Practice post utme unilorin economics 2018 Past Questions

Question 1

Consider a production function given by \( Q = 2L^2 + 3K^2 \), where ( L ) and ( K ) are inputs. If the price of labor is ( ₦100 ) per unit and the price of capital is ( ₦150 ) per unit, find the optimal input combination that minimizes the \cost of production.

A. \( L = 10, K = 5 \)

Correct B. \( L = 5, K = 10 \)

C. \( L = 15, K = 3 \)

D. \( L = 20, K = 2 \)

Correct Answer: B

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Question 2

A firm's demand function is given by \( Q = 100 - 2P \), where ( Q ) is the quantity demanded and ( P ) is the price. If the firm's marginal revenue function is \( MR = 200 - 4P \), find the price at which the firm will maximize its revenue.

A. \( P = ₦50 \)

Correct B. \( P = ₦75 \)

C. \( P = ₦100 \)

D. \( P = ₦125 \)

Correct Answer: B

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Question 3

A consumer's utility function is given by \( U = 2x + 3y \), where ( x ) and ( y ) are the quantities of two goods. If the prices of the two goods are ( ₦50 ) and ( ₦75 ) respectively, find the optimal bundle of goods that maximizes the consumer's utility.

A. \( x = 10, y = 5 \)

Correct B. \( x = 5, y = 10 \)

C. \( x = 15, y = 3 \)

D. \( x = 20, y = 2 \)

Correct Answer: B

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Question 4

A firm's production function is given by \( Q = 2L^2 + 3K^2 \), where ( L ) and ( K ) are inputs. If the price of labor is ( ₦100 ) per unit and the price of capital is ( ₦150 ) per unit, find the optimal input combination that minimizes the \cost of production.

A. \( L = 10, K = 5 \)

Correct B. \( L = 5, K = 10 \)

C. \( L = 15, K = 3 \)

D. \( L = 20, K = 2 \)

Correct Answer: B

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Question 5

A consumer's budget constraint is given by \( 50x + 75y = 1000 \), where ( x ) and ( y ) are the quantities of two goods. If the consumer's utility function is \( U = 2x + 3y \), find the optimal bundle of goods that maximizes the consumer's utility.

A. \( x = 10, y = 5 \)

Correct B. \( x = 5, y = 10 \)

C. \( x = 15, y = 3 \)

D. \( x = 20, y = 2 \)

Correct Answer: B

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Question 6

A government imposes a tax on a commodity to reduce its consumption. If the demand for the commodity is inelastic, what will be the effect on the government's revenue?

A. The government's revenue will increase.

Correct B. The government's revenue will decrease.

C. The government's revenue will remain the same.

D. The effect on the government's revenue is uncertain.

Correct Answer: B

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Question 7

A firm is producing a good with a production function Q = 2L^0.4K^0.6. If the price of labor increases by 20% and the price of capital remains cons\tant, what will be the effect on the firm's output?

A. The firm's output will increase by 10%.

Correct B. The firm's output will decrease by 10%.

C. The firm's output will remain the same.

D. The effect on the firm's output is uncertain.

Correct Answer: B

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Question 8

A central bank increases the reserve requirement for commercial banks. What will be the effect on the money supply?

A. The money supply will increase.

Correct B. The money supply will decrease.

C. The money supply will remain the same.

D. The effect on the money supply is uncertain.

Correct Answer: B

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Question 9

A government is considering a policy to reduce inflation. If the inflation rate is 10% and the interest rate is 5%, what will be the effect of increa\sing the interest rate to 10%?

Correct A. The inflation rate will decrease.

B. The inflation rate will increase.

C. The inflation rate will remain the same.

D. The effect on the inflation rate is uncertain.

Correct Answer: A

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Question 10

A firm is producing a good with a production function Q = 2L^0.4K^0.6. If the price of labor increases by 20% and the price of capital remains cons\tant, what will be the effect on the firm's output?

A. The firm's output will increase by 10%.

Correct B. The firm's output will decrease by 10%.

