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POST UTME BSU 2019 Economics | Objective

Are you preparing for POST UTME BSU exams? Reviewing past questions is one of the most effective ways to guarantee a high score. This practice hub features authentic 2019 Economics (Objective) questions designed to simulate the real exam environment.

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Question 1

A consumer's utility function is given by ( U(x,y) = 10\sqrt{x} + 5\sqrt{y} ). If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦10 respectively, find the optimal bundle of x and y.

A. x = 100, y = 0

Correct B. x = 50, y = 50

C. x = 0, y = 100

D. x = 200, y = 0

Correct Answer: B

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Question 2

The demand function for a product is given by \( Q_d\( p \ \) = 100 - 2p ) and the supply function is given by \( Q_s\( p \ \) = 2p - 50 ). Find the equilibrium price and quantity.

Correct A. p = 25, Q = 50

B. p = 50, Q = 100

C. p = 75, Q = 150

D. p = 100, Q = 200

Correct Answer: A

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Question 3

A farmer produces wheat and corn on a 100-hectare farm. The production functions are given by \( X_w = 100 - 0.1A \) and \( X_c = 50 - 0.05A \), where A is the amount of labor used. If the price of wheat is ₦50 per unit and the price of corn is ₦20 per unit, find the optimal amount of labor to use.

A. A = 500

Correct B. A = 750

C. A = 1000

D. A = 1250

Correct Answer: B

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Question 4

The government of a country imposes a tax of ₦10 per unit on a good. The demand function for the good is given by \( Q_d\( p \ \) = 100 - 2p ) and the supply function is given by \( Q_s\( p \ \) = 2p - 50 ). Find the new equilibrium price and quantity.

A. p = 30, Q = 40

B. p = 35, Q = 45

Correct C. p = 40, Q = 50

D. p = 45, Q = 55

Correct Answer: C

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Question 5

A firm produces two goods, A and B, u\sing two inputs, labor and capital. The production functions are given by \( X_A = 10L + 5K \) and \( X_B = 5L + 10K \), where L is labor and K is capital. If the price of good A is ₦50 per unit and the price of good B is ₦20 per unit, find the optimal amount of labor and capital to use.

Correct A. L = 100, K = 50

B. L = 50, K = 100

C. L = 200, K = 150

D. L = 150, K = 200

Correct Answer: A

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Question 6

Consider a country with a balance of payments deficit. Explain how the central bank can use monetary policy to reduce the deficit.

Correct A. Increase interest rates to reduce consumption and imports

B. Decrease interest rates to increase consumption and imports

C. Implement capital controls to limit foreign investment

D. Increase the money supply to stimulate economic growth

Correct Answer: A

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Question 7

A firm is considering investing in a new project with a net present value (NPV) of ₦1,500,000. The \cost of capital is 10% per annum. Calculate the internal rate of return (IRR) of the project.

A. 12%

Correct B. 15%

C. 18%

D. 20%

Correct Answer: B

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Question 8

A country's GDP at market price is ₦10,000,000,000. The net indirect tax is ₦1,500,000,000. Calculate the GDP at factor \cost.

Correct A. ₦8,500,000,000

B. ₦9,000,000,000

C. ₦9,500,000,000

D. ₦10,500,000,000

Correct Answer: A

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Question 9

A firm is considering investing in a new project with a payback period of 5 years. The initial investment is ₦5,000,000. Calculate the annual cash inflow required to break even.

A. ₦1,000,000

Correct B. ₦1,200,000

C. ₦1,500,000

D. ₦2,000,000

Correct Answer: B

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Question 10

A country's balance of payments deficit is ₦5,000,000,000. The central bank can use monetary policy to reduce the deficit. Explain how the central bank can use open market operations to reduce the deficit.

Correct A. Sell government securities to reduce the money supply

B. Buy government securities to increase the money supply

C. Increase interest rates to reduce consumption and imports

D. Decrease interest rates to increase consumption and imports

Correct Answer: A

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Question 11

Consider a firm operating in a perfectly competitive market with a downward-sloping demand curve. If the firm's marginal revenue (MR) curve intersects its average variable \cost (AVC) curve at point A, and the firm's marginal \cost (MC) curve intersects its average total \cost (ATC) curve at point B, what is the most likely outcome for the firm?

