Purpose: University placement test is an important admission policy priority in Nigeria, because it serves as a university-based selection criterion for placement of students into undergraduate programs in Nigeria. Although recently attention have been shifted on the call to develop a standard content and standardize the test, yet attention has not been paid on the development of standard setting in which the decisions to select or reject the applicants are made. This study; therefore, investigated the application Rasch-based Objective Standard Setting (OSS) to establish the standards in a university placement test. Methods: To demonstrate the application of OSS, 9 judges were employed for the conduct of standard ratings; the data used for Rasch calibration with WINSTEP were the responses of 600 students on the 60 items validated Economics Placement Test (EPT). Findings: The experts' ratings and Rasch generated logits (item difficulties) were used in quantifying the set of essential items selected. Results of OSS produced the cut-scores of [less than] -0.62 into Basic, -0.62 logits into Proficient and 0.02 logits for Advanced performance levels. The examinees in these categories were, 39% at Basic, 32% at Proficient and 29% at Advanced performance levels. Implications for Research and Practice: The results of this OSS provide performance levels with a clear content related description to informed decision on students' mastery of the content in EPT. It is recommended that, results from the OSS should be compared with other existing IRT-based methods in similar study to ascertain its external validity.