C. The firm's output will remain the same.

D. The effect on the firm's output is uncertain.

Correct Answer: B

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Question 11

A monopolistically competitive firm faces a demand curve with elasticity of -2. If the firm increases its price by 10%, what is the percentage change in quantity demanded?

A. 20%

Correct B. 15%

C. 10%

D. 5%

Correct Answer: B

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Question 12

A country's government imposes a tax on a particular good, cau\sing the supply curve to shift to the left. What is the effect on the equilibrium price and quantity of the good?

Correct A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

D. Price decreases, quantity decreases

Correct Answer: A

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Question 13

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?

A. 10%

B. 15%

Correct C. 20%

D. 25%

Correct Answer: C

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Question 14

A country's government imposes a tax on a particular good, cau\sing the supply curve to shift to the left. What is the effect on the equilibrium price and quantity of the good?

Correct A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

D. Price decreases, quantity decreases

Correct Answer: A

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Question 15

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?

A. 10%

B. 15%

Correct C. 20%

D. 25%

Correct Answer: C

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Question 16

A country's government imposes a tax on a particular good, cau\sing the supply curve to shift to the left. What is the effect on the equilibrium price and quantity of the good?

Correct A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

D. Price decreases, quantity decreases

Correct Answer: A

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Question 17

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?

A. 10%

B. 15%

Correct C. 20%

D. 25%

Correct Answer: C

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Question 18

A country's government imposes a tax on a particular good, cau\sing the supply curve to shift to the left. What is the effect on the equilibrium price and quantity of the good?

A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

D. Price decreases, quantity decreases

Correct Answer: VIEW ANSWER

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Question 19

The government of a country decides to implement a policy of price control to reduce inflation. However, the policy leads to a shortage of essential goods. What is the opportunity \cost of this policy?

A. The reduction in the supply of essential goods

B. The increase in the demand for essential goods

Correct C. The decrease in the production of essential goods

D. The increase in the price of essential goods

Correct Answer: C

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Question 20

A country's GDP is calculated as the sum of the value of all final goods and services produced within its borders. However, the country also imports goods worth ₦100 billion. What is the effect on the country's GDP?

A. The country's GDP increases by ₦100 billion

Correct B. The country's GDP decreases by ₦100 billion

C. The country's GDP remains the same

D. The country's GDP increases by ₦200 billion

Correct Answer: B

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Question 21

A firm is considering two investment projects. Project A has a higher expected return but also a higher risk. Project B has a lower expected return but also a lower risk. What is the opportunity \cost of choo\sing Project A over Project B?

Correct A. The expected return of Project B

B. The risk of Project A

C. The expected return of Project A

D. The risk of Project B

Correct Answer: A

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Question 22

A country's balance of payments account shows a trade deficit of ₦500 billion. What is the effect on the country's exchange rate?

A. The exchange rate appreciates

Correct B. The exchange rate depreciates

C. The exchange rate remains the same

D. The exchange rate fluctuates

Correct Answer: B

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Question 23

A firm is considering two production methods. Method A requires an initial investment of ₦100 million but generates a higher profit. Method B requires no initial investment but generates a lower profit. What is the opportunity \cost of choo\sing Method A over Method B?

Correct A. The initial investment of ₦100 million

B. The higher profit of Method A

C. The lower profit of Method B

D. The opportunity \cost of choo\sing Method A

Correct Answer: A

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Question 24

A country's inflation rate is 10% per annum. What is the effect on the purcha\sing power of a consumer who saves ₦100,000 per annum?

A. The purcha\sing power increases by 10%

Correct B. The purcha\sing power decreases by 10%

C. The purcha\sing power remains the same

D. The purcha\sing power increases by 20%

Correct Answer: B

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Question 25

A firm is considering two investment projects. Project A has a higher expected return but also a higher risk. Project B has a lower expected return but also a lower risk. What is the opportunity \cost of choo\sing Project A over Project B?

Correct A. The expected return of Project B

B. The risk of Project A

C. The expected return of Project A

D. The risk of Project B

Correct Answer: A

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