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POST UTME OAU 2025 Economics | Objective

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Question 1

Determine the equilibrium price and quantity of a commodity in a market where the demand function is given by Qd = 100 - 2P and the supply function is given by Qs = 2P - 10, where P is the price in naira.

A. ₦50, 50 units

B. ₦75, 25 units

Correct C. ₦100, 0 units

D. ₦125, 50 units

Correct Answer: C

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Question 2

A firm's production function is given by Q = 2L^0.5, where Q is the quantity produced and L is the labor input. If the firm's revenue function is given by R = 100Q, find the labor input that maximizes the firm's profit.

A. 10 units

Correct B. 20 units

C. 30 units

D. 40 units

Correct Answer: B

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Question 3

A country's GDP is given by the equation GDP = C + I + G + $ X - M $, where C is consumption, I is investment, G is government sp\ending, X is exports, and M is imports. If the country's GDP is ₦10 trillion, consumption is ₦2 trillion, investment is ₦1 trillion, government sp\ending is ₦1.5 trillion, exports are ₦2.5 trillion, and imports are ₦1.5 trillion, find the country's trade balance.

A. ₦0

B. ₦1 trillion

Correct C. ₦2 trillion

D. ₦3 trillion

Correct Answer: C

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Question 4

A firm's tax liability is given by the equation T = 0.2I, where T is the tax liability and I is the investment. If the firm's investment is ₦10 million, find the firm's tax liability.

Correct A. ₦0.2 million

B. ₦0.5 million

C. ₦1 million

D. ₦2 million

Correct Answer: A

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Question 5

A country's budget is given by the equation B = R - T, where B is the budget, R is revenue, and T is tax. If the country's revenue is ₦10 trillion and tax is ₦2 trillion, find the country's budget.

A. ₦8 trillion

B. ₦9 trillion

Correct C. ₦10 trillion

D. ₦11 trillion

Correct Answer: C

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Question 6

A monopolistically competitive firm faces a downward-sloping demand curve. If the firm increases its price, what will happen to its marginal revenue?

A. Increase

Correct B. Decrease

C. Remain the same

D. Become more elastic

Correct Answer: B

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Question 7

A country's balance of payments is in equilibrium when its current account is equal to its capital account. What is the name of this equilibrium?

A. Current account equilibrium

B. Capital account equilibrium

Correct C. Balance of payments equilibrium

D. Trade balance equilibrium

Correct Answer: C

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Question 8

A firm's production function is given by Q = 2L^0.5K^0.5. What is the value of the returns to scale?

A. Increa\sing returns to scale

B. Decrea\sing returns to scale

Correct C. Cons\tant returns to scale

D. Negative returns to scale

Correct Answer: C

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Question 9

A country's elasticity of demand for a particular good is 0.8. If the price of the good increases by 10%, what will happen to the quantity demanded?

A. Increase by 8%

Correct B. Decrease by 8%

C. Increase by 10%

D. Decrease by 10%

Correct Answer: B

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Question 10

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm increases its labor input by 10%, what will happen to its output?

A. Increase by 5%

Correct B. Increase by 10%

C. Increase by 15%

D. Decrease by 5%

Correct Answer: B

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Question 11

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 P = 10, and the firm's \cost function is C(L,K) = 2L + 3K, what is the optimal level of labor (L) and capital (K) to maximize profits?

Correct A. $ L = 4, K = 4 $

B. $ L = 2, K = 2 $

C. $ L = 8, K = 8 $

D. $ L = 1, K = 1 $

Correct Answer: A

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Question 12

A government is considering a tax reform to reduce income inequality. The current tax system has a progressive tax rate structure with a top marginal tax rate of 40%. The government wants to introduce a new tax system with a flat tax rate of 25%. If the government expects to collect the same amount of revenue as before, what is the new tax base?

A. ( 100 )

Correct B. ( 120 )

C. ( 150 )

D. ( 180 )

Correct Answer: B

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Question 13

A firm is considering investing in a new project with a required rate of return of 12%. The project has a net present value (NPV) of -100,000. What is the present value of the expected future cash flows?

