1

Suppose that the equilibrium price of an article is N5.00 but the government fixes the price by law at
N4.00, the supply will be

A. The same as equilibrium supply

B. Greater than equilibrium supply

C. Less than the equilibrium supply

D. Determined later by government

E. None of these

A budget deficit means

A. That a country is buying more than is selling

B. That a country is selling more than is buying

C. That a government is spending more than in takes in taxation

D. That a government is spending less than it takes in taxation

E. That a government is spending as much as it takes in taxation

When elasticity is zero, the demand curve is

A. Perfectly elastic

B. Perfectly inelastic

C. Concave

D. Downward slopping

E. Circular

The following is NOT a reason for the existence of small firms

A. Scale of production is limited by size of the market

B. Expansion brings diminishing returns

C. Large firms can carter for wide markets

D. Small firms can provide personal services

E. All of the above

Inferior goods are referred to in Economics as goods

A. Whose quality is low

B. Consumed by very poor people

C. Whose consumption falls when cunsumers' income rises

D. Which satisfy only the basic needs

E. None of the above

If a company doubles all its inputs and discovers that its output is more than doubles, we can say
that the company is experiencing

A. Increasing Marginal utility

B. Diseconomies of scale

C. Increasing costs

D. Constant returns to scale

E. Increasing returns to scale

Price control cannot work in Nigeria because

A. the population is too large

B. the policemen hate to arrest people

C. while it is fairly easy to control producers and importing firms, smaller distributors are too many
to be controlled

D. control cannot work under military rule

E. too many things are produced in the country

The effect of the demand for product A caused by a change in the price of a product B is called?

A. cross-elasticity of demand

B. elasticity of supply

C. competitive demand

D. composite demand
E. joint demand

A Tax which takes a higher percentage from higher incomes is called?

A. a regressive tax

B. a progressive tax

C. a proportional tax

D. an indirect tax

E. a direct tax

10

Which of the following statements is true?

A. A proportional tax is one which takes from high income people a larger fraction of their income
than it takes for low income people

B. taxes on commodities of services which can be shifted elsewhere are usually called direct taxes

C. The sole proprietor is a legal entity

D. the influence of demand on price will be smallest on the short run

E. the cost of production is the most important determining factor of supply in the long run

11

The biggest source of government revenue in Nigeria is

A. mining, rents and royalties

B. company income tax

C. import duties

D. export duties

E. petroleum profit tax

12

Marginal cost is

A. Lowest cost of producing goods

B. The cost of production of the most efficient firm in the industry

C. Cost of production of the most inefficient firm in the industry

D. The cost of production of the last or extra unit of goods produced by a firm

E. The cost of production at which the minimum profit is obtained by a firm

13

As consumption of beer increases, its marginal utility to a drinker will

A. Increase

B. Remain constant

C. Fluctuate

D. Decrease

E. Change proportionally

14

If the demand of a product with 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

E. An increase in quantity offered but a reduction in price

15

If the consumer demand for product X increases as the price of product Y decreases we can be fairly
certain that X

A. X and Y are complementary commodities

B. X and Y are substitute goods

C. X and Y are independent goods

D. X and Y are jointly supplied

E. X and Y are inferior commodities

79

When more of tax on a product is borne by the buyer than the seller, the commodity involved has

A. perfectly elastic demand

B. perfectly inelastic demand

C. fairly inelastic demand

D. elastic demand

80

The average revenue curve of a firm in a perfect market is the same as the
A. supply curve of the firm

B. average cost curve of the firm

C. demand curve of the firm

D. total revenue curve of the firm

The most liquid asset among the following is

A. bonds

A. cheque

C. cash

D. shares

82

Petrol and Kerosene are jointly obtained from crude oil. If the supply of petrol increases, the