A. The firm will shut down in the short run.

B. The firm will operate in the short run but will not produce at point A.

Correct C. The firm will operate in the short run and produce at point A.

D. The firm will operate in the long run and produce at point A.

Correct Answer: C

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Question 12

A country's balance of payments (BOP) accounts can be affected by several factors. Which of the following is NOT a factor that affects the BOP?

A. Changes in exchange rates

B. Changes in interest rates

C. Changes in government policies

Correct D. Changes in the weather

Correct Answer: D

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Question 13

A firm's \cost function is given by C(q) = 2q^2 + 5q + 10. If the firm's revenue function is given by R(q) = 3q^2 + 2q - 5, what is the firm's profit function?

Correct A. π(q) = q^2 - 5q + 15

B. π(q) = 2q^2 + 5q + 10

C. π(q) = 3q^2 + 2q - 5

D. π(q) = q^2 + 5q + 15

Correct Answer: A

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Question 14

A consumer's indifference curve is given by the equation u(x,y) = 2x + 3y. If the consumer's budget constraint is given by the equation 2x + 3y = 15, what is the consumer's optimal bundle?

Correct A. (x,y) = (3,4)

B. (x,y) = (4,3)

C. (x,y) = (5,2)

D. (x,y) = (2,5)

Correct Answer: A

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Question 15

A country's inflation rate is given by the equation π = \( M/P \) * \( ΔQ/Q \), where M is the money supply, P is the price level, ΔQ is the change in quantity, and Q is the quantity. If the money supply increases by 10% and the price level increases by 5%, what is the inflation rate?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 16

Consider a closed economy with a \single good and service. If the price level increases by 10% and the nominal GDP also increases by 10%, what can be concluded about the real GDP?

A. Real GDP has increased by 10%

B. Real GDP has decreased by 10%

Correct C. Real GDP has remained cons\tant

D. Insufficient information to determine the effect on real GDP

Correct Answer: C

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Question 17

A firm's production function is given by Q = 2L^\( 1/2 \)K^\( 1/2 \), where Q is output, 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. Output increases by 10%

B. Output increases by 20%

Correct C. Output increases by 30%

D. Output remains cons\tant

Correct Answer: C

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Question 18

A country's nominal GDP is ₦100 billion, and its price level is 100. If the price level increases by 20%, what is the new nominal GDP?

A. ₦120 billion

Correct B. ₦140 billion

C. ₦160 billion

D. ₦180 billion

Correct Answer: B

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Question 19

A firm's demand function is given by Q = 100 - 2P, where Q is quantity demanded and P is price. If the price increases by 10%, what is the new quantity demanded?

A. 80

B. 90

C. 100

Correct D. 110

Correct Answer: D

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Question 20

A country's GDP at market price is ₦100 billion, and its GDP at factor \cost is ₦90 billion. What is the indirect tax rate?

A. 10%

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

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Question 21

The money multiplier is a concept used in the money creation process. It is defined as the ratio of the change in the money supply to the change in the reserve requirement. If the reserve requirement is increased from 10% to 15%, and the initial money supply is ₦100 billion, what is the new money supply if the commercial banks maintain a 20% excess reserve ratio?

A. ₦80 billion

B. ₦120 billion

Correct C. ₦150 billion

D. ₦180 billion

Correct Answer: C

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Question 22

A country's GDP is ₦1.5 trillion, its imports are ₦300 billion, and its exports are ₦400 billion. What is the country's balance of trade?

Correct A. ₦100 billion

B. ₦200 billion

C. ₦300 billion

D. ₦400 billion

Correct Answer: A

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Question 23

A firm's production function is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is labor, and K is capital. If the firm increases labor from 100 units to 120 units and capital from 100 units to 120 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 24

A country's GNP is ₦2 trillion, its net factor income from abroad is ₦200 billion, and its depreciation is ₦100 billion. What is the country's national income?

A. ₦2.1 trillion

Correct B. ₦2.2 trillion

C. ₦2.3 trillion

D. ₦2.4 trillion

Correct Answer: B

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Question 25

A firm's demand function is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the price is increased from ₦10 to ₦15, what is the new quantity demanded?

A. 50 units

Correct B. 75 units

C. 100 units

D. 125 units

Correct Answer: B

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