Practice Post UTME AFE BABALOLA UNIVERSITY commerce 2018 Past Questions

Question 1

A firm specializes in producing only one good. This specialization allows the firm to achieve economies of scale in production. Which of the following is a benefit of specialization?

A. Increased productivity

Correct B. Reduced costs

C. Improved quality

D. Increased competition

Correct Answer: B

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Question 2

A company has a policy of paying its employees a fixed salary plus a bonus based on the company's profits. This type of compensation is an example of a _______ contract.

A. Fixed

Correct B. Variable

C. Frictional

D. Opportunity

Correct Answer: B

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Question 3

A firm's production function is given by the equation Q = 2L^0.5K^0.5, where Q is the quantity produced, L is the number of labor hours, and K is the capital stock. If the firm wants to produce 100 units of output, how many labor hours are required if the capital stock is 400?

A. 50

B. 100

Correct C. 200

D. 400

Correct Answer: C

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Question 4

A company has a portfolio of assets that includes stocks, bonds, and real estate. The company's investment manager wants to diversify the portfolio by adding a new asset class. Which of the following asset classes would be a good addition to the portfolio?

Correct A. Commodities

B. Currencies

C. Mutual Funds

D. Private Equity

Correct Answer: A

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Question 5

A firm is considering investing in a new project that has a net present value (NPV) of 100,000. The firm's cost of capital is 10%. What is the internal rate of return (IRR) of the project?

A. 10%

Correct B. 12%

C. 15%

D. 18%

Correct Answer: B

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Question 6

A company's marketing strategy involves creating a new product line to cater to the growing demand for eco-friendly products. The company has identified three potential product lines: A) Biodegradable plastics, B) Reusable water bottles, C) Energy-efficient light bulbs, and D) Organic food products. Which product line is most likely to appeal to environmentally conscious consumers?

A. Biodegradable plastics

Correct B. Reusable water bottles

C. Energy-efficient light bulbs

D. Organic food products

Correct Answer: B

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Question 7

A firm's sole trader has a warehouse with a capacity to store 500 units of goods. The firm's inventory management system uses a first-in-first-out (FIFO) method. If the firm receives a new shipment of 200 units, what is the new total capacity of the warehouse?

A. 600

B. 700

Correct C. 800

D. 900

Correct Answer: C

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Question 8

A company's marketing mix involves a product with a high perceived value, a price of ₦500, and a distribution channel that includes online and offline sales. What is the primary benefit of this marketing mix?

A. Increased revenue

B. Improved brand image

Correct C. Enhanced customer experience

D. Increased market share

Correct Answer: C

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Question 9

A firm's sole trader has a warehouse with a capacity to store 500 units of goods. The firm's inventory management system uses a first-in-first-out (FIFO) method. If the firm receives a new shipment of 200 units, what is the new total capacity of the warehouse?

A. 600

B. 700

Correct C. 800

D. 900

Correct Answer: C

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Question 10

A company's marketing strategy involves creating a new product line to cater to the growing demand for eco-friendly products. The company has identified three potential product lines: A) Biodegradable plastics, B) Reusable water bottles, C) Energy-efficient light bulbs, and D) Organic food products. Which product line is most likely to appeal to environmentally conscious consumers?

A. Biodegradable plastics

Correct B. Reusable water bottles

C. Energy-efficient light bulbs

D. Organic food products

Correct Answer: B

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Question 11

A company is considering two different production processes for its new product. Process A has a fixed cost of ₦500,000 and a variable cost of ₦200 per unit. Process B has a fixed cost of ₦750,000 and a variable cost of ₦150 per unit. If the selling price of the product is ₦300 per unit, which process should the company choose to maximize its profit?

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 12

A consumer protection agency is investigating a complaint about a company's advertising practices. The company has been accused of making false claims about the benefits of its product. Which of the following is a legal requirement for advertising in Nigeria?

A. The company must provide evidence to support its claims

B. The company must disclose any potential conflicts of interest

C. The company must obtain prior approval from the advertising regulator

Correct D. The company must not make any claims that are likely to deceive consumers

Correct Answer: D

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Question 13

A sole trader is considering expanding its business by opening a new branch. The new branch will require an initial investment of ₦1,000,000 and will generate additional revenue of ₦500,000 per year. If the sole trader's current profit is ₦200,000 per year, what is the minimum required rate of return on the investment to justify the expansion?

