UTME CBT FREE Practice Test – Economics (Questions with Answers and Explanations)

Which of the following is a function of a retailer?

A. Banking services    B. Hoarding services    C. Storage services    D. Sales services

Study the table below:

What is the marginal product of the second worker?

A. 10    B. 20    C. 15    D.    18

Which of these would NOT increase the population of a country?

A. Increase in death rate     B. Decrease in birth rate     C. Emigration     D. Migration

The short-run average variable cost of a firm will rise owing to ______

A. the expansion of factory space
B. the building of new warehouses
C. an increase in the cost of labour
D. an increase in the salaries of directors.

From the graph above, the consumer will attain equilibrium at point _____

A. J   B. K   C. L   D. M

A major feature of underdeveloped economy is _____

A. excess capacity utilization
B. low rate of population growth
C. low level of standard of living
D. low level of unemployment.

Given the demand function Qd = 20 -P What is Qd when P is $12?

A. 6 units    B. 8 units    C. 10 units    D. 12 units

Which is an example of an invisible item in the Trade Account of Ghana?

A. Export of cocoa from Ghana
B. Import of oil from Nigeria
C. A gift of a Peugeot 504 by a firm in Nigeria to another firm in Ghana
D. Payment for shipping and insurance by a Ghanaian company to companies outside Ghana.

Given the supply function: P = ¼(Qs + 10) , when P = N 10, what is Qs?

A. 20   B. 15   C. 50   D. 30

If the demand for a product with a perfectly elastic supply increases, there will be ______

A. an increase in price and quantity offered
B. an increase in quantity offered but price will remain the same
C. a reduction in price and quantity offered
D. an increase in price but a reduction in quantity offered for sale

An advantage of large-scale farming over peasant farming is in the area of ______

A. providing research and massive employment of labour
B. redistributing national income to various regions of the country
C. encouraging the use of traditional implements
D. encouraging urban-rural migration.

The demand curve for a commodity is downward sloping because the consumer will pay ______

A. less as the marginal utility falls.
B. more as the marginal, utility falls.
C. less as the total utility falls
D. more as the average utility falls.

A decrease in the demand for a product X resulted in a decrease in the demand for another product Y. The demand for X and Y is ______

A. derived.    B. composite.    C. joint.    D. competitive.

An important factor hindering the rapid development of the industrial sector in Nigeria is _____

A. rural-urban migration
B. excessive demand for finished products
C. inadequate infrastructural facilities
D. the dominance of the oil sector

The following are reasons for the failure of agricultural policies in West Africa except ______

A. vague policy statements.
B. negation of policies.
C. creation of agro-service stations.
D. provision of obsolete implements.

Securities are described as listed when they are ______

A. mobilized as long-term debt instruments
B. traded on a recognised stock market
C. bought and sold purely for development purposes
D. mobilized as short-term debt instruments

In a planned economy, the emphasis is on _______

A. public ownership and control
B. price and competition
C. individual choices and decisions
D. private ownership and control

Disposable income is the same thing as ________

A. personal income minus personal saving
B. personal income minus taxes
C. national income minus depreciation
D. exports minus imports

The type of monopoly that develops as a result of granting patent right is known as _____

A. natural monopoly.    B. state monopoly    C. legal monopoly.    D. discriminating monopoly.

Mr. Okpoti has meat and wants maize, while Mr. Adama has maize and wants meat. A transaction is possible because of _______

A. joint demand.     B. scale of preference.     C. double coincidence of wants.     D. opportunity cost.

Which of the following is a function of merchant banks?

A. Acting as bankers’ bank.
B. Lending to the commercial banks as a last resort.
C. Controlling inflation in the economy.
D. Underwriting and issuing of shares.

If particular consumer derives total utility of 22 utils having consumed 4 units of a given product, his average utility will be

A. 88 utils.    B. 18 utils.    C. 5.5 utils.    D. 3.5 utils.

The average total cost when 20 units are produced is _____

A. N 20.00   B. N 23.00   C. N 13.00   D. N 15.00.

A major disadvantage of the arithmetic mean is that it is ______

A. not useful for large data
B. not table for further statistical analysis
C. cumbersome to determine the actual value
D. affected by extreme data.

The Central Bank controls the activities of other banks by all but one of the following. Which one?

A. The use of bank rate
B. The purchase or sale of government bonds on the open market
C. Special deposit D. The use of directives
D. Taxation.

Study the diagram below: 


The equilibrium price is _____

A. P₂     B. P₀     C. P₁     D. indeterminate

In the process of production, total output is at maximum when ______

A. MP = 0   B. MP > 0   C. AP = 0   D. AP > 0.

A country has a surplus in its balance of visible trade if _______

A. the value of imports exceeds the value of exports of goods
B. the value of exports exceeds the value of imports of goods
C. the value of goods exported is equal to the value of goods imported
D. it is able to spend a lot on capital programmes

One of the reasons for an exceptional demand curve is the ______

(A) expectation of a future change in price
(B) availability of credit facilities
(C) change in the price of the commodity
(D) availability of substitutes.

Under conditions of perfect competition, a firm’s supply curve is determined by its ______

(A) total cost curve   (B) marginal cost curve   (C) variable cost curve   (D) fixed cost curve.

One of the challenges facing the banking industry in Nigeria is _______

A. ensuring technological security
B. providing employment
C. providing loans for investment
D. creating more money.

If the quantity demanded of a commodity increases from 20 to 30 when there is an increase
in price from N 4 to N 5, the elasticity of demand is _______

A. 0     B. 1     C. 2     D. 5

The value of money is generally measured by reference to _______

A. the interest rate charged on bank loans
B. the general price level
C. the size of a country’s gold stock
D. the level of economic development in a country

If the country is currently producing at point Y, it can increase production of producer goods by _____

A. W   B. X   C. Z   D. V

When the marginal product is negative, the total product will be ______

A. constant.    B. at a maximum.    C. increasing.    D. decreasing.

Which of the financial institutions cannot direct loans to individuals?

A. The Agricultural Bank     B. The Industrial Bank     C. The Central Bank     D. The Co-operative Bank

The benefits that accrue to a firm as a result of an improvement in the industry it belongs to are called _____

(A) internal economies of scale
(B) economies of scale
(C) market economies
(D) external economies of scale.

A major disadvantage of localization of industry is _______

A. the risk of structural unemployment
B. over-utilization of installed industrial capacity
C. the risk of seasonal unemployment
D. under-utilization of installed industrial capacity.

The quantity supplied of a commodity increases when _______

A. production increases
B. demand increases
C. price of the commodity increases
D. population of the country increases

Insurance companies invest mainly in instruments traded on the _______

(A) capital market   (B) commodity market   (C) money market   (D) open market.