POST UTME KSU 2020 Economics | Objective

Are you preparing for POST UTME KSU exams? Reviewing past questions is one of the most effective ways to guarantee a high score. This practice hub features authentic 2020 Economics (Objective) questions designed to simulate the real exam environment.

Practice these randomly selected questions to test your readiness.

Question 1
A firm's production function is given by Q = 2L^0.5K^0.5, where L is labor and K is capital. If the firm increases labor by 20% and capital by 15%, what is the percentage change in output?
A. 10%
B. 12%
Correct C. 15%
D. 18%

Correct Answer: C

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Question 2
A monopolist faces a demand curve given by P = 100 - 2Q. The marginal \cost is cons\tant at ₦50. What is the profit-maximizing quantity?
A. 20 units
B. 30 units
Correct C. 40 units
D. 50 units

Correct Answer: C

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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 goods are ₦10 and ₦20 respectively, and the consumer has a budget of ₦100, what is the optimal bundle?
A. x = 5, y = 3
B. x = 3, y = 5
Correct C. x = 4, y = 4
D. x = 6, y = 2

Correct Answer: C

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Question 4
A country's balance of payments is given by the following equation: BOP = X - M - \( I - S \), where X is exports, M is imports, I is investment, and S is savings. If the country's exports are ₦100 billion, imports are ₦80 billion, investment is ₦50 billion, and savings are ₦30 billion, what is the balance of payments?
Correct A. ₦10 billion surplus
B. ₦10 billion deficit
C. ₦20 billion surplus
D. ₦20 billion deficit

Correct Answer: A

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Question 5
A firm's production function is given by Q = 3L^0.5K^0.5, where L is labor and K is capital. If the firm increases labor by 25% and capital by 20%, what is the percentage change in output?
A. 12%
B. 15%
Correct C. 18%
D. 20%

Correct Answer: C

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Question 6
The demand curve for a commodity is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. The supply curve is given by Qs = 2P - 100, where Qs is the quantity supplied. Find the equilibrium price and quantity.
A. ₦50, 200 units
B. ₦75, 150 units
Correct C. ₦100, 100 units
D. ₦125, 50 units

Correct Answer: C

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Question 7
A firm has a \cost function C(x) = 2x^2 + 10x + 5, where x is the number of units produced. Find the marginal \cost function.
Correct A. 4x + 10
B. 2x + 5
C. x + 2
D. x - 2

Correct Answer: A

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Question 8
The money supply in an economy is given by M = 1000 + 2Y, where M is the money supply and Y is the national income. If the national income is ₦100 billion, find the money supply.
A. ₦200 billion
Correct B. ₦300 billion
C. ₦400 billion
D. ₦500 billion

Correct Answer: B

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Question 9
A farmer produces two crops, maize and yam. The production function for maize is given by Qm = 100x + 50y, where Qm is the quantity of maize produced and x and y are the inputs. The production function for yam is given by Qy = 50x + 100y, where Qy is the quantity of yam produced. If the farmer uses 100 units of x and 50 units of y, find the quantities of maize and yam produced.
A. Maize: 5000 units, Yam: 2500 units
B. Maize: 7500 units, Yam: 3750 units
Correct C. Maize: 10000 units, Yam: 5000 units
D. Maize: 12500 units, Yam: 6250 units

Correct Answer: C

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Question 10
The government of a country imposes a tax of ₦10 per unit on a commodity. The demand curve for the commodity is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. The supply curve is given by Qs = 2P - 100, where Qs is the quantity supplied. Find the new equilibrium price and quantity.
A. ₦60, 150 units
Correct B. ₦80, 100 units
C. ₦100, 50 units
D. ₦120, 0 units

Correct Answer: B

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Question 11
The law of diminishing marginal utility states that as the quantity of a good consumed increases, the marginal utility derived from each additional unit of the good decreases. However, this law does not apply to all goods. Which of the following goods is an exception to the law of diminishing marginal utility?
Correct A. Giffen Goods
B. Normal Goods
C. Inferior Goods
D. Luxury Goods

Correct Answer: A

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Question 12
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. External Debt

