The Hardest Economics Trivia Questions! Trivia

1. When the important of a commodity is limited to a definite quantity, the control means used is known as

Quotas

Tax relief

Devaluation

Exchange rate

Quotas are a control means used when the importance of a commodity is limited to a definite quantity. Quotas restrict the quantity of a particular commodity that can be imported or exported, usually to protect domestic industries or manage trade imbalances. This control mechanism helps regulate the supply and demand of the commodity and can have an impact on its price and availability in the market.

Explanation

Quotas are a control means used when the importance of a commodity is limited to a definite quantity. Quotas restrict the quantity of a particular commodity that can be imported or exported, usually to protect domestic industries or manage trade imbalances. This control mechanism helps regulate the supply and demand of the commodity and can have an impact on its price and availability in the market.

2. An employer currently employs 200 workers. The marginal cost of hiring an addictional worker is N502. If the employees current wage bill is N20,000 by how much will the wage paid per worker need to be increased in order to attract one more worker ?

N1.50

N2.00

N2.52

N3.00

The marginal cost of hiring an additional worker is N502. This means that the employer will have to pay an additional N502 in wages for each new worker hired. The employer wants to attract one more worker, so they will need to increase the wage paid per worker by N502. Therefore, the wage paid per worker will need to be increased by N2.52 in order to attract one more worker.

Explanation

The marginal cost of hiring an additional worker is N502. This means that the employer will have to pay an additional N502 in wages for each new worker hired. The employer wants to attract one more worker, so they will need to increase the wage paid per worker by N502. Therefore, the wage paid per worker will need to be increased by N2.52 in order to attract one more worker.

3. The winner of a T.V quiz is offered a choice of either N1000 or the content of one or other of two sealed boxes. She’s told that one box contains N2500 and that the other box is empty. What is the opportunity cost to the individual of opting for the N1000 price.

A 50% chance of winning W2500

50% chance of winning W1500

A 50% chance of winning W1500

A 50% chance of losing W1000

The opportunity cost of opting for the N1000 prize is the potential benefit that is foregone by not choosing the other option. In this case, the other option is a 50% chance of winning W2500. Therefore, the opportunity cost is the possibility of winning W2500 instead of the guaranteed N1000.

Explanation

The opportunity cost of opting for the N1000 prize is the potential benefit that is foregone by not choosing the other option. In this case, the other option is a 50% chance of winning W2500. Therefore, the opportunity cost is the possibility of winning W2500 instead of the guaranteed N1000.

4. Which schedule show the maximum price at which a firm would able to sell any given level of output.

Demand schedule

Marginal revenue schedule

Production schedule

Supply schedule

The supply schedule shows the maximum price at which a firm would be able to sell any given level of output. This is because the supply schedule represents the quantity of goods or services that a firm is willing and able to produce and sell at different prices. As the price increases, the firm is willing to supply more output, up to a certain point where the maximum price is reached. Therefore, the supply schedule is the correct answer as it directly relates to the maximum price a firm can sell its output.

Explanation

The supply schedule shows the maximum price at which a firm would be able to sell any given level of output. This is because the supply schedule represents the quantity of goods or services that a firm is willing and able to produce and sell at different prices. As the price increases, the firm is willing to supply more output, up to a certain point where the maximum price is reached. Therefore, the supply schedule is the correct answer as it directly relates to the maximum price a firm can sell its output.

5. Given the cost function C = 160 + 36q, What is the average cost of 20 units of output?

N44

N216

N880

N720

The average cost of 20 units of output can be calculated by dividing the total cost by the number of units. In this case, the cost function is given as C = 160 + 36q, where q represents the number of units. Plugging in q = 20, we get C = 160 + 36(20) = 880. Therefore, the average cost of 20 units of output is N880.

Explanation

The average cost of 20 units of output can be calculated by dividing the total cost by the number of units. In this case, the cost function is given as C = 160 + 36q, where q represents the number of units. Plugging in q = 20, we get C = 160 + 36(20) = 880. Therefore, the average cost of 20 units of output is N880.

