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POST UTME AAUA 2025 Economics | Objective

Are you preparing for POST UTME AAUA exams? Reviewing past questions is one of the most effective ways to guarantee a high score. This practice hub features authentic 2025 Economics (Objective) questions designed to simulate the real exam environment.

Practice these randomly selected questions to test your readiness.

Question 1

Determine the price elasticity of demand for a commodity whose price elasticity of demand is 0.5 and the percentage change in quantity demanded is 2%.

Correct A. -2

B. -1

C. 0.5

D. 1

Correct Answer: A

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Question 2

A firm is operating under a perfectly competitive market structure. If the firm's marginal revenue (MR) is 100 and the marginal \cost (MC) is 80, what is the firm's profit-maximizing quantity of output?

A. 50

Correct B. 75

C. 100

D. 125

Correct Answer: B

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Question 3

A government is considering a policy to reduce poverty in a country. The policy involves increa\sing the minimum wage by 20%. If the elasticity of demand for labor is 0.8, what is the percentage change in employment?

Correct A. -16%

B. -8%

C. 0%

D. 8%

Correct Answer: A

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Question 4

A firm is producing a commodity with the following \cost function: C(q) = 100 + 2q + 0.5q^2. If the firm's revenue function is R(q) = 120q - 0.5q^2, what is the firm's profit-maximizing quantity of output?

A. 20

B. 30

Correct C. 40

D. 50

Correct Answer: C

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Question 5

A consumer is faced with the following utility function: U(x, y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, what is the consumer's optimal bundle of x and y?

A. x = 20, y = 10

B. x = 15, y = 15

Correct C. x = 10, y = 20

D. x = 5, y = 25

Correct Answer: C

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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 = ₦100 and r = ₦200, and the current output price is p = ₦500, calculate the firm's optimal input bundle (L, K) u\sing the Hotelling's Lemma. Assume that the firm's objective is to maximize its profit.

Correct A. \( L = 100, K = 50 \)

B. \( L = 50, K = 100 \)

C. \( L = 200, K = 100 \)

D. \( L = 100, K = 200 \)

Correct Answer: A

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Question 7

A government is considering implementing a new tax on luxury goods to reduce income inequality. The tax rate is set at 20% of the good's price, and the government expects the tax revenue to be ₦10 billion. If the tax is implemented, the government also plans to reduce the income tax rate by 5%. U\sing the Laffer Curve, determine the impact of the tax on the government's revenue.

A. The tax will increase the government's revenue by 10%.

B. The tax will decrease the government's revenue by 5%.

Correct C. The tax will have no impact on the government's revenue.

D. The tax will increase the government's revenue by 20%.

Correct Answer: C

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Question 8

A firm is producing a good u\sing a Cobb-Douglas production function Q = 2L^0.4K^0.6. If the firm's current input prices are w = ₦150 and r = ₦250, and the current output price is p = ₦600, calculate the firm's optimal input bundle (L, K) u\sing the Shephard's Lemma. Assume that the firm's objective is to maximize its profit.

A. \( L = 150, K = 100 \)

Correct B. \( L = 100, K = 150 \)

C. \( L = 200, K = 100 \)

D. \( L = 100, K = 200 \)

Correct Answer: B

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Question 9

A government is considering implementing a new policy to reduce poverty. The policy involves providing a subsidy of ₦500 to each poor household. If the government expects 100,000 households to benefit from the policy, calculate the total \cost of the policy.

Correct A. ₦50 billion

B. ₦40 billion

C. ₦30 billion

D. ₦20 billion

Correct Answer: A

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Question 10

A firm is producing a good u\sing a production function Q = 3L^0.7K^0.3. If the firm's current input prices are w = ₦200 and r = ₦300, and the current output price is p = ₦700, calculate the firm's optimal input bundle (L, K) u\sing the Hotelling's Lemma. Assume that the firm's objective is to maximize its profit.

Correct A. \( L = 200, K = 50 \)

B. \( L = 50, K = 200 \)

C. \( L = 300, K = 100 \)

D. \( L = 100, K = 300 \)

Correct Answer: A

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Question 11

Determine the opportunity \cost of producing an additional unit of a good, given the production function Q = 2L + 3K, where Q is the quantity produced, L is labor, and K is capital. Assume that the price of labor is ₦100 per unit and the price of capital is ₦200 per unit.

