POST UTME AAUA 2023 Commerce | Objective

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Question 1
In a perfectly competitive market, the supply curve is represented by the equation ( Q = 100 + 2P ). If the price elasticity of demand is 0.5, what is the change in quantity demanded when the price increases by ₦10?
A. 20 units
Correct B. 40 units
C. 60 units
D. 80 units

Correct Answer: B

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Question 2
A company has a production function ( Q = 2L^2 + 5K ), where ( L ) is labor and ( K ) is capital. If the company increases labor by 20% and capital by 15%, what is the percentage change in output?
A. 10%
B. 15%
Correct C. 20%
D. 25%

Correct Answer: C

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Question 3
A firm has a budget constraint ( 2L + 3K = 100 ), where ( L ) is labor and ( K ) is capital. If the firm wants to maximize profit, which of the following combinations of labor and capital will it choose?
Correct A. ( L = 20, K = 30 )
B. ( L = 30, K = 20 )
C. ( L = 40, K = 10 )
D. ( L = 10, K = 40 )

Correct Answer: A

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Question 4
A life insurance policy pays ₦1 million to the beneficiary if the policyholder dies within the next 5 years. The probability of the policyholder dying within the next 5 years is 0.05. What is the expected value of the insurance policy?
A. ₦50,000
Correct B. ₦500,000
C. ₦1 million
D. ₦5 million

Correct Answer: B

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Question 5
A bank offers a 5-year fixed deposit account with an interest rate of 10% per annum compounded annually. If the initial deposit is ₦100,000, what will be the future value of the investment after 5 years?
Correct A. ₦163,918.62
B. ₦164,918.62
C. ₦165,918.62
D. ₦166,918.62

Correct Answer: A

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Question 6
A company's sole trader has a business income of ₦1,500,000 and expenses of ₦800,000. What is the sole trader's profit?
Correct A. ₦700,000
B. ₦600,000
C. ₦800,000
D. ₦900,000

Correct Answer: A

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Question 7
A business has a production cost of ₦2,000,000 and a selling price of ₦3,500,000. What is the business's profit margin?
A. 50%
Correct B. 60%
C. 40%
D. 30%

Correct Answer: B

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Question 8
A company's marketing budget is ₦1,200,000. If the company spends 30% on advertising, 20% on promotions, and 50% on public relations, what is the amount spent on public relations?
A. ₦600,000
B. ₦800,000
Correct C. ₦900,000
D. ₦1,000,000

Correct Answer: C

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Question 9
A business has a production cost of ₦1,500,000 and a selling price of ₦3,000,000. If the business produces 2,000 units, what is the business's profit?
A. ₦1,200,000
B. ₦1,500,000
Correct C. ₦1,800,000
D. ₦2,000,000

Correct Answer: C

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Question 10
A company's insurance premium is ₦500,000. If the company has a deductible of ₦200,000, what is the company's net insurance premium?
A. ₦300,000
Correct B. ₦400,000
C. ₦500,000
D. ₦600,000

Correct Answer: B

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Question 11
In a perfectly competitive market, the supply curve is a
Correct A. Horizontal line
B. Vertical line
C. U-shaped curve
D. Inverted U-shaped curve

Correct Answer: A

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Question 12
The concept of 'moral hazard' in insurance refers to the situation where
Correct A. A policyholder takes unnecessary risks because they are insured
B. An insurer takes unnecessary risks because they are insured
C. A policyholder takes necessary risks because they are insured
D. An insurer takes necessary risks because they are insured

Correct Answer: A

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Question 13
The diagram below shows a typical example of a
Correct A. Supply and demand curve
B. Production possibility frontier
C. Cost-benefit analysis
D. Break-even analysis

Correct Answer: A

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Question 14
The concept of 'privity of contract' in business law refers to the situation where
A. A third party has a right to enforce a contract
Correct B. A third party has no right to enforce a contract
C. A third party has a right to rescind a contract
D. A third party has no right to rescind a contract