Correct A. ( 80,000 )

B. ( 100,000 )

C. ( 120,000 )

D. ( 140,000 )

Correct Answer: A

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Question 14

A government is considering a policy to increase agricultural production. The policy involves providing subsidies to farmers to purchase fertilizers and pesticides. If the government expects to sp\end 10 billion naira on the policy, and the subsidy rate is 20%, what is the total value of fertilizers and pesticides purchased?

A. ( 40,000,000,000 )

Correct B. ( 50,000,000,000 )

C. ( 60,000,000,000 )

D. ( 70,000,000,000 )

Correct Answer: B

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Question 15

A firm is considering investing in a new project with a required rate of return of 15%. The project has a net present value (NPV) of 150,000. What is the present value of the expected future cash flows?

A. ( 120,000 )

Correct B. ( 150,000 )

C. ( 180,000 )

D. ( 200,000 )

Correct Answer: B

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Question 16

Suppose a country has a trade deficit of $100 billion and a current account deficit of $50 billion. What is the likely effect on its exchange rate?

A. The exchange rate will appreciate

Correct B. The exchange rate will depreciate

C. The exchange rate will remain unchanged

D. The exchange rate will fluctuate

Correct Answer: B

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Question 17

A monopolist faces a demand curve given by Q = 100 - 2P and a marginal \cost curve given by MC = 10 + 2Q. What is the profit-maximizing price?

A. ₦25

Correct B. ₦50

C. ₦75

D. ₦100

Correct Answer: B

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Question 18

A consumer's indifference curve is given by U = 2x + 3y. The budget constraint is given by 2x + 3y = 12. What is the consumer's optimal bundle?

Correct A. x = 2, y = 4

B. x = 4, y = 2

C. x = 6, y = 0

D. x = 0, y = 6

Correct Answer: A

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Question 19

A country's GDP is given by GNP - $ imports - exports $. If the GNP is $100 billion, imports are $50 billion, and exports are $20 billion, what is the GDP?

A. $70 billion

Correct B. $80 billion

C. $90 billion

D. $100 billion

Correct Answer: B

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Question 20

A firm's \cost function is given by C = 2Q^2 + 10Q. The revenue function is given by R = 20Q. What is the profit-maximizing quantity?

A. 5 units

Correct B. 10 units

C. 15 units

D. 20 units

Correct Answer: B

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Question 21

A firm's production function is given by Q = 2L^$ 1/2 $K^$ 1/2 $, where L is labor and K is capital. If the firm's current labor and capital inputs are 16 and 9 respectively, what is the marginal product of labor (MPL) at this point?

A. 1/4

Correct B. 1/2

C. 1

D. 2

Correct Answer: B

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Question 22

A government imposes a tax on a firm's output. The firm's supply curve shifts to the left, but the demand curve remains unchanged. What is the effect on the equilibrium price and quantity?

Correct A. Price increases, quantity decreases

B. Price decreases, quantity increases

C. Price increases, quantity increases

D. Price decreases, quantity decreases

Correct Answer: A

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Question 23

A consumer's utility function is given by U = 2x + 3y, where x and y are the quantities of two goods. If the consumer's budget is ₦100 and the prices of the two goods are ₦5 and ₦10 respectively, what is the consumer's optimal bundle?

Correct A. x = 10, y = 5

B. x = 5, y = 10

C. x = 15, y = 0

D. x = 0, y = 15

Correct Answer: A

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Question 24

A firm's \cost function is given by C = 2L + 3K, where L is labor and K is capital. If the firm's current labor and capital inputs are 16 and 9 respectively, what is the firm's total \cost?

A. ₦100

Correct B. ₦150

C. ₦200

D. ₦250

Correct Answer: B

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Question 25

A firm is a pure monopolist in a market with a demand curve given by P = 100 - 2Q. The firm's marginal \cost curve is given by MC = 10. What is the firm's optimal quantity and price?

Correct A. Q = 20, P = ₦80

B. Q = 30, P = ₦70

C. Q = 40, P = ₦60

D. Q = 50, P = ₦50

Correct Answer: A

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