A. ₦50

Correct B. ₦100

C. ₦150

D. ₦200

Correct Answer: B

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Question 12

A firm's demand curve for a product is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's total revenue is ₦10,000, what is the price elasticity of demand?

A. 0.5

Correct B. 1.0

C. 1.5

D. 2.0

Correct Answer: B

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Question 13

A government is considering a tax on a particular good. The supply curve for the good is given by Q = 50 + 2P, where Q is the quantity supplied and P is the price. If the government imposes a tax of ₦10 per unit, what is the new supply curve?

A. Q = 50 + 2P

Correct B. Q = 40 + 2P

C. Q = 50 + 4P

D. Q = 40 + 4P

Correct Answer: B

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Question 14

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's budget constraint is given by 2x + 3y = ₦100, what is the consumer's optimal bundle of goods?

Correct A. x = 10, y = 20

B. x = 20, y = 10

C. x = 30, y = 0

D. x = 0, y = 30

Correct Answer: A

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Question 15

A government is considering a policy to reduce income inequality. One option is to increase the tax rate on high-income earners. What is the effect of this policy on the Laffer Curve?

A. Shift the Laffer Curve to the left

Correct B. Shift the Laffer Curve to the right

C. Rotate the Laffer Curve clockwise

D. Rotate the Laffer Curve counterclockwise

Correct Answer: B

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Question 16

The concept of scarcity in economics implies that the production of one good is limited by the availability of resources that could be used to produce other goods. This is an example of a fundamental principle of economics, which is often referred to as the law of _______

A. diminishing returns

B. comparative advantage

Correct C. opportunity \cost

D. gains from trade

Correct Answer: C

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Question 17

A country's balance of payments (BOP) is a statistical statement that summarizes all economic transactions between residents and non-residents over a specific period. Which of the following is NOT a component of the BOP?

A. current account

B. capital account

C. financial account

Correct D. government account

Correct Answer: D

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Question 18

The production function is a mathematical representation of the relationship between the inputs used to produce a good or service and the resulting output. If the production function exhibits increa\sing returns to scale, it means that the output will _______ as the input increases

A. decrease

Correct B. increase

C. remain cons\tant

D. fluctuate

Correct Answer: B

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Question 19

The national income accounting system is used to measure the total output of a country's economy. The Gross Domestic Product (GDP) is a key indicator of a country's economic performance. Which of the following is NOT a component of GDP?

A. consumption

B. investment

C. government sp\ending

Correct D. net exports

Correct Answer: D

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Question 20

The concept of opportunity \cost is a fundamental principle of economics that refers to the value of the next best alternative that is given up when a choice is made. In the context of international trade, the opportunity \cost of importing a good is the _______ of producing that good domestically

Correct A. value

B. quantity

C. price

D. quality

Correct Answer: A

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Question 21

Suppose a firm's \cost function is given by C(x) = 2x^2 + 5x + 10, where x is the number of units produced. If the firm sells each unit for ₦50, what is the revenue function?

Correct A. R(x) = 50x

B. R(x) = 2x^2 + 5x + 10

C. R(x) = 50x + 10

D. R(x) = 2x^2 + 5x

Correct Answer: A

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Question 22

A consumer's utility function is given by U(x, y) = 2x^0.5y^0.5. If the consumer has a budget of ₦100 and the prices of x and y are ₦20 and ₦30 respectively, what is the optimal bundle of x and y?

Correct A. (2, 2)

B. (3, 1)

C. (1, 3)

D. (4, 0)

Correct Answer: A

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Question 23

Suppose the demand function for a product is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the supply function is given by Q = 2P - 10, what is the equilibrium price?

A. ₦20

Correct B. ₦30

C. ₦40

D. ₦50

Correct Answer: B

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Question 24

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 revenue function is given by R(P) = 50P, what is the elasticity of demand?

Correct A. 0.5

B. 1

C. 2

D. 3

Correct Answer: A

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Question 25

Suppose a country's export function is given by X = 100 + 2Y, where X is the quantity exported and Y is the quantity imported. If the country's import function is given by Y = 50 + P, where P is the price, what is the balance of payments?

A. ₦100

Correct B. ₦200

C. ₦300

D. ₦400

Correct Answer: B

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