Correct Answer: B

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Question 15
The diagram below shows a typical example of a
Correct A. Photosynthesis process
B. Respiration process
C. Transpiration process
D. Osmosis process

Correct Answer: A

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Question 16
The concept of comparative advantage in international trade is based on the idea that countries should specialize in producing goods for which they have a lower opportunity cost compared to other countries. Which of the following is a correct example of comparative advantage?
A. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 100 units of cloth.
B. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 150 units of cloth.
Correct C. Country A produces 50 units of wheat and 100 units of cloth, while Country B produces 100 units of wheat and 50 units of cloth.
D. Country A produces 50 units of wheat and 100 units of cloth, while Country B produces 150 units of wheat and 50 units of cloth.

Correct Answer: C

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Question 17
A consumer protection agency has been established to regulate the sale of goods and services in a country. Which of the following is a key function of this agency?
Correct A. To ensure that all goods and services meet the required standards of quality and safety.
B. To protect consumers from unfair trade practices and false advertising.
C. To regulate the prices of goods and services.
D. To provide information to consumers about the quality and safety of goods and services.

Correct Answer: A

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Question 18
A firm has a production function given by Q = 2L + 3K, where Q is the output, L is the labor input, and K is the capital input. If the firm wants to produce 100 units of output, how many units of labor and capital are required?
Correct A. L = 20, K = 30
B. L = 30, K = 20
C. L = 40, K = 10
D. L = 10, K = 40

Correct Answer: A

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Question 19
A company has a portfolio of assets that includes stocks, bonds, and real estate. The expected return on each asset is as follows: stocks (15%), bonds (8%), and real estate (12%). If the company wants to allocate its portfolio to achieve an expected return of 10%, what is the optimal allocation?
Correct A. Stocks: 60%, Bonds: 20%, Real Estate: 20%
B. Stocks: 40%, Bonds: 30%, Real Estate: 30%
C. Stocks: 20%, Bonds: 40%, Real Estate: 40%
D. Stocks: 30%, Bonds: 50%, Real Estate: 20%

Correct Answer: A

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Question 20
A bank has a loan portfolio that includes personal loans, business loans, and mortgage loans. The interest rates on each type of loan are as follows: personal loans (12%), business loans (15%), and mortgage loans (8%). If the bank wants to allocate its loan portfolio to achieve an interest income of ₦1,000,000, what is the optimal allocation?
Correct A. Personal Loans: ₦300,000, Business Loans: ₦400,000, Mortgage Loans: ₦300,000
B. Personal Loans: ₦400,000, Business Loans: ₦300,000, Mortgage Loans: ₦300,000
C. Personal Loans: ₦300,000, Business Loans: ₦300,000, Mortgage Loans: ₦400,000
D. Personal Loans: ₦400,000, Business Loans: ₦400,000, Mortgage Loans: ₦200,000

Correct Answer: A

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Question 21
A company's marketing strategy involves a mix of advertising, sales promotions, and public relations. Which of the following is the primary goal of this strategy?
A. To increase brand awareness
B. To build customer loyalty
C. To generate leads
Correct D. To increase sales revenue

Correct Answer: D

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Question 22
A sole trader's business is affected by the following factors: market demand, competition, and government regulations. Which of the following is the most significant factor?
A. Market demand
B. Competition
C. Government regulations
Correct D. All of the above

Correct Answer: D

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Question 23
A company's insurance policy covers the following risks: fire, theft, and liability. Which of the following is the most expensive risk to insure?
A. Fire
B. Theft
Correct C. Liability
D. All of the above

Correct Answer: C

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Question 24
A foreign trade agreement between two countries involves the exchange of goods and services. Which of the following is the primary benefit of this agreement?
A. Increased trade volume
B. Improved economic growth
C. Enhanced political relations
Correct D. All of the above

Correct Answer: D

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Question 25
A company's marketing mix involves the following elements: product, price, promotion, and place. Which of the following is the primary goal of this mix?
A. To increase brand awareness
B. To build customer loyalty
C. To generate leads
Correct D. To increase sales revenue

Correct Answer: D

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