A. cost of crude oil production has increased

B. supply of kerosene will rise

C. supply of kerosene will remain unchanged

D. supply of kerosene will fall

83

The fixing of maximum prices by government is mainly on

A. imported capital goods

B. inferior goods

C. selected essential goods

D. luxury goods

84

The price level and the value of money are

A. positively related

B. directly related

C. not related
D. inversely related

85

Taxes levied on goods and services by government are called

A. indirect taxes

B. direct taxes

C. coporate taxes

D. poll taxes

When the demand for a commodity increases while supply remains unchanged, the equilibrium
price and quantity will

A. increase

B. remain constant

C. decrease

D. turn negative

87

Consumers have access to a variety of goods through the activities of the

A. retailers

B. advertising agencies

C. mass media

D. wholesalers

88

The malthusian theory of population is best illustrated when

A. the size of the population and available resources are equal

B. both population and food supply increase at the same rate

C. food supply increases much faster than population growth

D. population increases much faster than food supply

89

The rate of growth of population is

A. initial population plus number of births and net migration

B. the difference between birth rate and death rate

C. birth rate less death rate plus net migration

D. the number of immigrants plus number of births

90

An indication that there is inflation in a country is that

A. there is a decrease in the demand for goods and services

B. there are too many goods in circulation

C. the same amount of money buys lower quantity of goods

D. people prefer to lend than to borrow

An example of government's recurrent expenditure is

A. electrification projects in rural areas

B. the cost of building a school

C. purchase of new vehicles

D. paying salaries of workers

92

A fall in the price of a normal commodity which has elastic demand will result in

A. a fall in demand

B. a fall in quantity demanded

C. an increase in revenue

D. a decrease in revenue

93

A small scale firm located within an industrial estate will enjoy

A. government protection and funding

B. technological economies of scale

C. financial economies of scale

D. external economies of scale

94

Country M enjoys absolute advantage over country N in the production of commodities X and Y, if
country M

A. is inefficient in the production of both commodities X and Y

B. is more efficient than country N in producing both commodities X and Y

C. can produce only commodity Y cheaper than country N

D. and country N are efficient in the production of both goods

95

Use the graph above to answer the question

The curve labelled W shows the

A. regressive tax

B. proportional tax

C. specific tax

D. progressive tax

11

If profit maximization is assumed to be the objective of a business enterprise, labour must be paid a
wage rate equal to the?

A. marginal revenue of the enterprise

B. marginal revenue product of labour in the enterprise

C. average revenue of the enterprise

D. marginal cost of production

212

The real cost of a commodity is

A. the cost of the alternative that has to be sacrificed for it

B. the alternative that has to be forgone in order to purchase it

C. its market price

D. the alternative cost involved when the opportunity of buying the commodity is missed

E. the sacrifice that is made after buying the commodity

213

which of the following is the correct way to calculate total cost?

A. Addition of fixed cost to variable cost

B. Division of total cost by total output

C. Multiplication of fixed cost by the variable cost

D. Subtraction of fixed cost from total cost

E. Addition of marginal cost to average cost

206

In the long run, as individuals receive higher wages, it causes

A. demand for food to decrease

B. demand for leisure to decrease

C. supply of normal goods to decrease

D. supply of labour to decrease

207

One feature of the average fixed cost is that it

A. falls continuously but is never equal to zero.

B. is U-shaped and intersects the Y-axis

C. rises and falls faster than the marginal cost

D. is always higher than the average variable cost

208

If the average fixed cost (AFC) of producing 5 bags of rice is $20.00, the average fixed cost of
producing 10 bags will be

A. $2.00

B. $4.00

C. $10.00

D. $20.00

209

The table below shows the total revenue schedule of a firm. Use the information to answer the
question that follows

Output (units) 50 60 70 80 90

Total revenue (TR) $ 85 102 119 136 153

What is the unit price of the firm's output

A. $10.00

B. $2.70

C. $2.00

D. $1.70

210

The table below shows the total revenue schedule of a firm. Use the information to answer the
question that follows

Output (units) 50 60 70 80 90

Total revenue (TR) $ 85 102 119 136 153

What is the firm's marginal revenue?