Correct Answer: D

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Question 13
The production function is a mathematical representation of the relationship between the inputs of a firm and the output it produces. Which of the following production functions exhibits increa\sing returns to scale?
A. Cobb-Douglas Production Function
B. Cons\tant Returns to Scale Production Function
Correct C. Increa\sing Returns to Scale Production Function
D. Decrea\sing Returns to Scale Production Function

Correct Answer: C

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Question 14
The concept of opportunity \cost is a fundamental principle in economics that refers to the value of the next best alternative that is given up when a choice is made. Which of the following is an example of an opportunity \cost?
A. The \cost of producing a good
B. The \cost of purcha\sing a good
Correct C. The value of the next best alternative given up
D. The value of the good produced

Correct Answer: C

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Question 15
The concept of elasticity of demand refers to the responsiveness of the quantity demanded of a good to changes in its price. Which of the following is a characteristic of elastic demand?
A. The demand curve is vertical
B. The demand curve is horizontal
Correct C. The demand curve is elastic
D. The demand curve is inelastic

Correct Answer: C

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Question 16
The following table shows the value of Nigeria's exports and imports for the year 2019. If the value of exports is ₦1.2 trillion and the value of imports is ₦1.5 trillion, calculate the balance of trade for Nigeria in 2019.
A. ₦300 billion
Correct B. ₦200 billion
C. ₦100 billion
D. ₦500 billion

Correct Answer: B

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Question 17
A firm produces two goods, A and B. The production function for good A is given by Q_A = 2L^0.5 + 3K^0.5, where L is labor and K is capital. The production function for good B is given by Q_B = 4L^0.5 + 2K^0.5. If the firm has 100 units of labor and 50 units of capital, calculate the total output of the firm.
A. 150
B. 200
Correct C. 250
D. 300

Correct Answer: C

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Question 18
The following diagram shows the supply and demand curves for a particular good.
A. Equilibrium price is ₦100
B. Equilibrium quantity is 100 units
Correct C. The market is in equilibrium
D. The market is in disequilibrium

Correct Answer: C

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Question 19
A country's GDP is ₦1.5 trillion, its imports are ₦1.2 trillion, and its net factor income from abroad is ₦100 billion. Calculate the country's GNP.
A. ₦1.6 trillion
B. ₦1.7 trillion
Correct C. ₦1.8 trillion
D. ₦1.9 trillion

Correct Answer: C

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Question 20
A firm's \cost function is given by C(L, K) = 2L^0.5 + 3K^0.5, where L is labor and K is capital. If the firm has 100 units of labor and 50 units of capital, calculate the total \cost of the firm.
A. ₦150
B. ₦200
Correct C. ₦250
D. ₦300

Correct Answer: C

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Question 21
Consider a small open economy with a fixed exchange rate. The government imposes a tariff of 15% on imported goods. U\sing the Marshall-Lerner condition, determine whether the tariff will lead to a trade surplus or deficit.
A. Trade surplus
Correct B. Trade deficit
C. No effect on trade balance
D. Uncertain

Correct Answer: B

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Question 22
A firm is considering investing in a new project with the following cash flows: Year 0: -$100,000; Year 1: $50,000; Year 2: $70,000; Year 3: $90,000. U\sing the net present value (NPV) method, determine whether the project is profitable if the discount rate is 10%.
Correct A. Profitable
B. Unprofitable
C. Break-even
D. Insufficient information

Correct Answer: A

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Question 23
A government is considering implementing a value-added tax (VAT) to raise revenue. U\sing the Laffer curve, determine the optimal VAT rate that maximizes government revenue.
A. 0%
B. 10%
Correct C. 20%
D. 30%

Correct Answer: C

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Question 24
A firm is producing a good with the following production function: Q = 2L^0.5K^0.5. U\sing the concept of returns to scale, determine whether the firm is experiencing increa\sing, decrea\sing, or cons\tant returns to scale.
A. Increa\sing returns to scale
B. Decrea\sing returns to scale
Correct C. Cons\tant returns to scale
D. No returns to scale

Correct Answer: C

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Question 25
A government is considering implementing a policy to reduce income inequality. U\sing the concept of Lorenz curve, determine the Gini coefficient of income distribution in a country with the following income distribution: 20% of the population has an income of $10,000, 30% has an income of $20,000, 20% has an income of $30,000, and 30% has an income of $40,000.
A. 0.2
B. 0.3
Correct C. 0.4
D. 0.5

Correct Answer: C

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