A. 10%

Correct B. 15%

C. 20%

D. 25%

Correct Answer: B

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Question 14

A company is considering exporting its product to a foreign market. The company has estimated that the export price will be ₦250 per unit, and the transportation cost will be ₦50 per unit. If the company's current selling price is ₦300 per unit, what is the minimum quantity that must be exported to break even?

A. 100 units

B. 200 units

Correct C. 500 units

D. 1000 units

Correct Answer: C

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Question 15

A consumer protection agency is investigating a complaint about a company's unfair trading practices. The company has been accused of engaging in price-fixing with its competitors. Which of the following is a legal consequence of price-fixing in Nigeria?

A. The company must pay a fine of ₦1,000,000

B. The company must refund all payments made by consumers

Correct C. The company must cease all trading activities for 6 months

D. The company must be dissolved

Correct Answer: C

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Question 16

In a perfectly competitive market, the law of supply states that as the price of a commodity increases, the quantity supplied will _______.

A. increase

Correct B. decrease

C. remain constant

D. become elastic

Correct Answer: B

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Question 17

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm wants to produce 16 units of output, and the price of labor is ₦100 per unit, while the price of capital is ₦200 per unit, what is the minimum cost of production?

A. ₦800

B. ₦1200

Correct C. ₦1600

D. ₦2400

Correct Answer: C

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Question 18

A consumer has a budget of ₦1000 and a preference for two goods, A and B. The prices of the goods are ₦200 and ₦300 respectively. The consumer's indifference curves are given by the equation U = 2x^0.5y^0.5. What is the optimal bundle of goods that the consumer will choose?

Correct A. (2, 3)

B. (3, 2)

C. (4, 1)

D. (1, 4)

Correct Answer: A

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Question 19

A firm is considering two different production processes for producing a certain good. Process A requires an initial investment of ₦100,000 and has a fixed cost of ₦50,000 per unit produced. Process B requires an initial investment of ₦200,000 and has a fixed cost of ₦30,000 per unit produced. If the firm expects to produce 1000 units of the good, which process should it choose?

A. Process A

Correct B. Process B

C. Both processes are equally profitable

D. Neither process is profitable

Correct Answer: B

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Question 20

A consumer has a budget of ₦500 and a preference for two goods, A and B. The prices of the goods are ₦100 and ₦200 respectively. The consumer's indifference curves are given by the equation U = 2x^0.5y^0.5. What is the optimal bundle of goods that the consumer will choose?

A. (2, 2)

Correct B. (3, 1)

C. (1, 3)

D. (4, 0)

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 Q is output, L is labor, and K is capital. If the firm's current labor and capital inputs are L = 16 and K = 9, respectively, what is the marginal product of labor?

A. 1

Correct B. 2

C. 3

D. 4

Correct Answer: B

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Question 22

A company's stock control system uses a first-in, first-out (FIFO) inventory method. If the company has 100 units of a product in stock, and 20 units are sold, what is the total value of the remaining units if the cost of each unit is ₦100?

Correct A. ₦8000

B. ₦9000

C. ₦10000

D. ₦11000

Correct Answer: A

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Question 23

A consumer protection law requires that all products sold in a particular market must have a minimum warranty period of 2 years. If a company sells a product with a warranty period of 1 year, what is the company's liability under the consumer protection law?

Correct A. The company is liable for any damages or losses incurred by the consumer.

B. The company is not liable for any damages or losses incurred by the consumer.

C. The company is liable for any damages or losses incurred by the consumer, but only for the first year.

D. The company is liable for any damages or losses incurred by the consumer, but only for the remaining warranty period.

Correct Answer: A

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Question 24

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's current labor and capital inputs are L = 16 and K = 9, respectively, what is the total output?

A. 8

B. 16

Correct C. 32

D. 64

Correct Answer: C

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Question 25

A company's transport system uses a fleet of vehicles to deliver goods to customers. If the company has a total of 10 vehicles, and 3 vehicles are out of service due to maintenance, what is the total number of vehicles available for delivery?

A. 7

Correct B. 8

C. 9

D. 10

Correct Answer: B

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