A. $153.00

B. $17.00

C. $1.70
D. $O.80

01

This table illustrates the law of _________

Units of Quality Consumes Total Utility Marginal Utility

0 - -

1 10 10

2 15 5

3 17 2

4 18 1

5 18 0

A. Increasing returns

B. Diminishing returns

C. Diminishing marginal utility

D. Increasing total utility

202

Pricing and Output decisions of sellers are highly inter-dependent in markets known as _________

A. Monopoly

B. Oligopoly

C. Monopolistic competition

D. Perfect competition

203

A firm is at its optimum size when ___________

A. It has a motive to increase output

B. It produces the greatest output at a minimum cost

C. Marginal cost equals marginal revenue

D. Marginal cost is less than marginal revenue

204

During inflation, the appropriate fiscal measure to adopt is to

A. increase indirect taxes

B. increase direct taxes

C. reduce personal income tax

D. increase government expenditure

205

Mr. X and Mrs. Y pay $500.00 and $1,400.00 as taxes on their earning of S5,000.00 and $7,000.00
respectively. The system of taxation employed is

A. specific tax

B. proportional tax

C. regressive tax

D. progressive tax

If Mr. A earns N2.000 a year while Mr. B earns N8000 but Mr. A pays N200 in tax per annum while
Mr. B pays N400, such tax is_______

A. Progressive

B. Proportional

C. Indirect

D. Regressive

197

Surplus in balance of payments leads to ________

A. Government budget surplus

B. Increase in foreign reserves

C. Decrease in foreign reserves

D. None of the above

198
Which of the following is NOT a character of perfect competition?

A. Supply and demand are equal

B. Products are identical

C. There is perfect knowledge

D. There is no advertising

199

Oligopoly means _________

A. single buyer in the market.

B. few buyers in the market.

C. few sellers in the market

200

The PAYE ( Pay As You Earn) in Nigeria is an example of ______

A. Flat rate Tax

B. Community tax

C. Regressive tax

D. Progressive tax

A firm incurred the following costs in production. Use the information in the table to answer the
question below.

Output

(bags of rice 0 10 20 30 40 50 60

Total Cost ($) 100 200 300 380 440 520 600

The fixed cost of production is___________

A. $I00.

B. $200.
C. $300.

D. $600

192

A firm incurred the following costs in production. Use the information in the table to answer the
question below.

Output

(bags of rice 0 10 20 30 40 50 60

Total Cost ($) 100 200 300 380 440 520 600

The average cost of producing 40 bags of rice is_____

A. $10

B. $11

C. $60.

D. $80

193

The relationship between the marginal revenue (MR) and the average revenue(AR) of a monopolist
is that the marginal revenue curve____

A. is above the average revenue curve

B. slopes down to the right and is below the AR curve.

C. and the AR curve are downward sloping and are identical.

D. is vertical while the average revenue curve is horizontal.

194

The output of an extra unit of an input is referred to as________

A. Output of the input.

B. Marginal product of the input

C. Average product of the input

D. Utility of the input employed

195

Inflation can be curbed by _______

A. Deficit budget

B. Paying higher wages

C. Increased aggregate demand

D. Reducing aggregate demand

186

PN equals average revenue or marginal revenue cure of

A. An imperfect competitive firm

B. a monopoly

C. a perfectly competitive firm

D. a monopolistic competitive firm

187

Marginal cost is?

A. the lowest cost of producing goods

B. the cost of production of the most efficient firm in an industry

C. the cost of production of the most inefficient firm in an industry

D. the cost of production of the last or extra unit of goods produced by a firm

188

In a free market economy, the rationing of scarce goods is done principally by?
A. the government

B. business organizations

C. the price mechanism

D. consumers

189

In order to enable the government of a country to increase its tax revenue, it will be advisable for it
to increase taxes on_______

