy includes providing subsidies to farmers, improving irrigation systems, and increa\sing the availability of fertilizers. However, the policy has been criticized for being too expensive and not addres\sing the root causes of the problem. Analyze the policy u\sing the concepts of opportunity \cost and Pareto optimality.

A. The policy is a good example of Pareto optimality because it benefits the majority of the population.

B. The policy is a bad example of Pareto optimality because it benefits only a few farmers.

Correct C. The policy is a good example of opportunity \cost because it involves giving up other impor\tant activities to produce more rice.

D. The policy is a bad example of opportunity \cost because it does not involve giving up other impor\tant activities.

Correct Answer: C

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