POST UTME OAU 2024 Economics | Objective

Are you preparing for POST UTME OAU exams? Reviewing past questions is one of the most effective ways to guarantee a high score. This practice hub features authentic 2024 Economics (Objective) questions designed to simulate the real exam environment.

Practice these randomly selected questions to test your readiness.

Question 1
Consider a firm operating in a perfectly competitive market with a production function Q = 2L^0.5K^0.5. If the price of the good is $10 and the firm's \cost function is C(L,K) = 2L + 3K, what is the optimal level of labor (L) and capital (K) that the firm should employ?
Correct A. \( L = 4, K = 4 \)
B. \( L = 8, K = 2 \)
C. \( L = 2, K = 8 \)
D. \( L = 16, K = 1 \)

Correct Answer: A

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Question 2
A consumer has the following utility function: U(x,y) = 2x + 3y. If the prices of x and y are $4 and $6 respectively, and the consumer's income is $100, what is the optimal bundle of x and y that the consumer should purchase?
Correct A. \( x = 10, y = 5 \)
B. \( x = 5, y = 10 \)
C. \( x = 15, y = 3 \)
D. \( x = 20, y = 2 \)

Correct Answer: A

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Question 3
Consider a firm that is considering investing in a new project. The project has a \cost of $100,000 and is expected to generate a cash flow of $150,000 in the first year, $120,000 in the second year, and $90,000 in the third year. What is the net present value (NPV) of the project if the discount rate is 10%?
Correct A. \( NPV = 50,000 \)
B. \( NPV = 30,000 \)
C. \( NPV = 20,000 \)
D. \( NPV = 10,000 \)

Correct Answer: A

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Question 4
A firm is considering investing in a new techno\logy that will increase its productivity by 20%. The firm's current production function is Q = 2L^0.5K^0.5. What will be the new production function after the firm invests in the new techno\logy?
Correct A. \( Q = 2.4L^0.5K^0.5 \)
B. \( Q = 2.2L^0.5K^0.5 \)
C. \( Q = 2.6L^0.5K^0.5 \)
D. \( Q = 2.8L^0.5K^0.5 \)

Correct Answer: A

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Question 5
A consumer has the following budget constraint: 2x + 3y = 100. If the consumer's utility function is U(x,y) = 2x + 3y, what is the optimal bundle of x and y that the consumer should purchase?
A. \( x = 20, y = 10 \)
B. \( x = 10, y = 20 \)
Correct C. \( x = 15, y = 15 \)
D. \( x = 25, y = 5 \)

Correct Answer: C

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Question 6
A perfectly competitive market has a demand curve that is downward sloping. What is the relationship between the price elasticity of demand and the slope of the demand curve?
Correct A. The price elasticity of demand is inversely proportional to the slope of the demand curve.
B. The price elasticity of demand is directly proportional to the slope of the demand curve.
C. The price elasticity of demand is indep\endent of the slope of the demand curve.
D. The price elasticity of demand is inversely proportional to the square of the slope of the demand curve.

Correct Answer: A

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Question 7
A monopolist faces a market demand curve with the following equation: Qd = 100 - 2P. The monopolist's marginal \cost curve is MC = 10. What is the profit-maximizing price and quantity?
Correct A. P = 40, Q = 30
B. P = 60, Q = 20
C. P = 80, Q = 10
D. P = 20, Q = 80

Correct Answer: A

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Question 8
A government imposes a tax on a good, which causes the supply curve to shift to the left. What is the effect on the equilibrium price and quantity?
Correct A. The equilibrium price increases and the equilibrium quantity decreases.
B. The equilibrium price decreases and the equilibrium quantity increases.
C. The equilibrium price remains the same and the equilibrium quantity decreases.
D. The equilibrium price increases and the equilibrium quantity remains the same.

Correct Answer: A

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Question 9
A firm has a total revenue function of TR = 100Q - 2Q^2 and a total \cost function of TC = 50Q + 10Q^2. What is the profit-maximizing quantity?
A. Q = 10
Correct B. Q = 20
C. Q = 30
D. Q = 40

Correct Answer: B

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Question 10
A consumer has a budget of ₦1000 and a demand curve for a good with the following equation: Qd = 100 - 2P. What is the maximum quantity the consumer can buy?
A. Q = 50
Correct B. Q = 60
C. Q = 70
D. Q = 80

Correct Answer: B

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Question 11
A firm's production function is given by Q = 100K^\( 1/2 \)L^\( 1/2 \), where Q is output, K is capital, and L is labor. If the firm's capital and labor inputs are increased by 20% and 15% respectively, what is the percentage change in output?
A. 10%
B. 12%
Correct C. 15%
D. 18%

