Practice Post UTME ABU commerce 2025 Past Questions

Question 1

In a perfectly competitive market, the supply curve is upward-sloping because of the law of increasing opportunity costs. However, this is not the case in a perfectly competitive market. What is the correct reason for the upward-sloping supply curve in a perfectly competitive market?

A. The law of increasing opportunity costs

Correct B. The law of diminishing marginal returns

C. The law of supply and demand

D. The law of diminishing marginal utility

Correct Answer: B

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Question 2

A company is considering two different production processes for its product. Process A requires an initial investment of ₦100,000 and has a variable cost of ₦50 per unit. Process B requires an initial investment of ₦150,000 and has a variable cost of ₦30 per unit. If the company produces 10,000 units, what is the total cost of production for Process A?

Correct A. ₦500,000

B. ₦550,000

C. ₦600,000

D. ₦650,000

Correct Answer: A

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Question 3

A firm is considering two different transportation options for its goods. Option A involves a fixed cost of ₦20,000 and a variable cost of ₦10 per unit. Option B involves a fixed cost of ₦30,000 and a variable cost of ₦5 per unit. If the firm transports 5,000 units, what is the total cost of transportation for Option A?

Correct A. ₦50,000

B. ₦60,000

C. ₦70,000

D. ₦80,000

Correct Answer: A

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Question 4

A company is considering two different insurance policies for its employees. Policy A has a premium of ₦50,000 and a deductible of ₦10,000. Policy B has a premium of ₦30,000 and a deductible of ₦5,000. If the company has 10 employees, what is the total premium for Policy A?

Correct A. ₦500,000

B. ₦300,000

C. ₦400,000

D. ₦600,000

Correct Answer: A

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Question 5

A firm is considering two different production processes for its product. Process A requires an initial investment of ₦100,000 and has a variable cost of ₦50 per unit. Process B requires an initial investment of ₦150,000 and has a variable cost of ₦30 per unit. If the firm produces 10,000 units, what is the total cost of production for Process B?

A. ₦600,000

Correct B. ₦650,000

C. ₦700,000

D. ₦750,000

Correct Answer: B

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Question 6

A company's sole trader has a warehouse with a capacity of 10,000 units. If the company's average daily sales are 200 units, and the company operates 7 days a week, what is the probability that the warehouse will be empty within 5 weeks?

A. 0.5

B. 0.7

C. 0.9

Correct D. 0.99

Correct Answer: D

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Question 7

A firm's insurance policy has a deductible of ₦10,000. If the firm's annual premium is ₦120,000, and the firm pays ₦50,000 in claims, what is the firm's expected loss?

A. ₦30,000

B. ₦40,000

Correct C. ₦50,000

D. ₦60,000

Correct Answer: C

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Question 8

A company's sole trader has a warehouse with a capacity of 10,000 units. If the company's average daily sales are 200 units, and the company operates 7 days a week, what is the probability that the warehouse will be empty within 5 weeks?

A. 0.5

B. 0.7

C. 0.9

Correct D. 0.99

Correct Answer: D

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Question 9

A firm's insurance policy has a deductible of ₦10,000. If the firm's annual premium is ₦120,000, and the firm pays ₦50,000 in claims, what is the firm's expected loss?

A. ₦30,000

B. ₦40,000

Correct C. ₦50,000

D. ₦60,000

Correct Answer: C

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Question 10

A company's sole trader has a warehouse with a capacity of 10,000 units. If the company's average daily sales are 200 units, and the company operates 7 days a week, what is the probability that the warehouse will be empty within 5 weeks?

A. 0.5

B. 0.7

C. 0.9

Correct D. 0.99

Correct Answer: D

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Question 11

In a perfectly competitive market, what is the relationship between the marginal revenue product of labor (MRPL) and the marginal factor cost of labor (MFC)?

A. MRPL > MFC

B. MRPL < MFC

Correct C. MRPL = MFC

D. MRPL ≠ MFC

Correct Answer: C

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Question 12

A company is considering two different production processes for its product. Process A has a fixed cost of ₦100,000 and a variable cost of ₦50 per unit. Process B has a fixed cost of ₦150,000 and a variable cost of ₦30 per unit. If the selling price of the product is ₦80 per unit, which process should the company choose?

