Practice post utme unilag economics 2017 Past Questions

Question 1

The Marshall-Lerner condition states that a country will benefit from a devaluation of its currency if the sum of the price elasticities of demand for imports and exports is greater than 1. What is the implication of this condition for a country with a price elasticity of demand for imports of 0.5 and a price elasticity of demand for exports of 1.2?

A. The country will benefit from the devaluation.

Correct B. The country will not benefit from the devaluation.

C. The country's trade balance will improve.

D. The country's trade balance will worsen.

Correct Answer: B

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Question 2

A firm's \cost function is given by C(q) = 10q^2 + 20q + 100. If the firm's revenue function is R(q) = 20q^2 - 10q + 100, what is the profit-maximizing level of output?

Correct A. q = 5

B. q = 10

C. q = 15

D. q = 20

Correct Answer: A

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Question 3

A country's GDP is given by the equation GDP = C + I + G + \( X - M \). If the country's consumption is 100, investment is 50, government sp\ending is 200, exports are 150, and imports are 100, what is the country's GDP?

Correct A. ₦600

B. ₦700

C. ₦800

D. ₦900

Correct Answer: A

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Question 4

A firm's demand function is given by Q = 100 - 2P. If the firm's supply function is Q = 2P - 10, what is the equilibrium price and quantity?

Correct A. P = 20, Q = 30

B. P = 30, Q = 20

C. P = 40, Q = 10

D. P = 50, Q = 5

Correct Answer: A

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Question 5

A country's money supply is given by the equation M = k * Y, where k is the money multiplier and Y is the country's GDP. If the country's money multiplier is 0.5 and its GDP is 1000, what is the country's money supply?

Correct A. ₦500

B. ₦600

C. ₦700

D. ₦800

Correct Answer: A

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Question 6

Consider a firm operating in a perfectly competitive market with a given production function Q = 2L^0.5K^0.5. If the firm's current input prices are w = 10 and r = 20, calculate the firm's optimal input bundle (L, K) u\sing the Hotelling's Lemma. Assume that the firm's output price is p = 50.

Correct A. (L, K) = (4, 16)

B. (L, K) = (16, 4)

C. (L, K) = (8, 8)

D. (L, K) = (2, 32)

Correct Answer: A

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Question 7

A government is considering a tax on a particular good to raise revenue. The demand function for the good is given by Q = 100 - 2P, and the supply function is given by Q = 2P - 10. If the government wants to raise revenue of ₦10,000,000, what is the optimal tax rate?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 8

A firm is considering investing in a new project with the following cash flows: Year 0: -₦100,000, Year 1: ₦50,000, Year 2: ₦75,000, Year 3: ₦100,000. If the firm's \cost of capital is 10%, what is the present value of the project?

Correct A. ₦150,000

B. ₦200,000

C. ₦250,000

D. ₦300,000

Correct Answer: A

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Question 9

A country's balance of payments is given by the following accounts: Current Account: ₦100,000,000; Capital Account: ₦50,000,000; Financial Account: ₦20,000,000. What is the country's net foreign exchange earnings?

Correct A. ₦70,000,000

B. ₦80,000,000

C. ₦90,000,000

D. ₦100,000,000

Correct Answer: A

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Question 10

A firm's \cost function is given by C(L, K) = 2L + 3K. If the firm's output is Q = 10, and the input prices are w = 5 and r = 10, what is the firm's minimum \cost?

A. ₦50

Correct B. ₦60

C. ₦70

D. ₦80

Correct Answer: B

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Question 11

Consider a firm operating in a perfectly competitive market with a production function Q = 2L^0.5K^0.5. If the firm's current input prices are w = ₦100 and r = ₦150, and it currently employs 4 units of labor and 9 units of capital, calculate the firm's current total \cost.

Correct A. ₦1,200

B. ₦1,500

C. ₦1,800

D. ₦2,100

Correct Answer: A

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Question 12

A country's balance of payments can be affected by the following factors: (i) a decrease in the price of its exports, (ii) an increase in the price of its imports, (iii) a decrease in the price of its imports, and (iv) an increase in the price of its exports. Which of the following would lead to an improvement in the balance of payments?

A. (i) and (ii)

Correct B. (i) and (iii)

C. (ii) and (iv)

D. (iii) and (iv)

Correct Answer: B

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Question 13

Consider a firm that produces two goods, X and Y, u\sing two inputs, labor (L) and capital (K). The production functions are given by Qx = 2L^0.5K^0.5 and Qy = 3L^0.5K^0.5. If the firm's current input prices are w = ₦100 and r = ₦150, and it currently employs 4 units of labor and 9 units of capital, calculate the firm's current total \cost.

