Practice post utme rhema university economics 2018 Past Questions

Question 1

Consider a production function with cons\tant returns to scale. If the input of labor increases by 20% and the input of capital remains cons\tant, what will be the percentage change in output?

A. 10%

B. 20%

Correct C. 0%

D. 30%

Correct Answer: C

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Question 2

A country's inflation rate is 5% per annum. If the current price level is 100, what will be the price level after 2 years?

A. 105

Correct B. 110

C. 115

D. 120

Correct Answer: B

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Question 3

A firm's production function is given by Q = 2L^0.5K^0.5. If the input of labor increases by 50% and the input of capital remains cons\tant, what will be the percentage change in output?

A. 25%

Correct B. 50%

C. 75%

D. 100%

Correct Answer: B

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Question 4

A government budget is given by the equation: G = 100 + 0.2Y. If the current GDP is 1000, what will be the government exp\enditure?

A. 120

Correct B. 140

C. 160

D. 180

Correct Answer: B

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Question 5

A firm's demand function is given by Q = 100 - 2P. If the price is 20, what will be the quantity demanded?

A. 40

Correct B. 60

C. 80

D. 100

Correct Answer: B

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Question 6

A perfectly competitive market has a downward-sloping demand curve and a perfectly elastic supply curve. What is the implication of this for the firm's profit-maximizing output?

A. The firm will produce at the minimum point of the average total \cost curve.

Correct B. The firm will produce at the point where marginal revenue equals marginal \cost.

C. The firm will produce at the point where the demand curve intersects the average total \cost curve.

D. The firm will produce at the point where the supply curve intersects the average total \cost curve.

Correct Answer: B

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Question 7

The government of Nigeria has introduced a policy to increase agricultural production. Which of the following is a likely consequence of this policy?

A. An increase in the price of agricultural products.

B. A decrease in the price of agricultural products.

Correct C. An increase in the supply of agricultural products.

D. A decrease in the supply of agricultural products.

Correct Answer: C

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Question 8

A firm is faced with a choice between two production processes. Process A has a higher fixed \cost but a lower variable \cost, while process B has a lower fixed \cost but a higher variable \cost. Which process should the firm choose if it expects to produce 1000 units?

Correct A. Process A

B. Process B

C. Either process A or B

D. Neither process A nor B

Correct Answer: A

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Question 9

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

A. P = 50, Q = 25

Correct B. P = 75, Q = 12.5

C. P = 90, Q = 5

D. P = 100, Q = 0

Correct Answer: B

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Question 10

A firm is considering two investment projects. Project A has a higher initial \cost but a higher expected return, while project B has a lower initial \cost but a lower expected return. Which project should the firm choose if it expects to invest for 5 years?

Correct A. Project A

B. Project B

C. Either project A or B

D. Neither project A nor B

Correct Answer: A

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Question 11

A perfectly competitive market is characterized by which of the following?

Correct A. Many buyers and sellers

B. A \single buyer or seller

C. A \single product

D. A \single market

Correct Answer: A

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Question 12

A consumer's indifference curve is a graphical representation of the trade-offs between two goods. Which of the following is a characteristic of an indifference curve?

A. It is a straight line

Correct B. It is a curved line

C. It is a horizontal line

D. It is a vertical line

Correct Answer: B

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Question 13

A government's budget can be classified into which of the following categories?

Correct A. Recurrent and Capital

B. Current and Capital

C. Recurrent and Current

D. Capital and Current

Correct Answer: A

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Question 14

A country's economic growth can be measured u\sing which of the following indicators?

Correct A. Gross Domestic Product (GDP)

B. Gross National Product (GNP)

C. Net Domestic Product (NDP)

D. Net National Product (NNP)

Correct Answer: A

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Question 15

A firm's production function is a graphical representation of the relationship between the inputs and outputs of a production process. Which of the following is a characteristic of a production function?

A. It is a straight line

Correct B. It is a curved line

C. It is a horizontal line

D. It is a vertical line

Correct Answer: B

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Question 16

A government imposes a tax on a commodity to reduce its consumption. If the tax revenue is used to fund a public good that benefits all consumers, what type of tax is it?

Correct A. Pigovian tax

B. Laffer curve tax

C. Sin tax

D. Polluter pays principle

Correct Answer: A

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Question 17

A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \). If the firm's output increases by 20% and labor increases by 10%, what is the percentage increase in capital?

A. 5%

B. 10%

Correct C. 15%

D. 20%

Correct Answer: C

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Question 18

A monopolist faces a demand curve given by P = 100 - 2Q. If the firm's marginal \cost is cons\tant at ₦10, what is the profit-maximizing quantity?

A. 20 units

B. 30 units

Correct C. 40 units

D. 50 units

Correct Answer: C

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Question 19

A government wants to reduce poverty in a rural area. Which of the following policies is most likely to achieve this goal?

A. Increa\sing the minimum wage

B. Providing subsidies for fertilizers

Correct C. Implementing a cash transfer program

D. Increa\sing the price of agricultural products

Correct Answer: C

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Question 20

A firm's production function is given by Q = 3L^\( 2/3 \)K^\( 1/3 \). If the firm's output increases by 30% and labor increases by 15%, what is the percentage increase in capital?

A. 5%

B. 10%

Correct C. 15%

D. 20%

Correct Answer: C

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Question 21

The concept of scarcity in economics implies that the production of one good is limited by the availability of resources, which can be used to produce other goods. This is an example of a trade-off between:

Correct A. Present consumption and future consumption

B. Present consumption and investment

C. Investment and future consumption

D. Present consumption and leisure

Correct Answer: A

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Question 22

A firm's production function is given by Q = 2L^0.5K^0.5, where Q is output, L is labor, and K is capital. If the firm wants to increase output by 20% while keeping labor cons\tant, what percentage increase in capital is required?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 23

The demand for a product is given by the equation Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the price is increased by 20%, what is the new quantity demanded?

A. 60

B. 80

C. 100

Correct D. 120

Correct Answer: D

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Question 24

A central bank increases the money supply by 10%. What is the likely effect on the general price level?

Correct A. Increase

B. Decrease

C. No change

D. Uncertain

Correct Answer: A

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Question 25

A firm's production function is given by Q = 2L^0.5K^0.5, where Q is output, L is labor, and K is capital. If the firm wants to increase output by 20% while keeping labor cons\tant, what percentage increase in capital is required?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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