Correct A. Process A

B. Process B

C. Both processes are equally profitable

D. Neither process is profitable

Correct Answer: A

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Question 13

A firm is considering entering a new market. The market demand curve is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the firm's marginal cost (MC) is ₦20, what is the maximum price it can charge?

A. ₦40

Correct B. ₦50

C. ₦60

D. ₦70

Correct Answer: B

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Question 14

A company is considering launching a new product. The product's demand curve is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the company's marginal cost (MC) is ₦20, what is the maximum price it can charge?

A. ₦40

Correct B. ₦50

C. ₦60

D. ₦70

Correct Answer: B

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Question 15

A firm is considering entering a new market. The market demand curve is given by Qd = 100 - 2P, where Qd is the quantity demanded and P is the price. If the firm's marginal cost (MC) is ₦20, what is the maximum price it can charge?

A. ₦40

Correct B. ₦50

C. ₦60

D. ₦70

Correct Answer: B

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Question 16

A bank's cash reserve ratio is 20%. If the bank has a total deposit of ₦1,000,000, how much of its reserve must it maintain in cash?

Correct A. ₦200,000

B. ₦100,000

C. ₦50,000

D. ₦20,000

Correct Answer: A

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Question 17

A company's production function is given by Q = 2L^0.5K^0.5. If the company wants to produce 100 units of output, and the cost of labor is ₦50 per unit, while the cost of capital is ₦30 per unit, how much should it spend on labor and capital respectively?

Correct A. ₦5,000, ₦3,000

B. ₦3,000, ₦5,000

C. ₦2,000, ₦4,000

D. ₦4,000, ₦2,000

Correct Answer: A

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Question 18

A consumer has a utility function U(x, y) = 2x + 3y. If the prices of x and y are ₦10 and ₦20 respectively, and the consumer has a budget of ₦100, what is the optimal bundle of x and y?

Correct A. x = 5, y = 2

B. x = 2, y = 5

C. x = 3, y = 4

D. x = 4, y = 3

Correct Answer: A

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Question 19

A firm's cost function is given by C(q) = 100 + 2q + 0.01q^2. If the firm produces 100 units of output, what is its total cost?

A. ₦1,200

B. ₦1,500

Correct C. ₦1,800

D. ₦2,000

Correct Answer: C

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Question 20

A bank's return on equity (ROE) is 15%. If the bank's net income is ₦500,000 and its equity is ₦3,000,000, what is its return on assets (ROA)?

Correct A. 5%

B. 10%

C. 15%

D. 20%

Correct Answer: A

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Question 21

In a perfectly competitive market, the supply curve is horizontal and the demand curve is downward-sloping. What is the equilibrium price and quantity in this market?

A. ₦100, 100 units

Correct B. ₦120, 80 units

C. ₦150, 60 units

D. ₦180, 40 units

Correct Answer: B

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Question 22

A company's production function is given by Q = 2L^0.5K^0.5. If the company wants to produce 400 units of output, and the price of labor is ₦50 per unit, and the price of capital is ₦100 per unit, what is the minimum cost of production?

A. ₦20,000

B. ₦25,000

Correct C. ₦30,000

D. ₦35,000

Correct Answer: C

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Question 23

A firm's demand function is given by Q = 100 - 2P. If the firm's marginal revenue function is MR = 200 - 4Q, what is the firm's optimal price?

A. ₦20

B. ₦30

Correct C. ₦40

D. ₦50

Correct Answer: C

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Question 24

A company's marketing mix is given by the 4 Ps: Product, Price, Place, and Promotion. If the company wants to increase sales, which of the following strategies would be most effective?

A. Increase the price of the product

B. Improve the quality of the product

Correct C. Increase the advertising budget

D. Reduce the distribution channels

Correct Answer: C

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Question 25

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm wants to produce 400 units of output, and the price of labor is ₦50 per unit, and the price of capital is ₦100 per unit, what is the minimum cost of production?

A. ₦20,000

B. ₦25,000

Correct C. ₦30,000

D. ₦35,000

Correct Answer: C

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