Correct A. ₦1,200

B. ₦1,500

C. ₦1,800

D. ₦2,100

Correct Answer: A

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Question 14

A country's economic growth can be affected by the following factors: (i) an increase in the population, (ii) an increase in the capital stock, (iii) an increase in the labor force, and (iv) a decrease in the capital stock. Which of the following would lead to an improvement in the economic growth?

A. (i) and (ii)

Correct B. (i) and (iii)

C. (ii) and (iv)

D. (iii) and (iv)

Correct Answer: B

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Question 15

Consider a firm that produces a \single good u\sing two inputs, labor (L) and capital (K). The production function is given by Q = 2L^0.5K^0.5. If the firm's current input prices are w = ₦100 and r = ₦150, and it currently employs 4 units of labor and 9 units of capital, calculate the firm's current total \cost.

Correct A. ₦1,200

B. ₦1,500

C. ₦1,800

D. ₦2,100

Correct Answer: A

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Question 16

The government of Nigeria has implemented policies to promote agricultural development in the country. Which of the following is a likely outcome of these policies?

Correct A. Increased food production and reduced poverty

B. Improved infrastructure and increased foreign investment

C. Increased government revenue and reduced unemployment

D. Increased inequality and reduced economic growth

Correct Answer: A

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Question 17

A firm produces two goods, A and B, u\sing two inputs, labor and capital. The production function for good A is given by Q_A = 2L^0.5K^0.5, where Q_A is the quantity of good A produced, L is the amount of labor used, and K is the amount of capital used. The production function for good B is given by Q_B = 3L^0.2K^0.8. If the firm has 100 units of labor and 200 units of capital, how much of good A should it produce?

A. 50 units

B. 75 units

Correct C. 100 units

D. 125 units

Correct Answer: C

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Question 18

The government of Nigeria has implemented a policy to reduce inflation by increa\sing interest rates. Which of the following is a likely effect of this policy?

A. Increased borrowing and reduced consumption

B. Increased investment and reduced unemployment

Correct C. Reduced inflation and increased economic growth

D. Increased inequality and reduced economic growth

Correct Answer: C

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Question 19

A country's GDP is given by the equation Y = C + I + G + \( X - M \), where Y is the GDP, C is the consumption, I is the investment, G is the government sp\ending, X is the exports, and M is the imports. If the country's GDP is 100 billion naira, consumption is 30 billion naira, investment is 20 billion naira, government sp\ending is 15 billion naira, exports are 25 billion naira, and imports are 10 billion naira, what is the value of the country's net exports?

A. 5 billion naira

Correct B. 10 billion naira

C. 15 billion naira

D. 20 billion naira

Correct Answer: B

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Question 20

A firm is considering two different production processes for producing a good. The first process requires 2 units of labor and 1 unit of capital to produce 10 units of the good, while the second process requires 1 unit of labor and 2 units of capital to produce 10 units of the good. If the firm has 100 units of labor and 200 units of capital, which production process should it use?

A. The first process

Correct B. The second process

C. Both processes are equally efficient

D. Neither process is efficient

Correct Answer: B

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Question 21

The government of a country decides to implement a policy of price control to combat inflation. However, the policy leads to a shortage of essential goods. Which of the following is a likely consequence of this policy?

A. Increased demand for essential goods

Correct B. Reduced production of essential goods

C. Increased supply of essential goods

D. Decreased inflation rate

Correct Answer: B

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Question 22

A firm is considering two different production processes. Process A requires an initial investment of ₦100,000 and has a variable \cost of ₦50 per unit produced. Process B requires an initial investment of ₦150,000 and has a variable \cost of ₦30 per unit produced. If the firm produces 10,000 units, which process will result in lower total \cost?

Correct A. Process A

B. Process B

C. Both processes have the same total \cost

D. Neither process has a lower total \cost

Correct Answer: A

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Question 23

A country's GDP is calculated as the sum of all final goods and services produced within its borders. If the country imports goods worth ₦100,000 and exports goods worth ₦150,000, what is the country's net export?

Correct A. ₦50,000

B. ₦100,000

C. ₦150,000

D. ₦200,000

Correct Answer: A

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Question 24

A firm's revenue function is given by R(x) = 2x^2 + 10x + 5, where x is the number of units produced. If the firm produces 5 units, what is its revenue?

Correct A. ₦75

B. ₦85

C. ₦95

D. ₦105

Correct Answer: A

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Question 25

A country's inflation rate is 5% per annum. If the price of a good is ₦100 today, what will be its price in 2 years?

A. ₦110

B. ₦115

C. ₦120

Correct D. ₦125

Correct Answer: D

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