A. Textile materials with elastic demand

B. Alcoholic beverages with inelastic demand

C. Agricultural products with inelastic supply

D. Luxury goods with elastic supply

190

People who dispose of their assets are expected to pay ______________

A. value added tax

B. capital gains tax

C. expenditure tax

D. sales tax

In the long-run, a firm must shut down if its average revenue is

A. greater than average cost

B. less than average variable cost

C. equal to the minimum average revenue is

D. equal to the average cost

182

Fiscal policy measures imply a change in

A. only taxation to control aggregate demand

B. bank rate to infulence lending

C. only government expenditure to regulate an economy

D. government revenue and expenditure to regulate an economy

183

Increasing national income without effective control of population size in a country can lead to

A. higher per capita income

B. increase in poverty

C. increased outflow of aid

D. underutilization of resources

184

The production cost that varies inversely with output is the

A. total fixed cost

B. marginal cost

C. average fixed cost

D. average cost

185

A firm that closes down will still incur

A. variable cost

B. fixed cost

C. total cost

D. marginal cost
The curve labelled x is the

 A. total revenue curve

 B. total product curve
 C. marginal product curve
 D. marginal revenue curve

In order to increase revenue, government should tax commodities for which

demand is

 A. perfectly price inelastic

 B. price inelastic
 C. price elastic
 D. unitary elastic

The figure above shows change in demand for commodity x which is a normal
good. Use it to answer the questions that follows

Which of the following caused the change in demand from D0 D0 to D2 D2?

 A. Fall in income of consumer

 B. Rise in the price of a substitute
 C. Rise in the price of a complement
 D. Fall in the supply of commodity x

The largest component of national income in developing countries consist of

 A. profit
 B. profit and rent
 C. rent
 D. wages and salaries

A firm's average cost decreases in the long-run because of

 A. increasing returns to scale
 B. diminishing average returns
 C. decreasing marginal returns
 D. decreasing average fixed cost

The production cost that varies inversely with output is the

A. total fixed cost

B. marginal cost

C. average fixed cost

D. average cost

173

A firm that closes down will still incur

A. variable cost

B. fixed cost

C. total cost

D. marginal cost

174

The sufficient condition for a firm to be in equilibrium is that the

A. marginal revenue curve is above the average revenue curve

B. marginal cost curve cuts the marginal revenue curve from below

C. firm must show that it is profitable

D. marginal cost must be equal to average revenue

175
The line labelled M in the diagram above represent

A. total cost

B. fixed cost

C. variable cost

D. average cost

The short run can be defined as the period of time during which

A. All inputs are fixed

B. At least one of the firm's input is fixed

C. At least two inputs are fixed

D. All inputs are variable

167

The part of income after tax that is not consumed is defined as

A. Wages and salaries

B. Saving
 C. Capital investment

D. Nondurable goods expenditure

168

A tariff is a tax imposed on

A. Consumer goods

B. Domestic goods

C. Imported goods

D. Exported goods

169

Which of the following measures can lead to an increase in exports?

A. Increase in export duties

B. Increase in excise duties

C. Depreciation of currency

D. Total ban on imports

170

Fiscal policy measures imply a change in

A. only taxation to control aggregate demand

B. bank rate to infulence lending

C. only government expenditure to regulate an economy

D. government revenue and expenditure to regulate an economy

The principle that specified that the amount, when and how to pay tax should be
made known to tax payer is known as
  A. Principle of economy
 B. Principle of convenience
 C. Principle of simplicity
 D. Principle of certainty

The diagram above represent

 A. perfect competition
 B. mononpoly
 C. demand curve
 D. competitive market

What is the lowest price the monopolist can charge

 A. P2
 B. P1
  C. P3
 D. P4

The theory of ............... was propounded by ..................