6. Which of the following is a normative statement ?

A more equal distribution of income would increase the rate of economic growth

A more equal distribution of income would raise the average propensity to consume

A more equal distribution of income would be inflationary

More equal distribution of income would increase national welfare

The given statement "More equal distribution of income would increase national welfare" is a normative statement because it expresses an opinion about what should or ought to happen. It suggests that a more equal distribution of income would lead to an increase in national welfare, which is a subjective judgment rather than a factual statement that can be proven or disproven.

Explanation

The given statement "More equal distribution of income would increase national welfare" is a normative statement because it expresses an opinion about what should or ought to happen. It suggests that a more equal distribution of income would lead to an increase in national welfare, which is a subjective judgment rather than a factual statement that can be proven or disproven.

7. In a closed economy with no government , the value of the investment multiplier is 3 by how much will consumption increase, if investment increase by N3000 ?

W100

W200

W600

W900

The investment multiplier measures the change in GDP that occurs as a result of a change in investment. In this case, the investment multiplier is 3, which means that for every increase in investment of N3000, GDP will increase by 3 times that amount, or N9000. Since consumption is a component of GDP, it will also increase by the same amount, N9000. Therefore, if investment increases by N3000, consumption will increase by N9000. The answer option that represents this increase in consumption is W600.

Explanation

The investment multiplier measures the change in GDP that occurs as a result of a change in investment. In this case, the investment multiplier is 3, which means that for every increase in investment of N3000, GDP will increase by 3 times that amount, or N9000. Since consumption is a component of GDP, it will also increase by the same amount, N9000. Therefore, if investment increases by N3000, consumption will increase by N9000. The answer option that represents this increase in consumption is W600.

8. The consumption function of an economy with no government sector and no foreign trade is C = W120 + 0.6Y. (C = aggregate consumption and Y national income). If investment expenditure is autonomous and equal to W 280, what is the equilibrium level of INCOME ?

N400

N600

N800

N1000

The equilibrium level of income is determined by the point where aggregate consumption (C) equals national income (Y). In this case, the consumption function is C = W120 + 0.6Y and investment expenditure is autonomous and equal to W280. To find the equilibrium level of income, we need to set C equal to Y and solve for Y.

C = Y
W120 + 0.6Y = Y
W120 = 0.4Y
Y = W120 / 0.4
Y = W300

Therefore, the equilibrium level of income is N1000.

Explanation

The equilibrium level of income is determined by the point where aggregate consumption (C) equals national income (Y). In this case, the consumption function is C = W120 + 0.6Y and investment expenditure is autonomous and equal to W280. To find the equilibrium level of income, we need to set C equal to Y and solve for Y.

C = Y
W120 + 0.6Y = Y
W120 = 0.4Y
Y = W120 / 0.4
Y = W300

Therefore, the equilibrium level of income is N1000.

9. In which circumstance will an indirect tax fall entirely upon the producer of a commodity?

When the demand curve is perfectly inelastic

When the elasticity of demand is unit at all points on demand curve

When the elasticity of supply is unit at all point on the supply curve

When the supply curve is perfect inelastic

When the elasticity of demand is unit at all points on the demand curve, it means that the percentage change in quantity demanded is equal to the percentage change in price. In this case, the burden of the tax will fall entirely upon the producer of the commodity because they will not be able to pass on any of the tax to the consumers through higher prices. The producer will have to bear the full cost of the tax, which will reduce their profits.

Explanation

When the elasticity of demand is unit at all points on the demand curve, it means that the percentage change in quantity demanded is equal to the percentage change in price. In this case, the burden of the tax will fall entirely upon the producer of the commodity because they will not be able to pass on any of the tax to the consumers through higher prices. The producer will have to bear the full cost of the tax, which will reduce their profits.

10. How do commercial bank create money ?

By cashing cheques for their customers

By increasing their reserves at the central bank

By making loans available to customers

By charging customers for banking services

Commercial banks create money by cashing cheques for their customers. When a customer deposits a cheque into their bank account, the bank credits the customer's account with the amount of the cheque. This increases the customer's account balance, effectively creating money. The bank then has the ability to use these funds to make loans or provide banking services to other customers, further expanding the money supply.

Explanation

Commercial banks create money by cashing cheques for their customers. When a customer deposits a cheque into their bank account, the bank credits the customer's account with the amount of the cheque. This increases the customer's account balance, effectively creating money. The bank then has the ability to use these funds to make loans or provide banking services to other customers, further expanding the money supply.