Correct Answer: C

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Question 12
A country's GDP is given by the equation Y = C + I + G + \( X - M \), where Y is GDP, C is consumption, I is investment, G is government sp\ending, X is exports, and M is imports. If the country's consumption, investment, government sp\ending, exports, and imports are 100, 20, 30, 50, and 40 respectively, what is the country's GDP?
A. 150
B. 160
Correct C. 170
D. 180

Correct Answer: C

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Question 13
A firm's \cost function is given by C = 100 + 2Q + 0.5Q^2, where C is \cost and Q is output. If the firm produces 100 units of output, what is its total \cost?
A. 250
B. 300
Correct C. 350
D. 400

Correct Answer: C

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Question 14
A country's balance of payments is given by the equation BOP = X - M + \( F - I \), where BOP is balance of payments, X is exports, M is imports, F is foreign investment, and I is domestic investment. If the country's exports, imports, foreign investment, and domestic investment are 100, 40, 20, and 30 respectively, what is its balance of payments?
A. 30
B. 40
Correct C. 50
D. 60

Correct Answer: C

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Question 15
A firm's revenue function is given by R = 100Q - 2Q^2, where R is revenue and Q is output. If the firm produces 50 units of output, what is its revenue?
A. 1000
B. 1200
Correct C. 1400
D. 1600

Correct Answer: C

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Question 16
A country's national income is given by the equation Y = C + I + G + \( X - M \), where Y is national income, C is consumption, I is investment, G is government sp\ending, X is exports, and M is imports. If the country's consumption, investment, government sp\ending, exports, and imports are 100, 20, 30, 50, and 40 respectively, what is its national income?
A. 150
B. 160
Correct C. 170
D. 180

Correct Answer: C

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Question 17
A firm's profit function is given by P = R - C, where P is profit, R is revenue, and C is \cost. If the firm's revenue and \cost are 1000 and 300 respectively, what is its profit?
A. 200
B. 300
Correct C. 400
D. 500

Correct Answer: C

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Question 18
A country's inflation rate is given by the equation I = \( P - P_0 \)/P_0 x 100, where I is inflation rate, P is current price level, and P_0 is base price level. If the current price level is 100 and the base price level is 80, what is the inflation rate?
A. 12.5%
B. 15%
Correct C. 17.5%
D. 20%

Correct Answer: C

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Question 19
A firm's production function is given by Q = 2L^0.5K^0.5, where Q is output, L is labor and K is capital. If the firm increases labor from 100 to 121 units, and capital from 100 to 121 units, what is the percentage change in output?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 20
A perfectly competitive market has a supply curve given by Q = 2P - 100. If the demand curve is given by Q = 200 - 3P, what is the equilibrium price and quantity?
A. P = 50, Q = 100
Correct B. P = 75, Q = 150
C. P = 100, Q = 200
D. P = 125, Q = 250

Correct Answer: B

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Question 21
A firm has a total revenue function given by TR = 2Q^2 - 100Q + 500, where Q is quantity. If the firm's total \cost function is given by TC = Q^2 + 50Q + 100, what is the profit-maximizing quantity?
A. Q = 10
Correct B. Q = 20
C. Q = 30
D. Q = 40

Correct Answer: B

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Question 22
Agricultural development in Nigeria has been hindered by the lack of infrastructure. Which of the following is a major consequence of this lack of infrastructure?
A. Increased food production
Correct B. Decreased food production
C. Increased agricultural employment
D. Decreased agricultural employment

Correct Answer: B

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Question 23
A monopoly has a demand curve given by Q = 100 - 2P. If the firm's marginal revenue function is given by MR = 2P - 100, what is the profit-maximizing price and quantity?
A. P = 50, Q = 50
Correct B. P = 75, Q = 75
C. P = 100, Q = 100
D. P = 125, Q = 125

Correct Answer: B

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Question 24
A firm has a production function given by Q = 2L^0.5K^0.5, where Q is output, L is labor and K is capital. If the firm increases labor from 100 to 121 units, and capital from 100 to 121 units, what is the percentage change in output?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 25
A perfectly competitive market has a supply curve given by Q = 2P - 100. If the demand curve is given by Q = 200 - 3P, what is the equilibrium price and quantity?
A. P = 50, Q = 100
Correct B. P = 75, Q = 150
C. P = 100, Q = 200
D. P = 125, Q = 250

Correct Answer: B

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