 A. Comparative advantage; Mercantilists

 B. Absolute advantage; Adam Smith
 C. Comparative advantage; Adam Smith
 D. Absolute advantage; David Ricardo

A monopolist may enjoy abnormal profit only if its

 A. marginal cost exceeds marginal revenue

 B. demand curve is perfectly elastic
 C. expenditure on advertisement increases
 D. price exceeds average total cost

All of the following describes conditions necessary for existence of a perfect

market EXCEPT

 A. lack of homogeneity of goods

 B. perfect knowledge
 C. large buyers and sellers
 D. portability of goods

From the graph above, the consumer is at equilibrium at point

  A. k
 B. l
 C. m
 D. j

Calculate the equilibrium level of national income (Y) where Y = C + I + G; C = 100

+ 0.75Y; I = 50; G = 200

 A. 2000
 B. 100
 C. 1500
 D. 1400

51

The budget of Nigeria will be deficit if

A. revenue expenditure exceeds the revenue receipts

B. capital expenditure exceeds the capital receipts

C. revenue and capital receipts exceeds revenue and capital receipts

D. the government is spending more than its receipts

E. all of the above

152

If the price of a commodity falls and the quantity purchased of it does not rise, the
commodity can be described as

A. normal

B. abnormal

C. inferior

D. superior

E. scarce

153

Mr.A earns N300 and pays N15 in tax. Mr. B earns N100 and pays N6 in tax. This tax system
can be described as?

A. proportional tax
B. progressive tax

C. competitive tax

D. excise tax

E. regressive tax

154

The total fixed cost curve is

A. horizontal

B. upward sloping

C. vertical

D. downward sloping

155

National income is calculated mainly to

A. determine how income is to shared

B. help firms generate more funds

C. determine aid to to be received from other nations

D. determine the level of sectoral performance

46

Which of the following is not a component of national income at factor cost?

A. Wages earned by doctor

B. Rent paid to landlords

C. Indirect tax

D. Undistributed company profits

E. Interest on loan
147

An ad valorem tax means

A. total amount of an income tax

B. a certain percentage on the value of a commodity

C. a certain percentage tax on the volume of commodity

D. a tax on capital gain

E. a profit tax

148

What do we call a market where there is large number of buyers and sellers, such that no
one has an appreciable influence over prices?

A. Free market

B. Perfectly competitive market

C. Controllled market

D. Stock exchange market

E. Open market

149

The burden of tax on a commodity whose demand is infinitely inelastic

A. is zero

B. will be borne by the seller alone

C. will be borne by the buyer alone

D. will be borne by both buyer and seller

E. is impossible to tell who bears it

150

Inflation can be curbed by

A. increasing aggregate demand

B. paying higher wages

C. increasing government expenditure

D. reducing aggregate demand

E. a deficit budget

Net national income is

A. Gross national income minus depreciation

B. gross domestic product plus net income from abroad

C. nominal national income divided by the price level

D. gross national income divided by the total population

E. gross national product plus subsidies minus indirect taxes

143

If Mr A earns N2,000 a year while Mr B earns N8,000 but Mr a pays N200 in tax per annum
while Mr B pays N400, such a tax is

A. Progressive

B. Indirect

C. Regressive

D. Proportional

E. None of the above

144

If a government is running deficit, this means

A. A term of trade are unfavourable

B. more project cannot be undertaken

C. Tax inflow is greater than expenditure

D. aggregate demand is greater than aggregate supply

E. tax inflow is less than expenditure

145

Pure monopoly describes market where

A. there are many sellers and a few buyers

B. goods are sold at different price

C. entry is not blocked, but no one cares to enter

D. a few sellers and one buyer exist

E. None of the above

Average cost is

A. the total cost of production

B. the extra cost of producing one additional unit of output

C. cost of producing a unit of output

D. variable cost

E. overhead cost

The demand curve faced by a monopolist is_____?

A. Positively sloped

B. Vertical

C. downward sloping

D. Negatively Sloped

The interest charged on loans is determined by the __________?

A. Exchange rate

B. Fiscal policy

C. Risk associated with the loan

D. Rate of production in the country

The additional cost incurred by producing an additional unit of output is known
as

 A. Fixed cost
 B. Total cost
 C. Average cost
 D. Marginal cost

One of the important features of perfect competition is_____?

 A. Adequate knowledge of existing prices

 B. The influence on prices by individual economic units
 C. The restriction in terms of movement of goods and services
 D. The administration of a centralized price system