POST UTME COVENANT UNIVERSITY 2020 Commerce | Objective

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Question 1
In a perfectly competitive market, the supply curve is perfectly elastic. What is the implication of this on the price elasticity of demand?
A. The price elasticity of demand is perfectly inelastic.
Correct B. The price elasticity of demand is perfectly elastic.
C. The price elasticity of demand is unit elastic.
D. The price elasticity of demand is not affected.

Correct Answer: B

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Question 2
A company's production function is given by Q = 2L^0.5K^0.5. If the price of labor increases by 20% and the price of capital increases by 15%, what is the new production level?
Correct A. Q = 1.2L^0.5K^0.5
B. Q = 1.15L^0.5K^0.5
C. Q = 1.2L^0.5K^0.5 + 1.15K^0.5
D. Q = 1.2L^0.5K^0.5 - 1.15K^0.5

Correct Answer: A

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Question 3
A firm is considering two investment projects. Project A has a 10% chance of success and a 90% chance of failure, with a payoff of ₦10,000 if it succeeds. Project B has a 20% chance of success and an 80% chance of failure, with a payoff of ₦20,000 if it succeeds. Which project should the firm choose?
A. Project A
Correct B. Project B
C. Neither project
D. Both projects

Correct Answer: B

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Question 4
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 actions would be most effective?
A. Increasing the price of the product
B. Decreasing the price of the product
C. Improving the product's quality
Correct D. Increasing the advertising budget

Correct Answer: D

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Question 5
A firm is considering a new product launch. The product's life cycle is given by the following diagram:
A. The product is in the introduction stage
Correct B. The product is in the growth stage
C. The product is in the maturity stage
D. The product is in the decline stage

Correct Answer: B

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Question 6
A company is considering two different production processes for its new product. Process A requires an initial investment of ₦5 million and generates a profit of ₦2.5 million per year. Process B requires an initial investment of ₦10 million and generates a profit of ₦5 million per year. If the company expects to operate for 5 years, which process should it 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 7
A firm's demand function is given by the equation Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's total revenue is given by the equation TR = PQ, find the price at which the firm's total revenue is maximized.
A. ₦20
Correct B. ₦30
C. ₦40
D. ₦50

Correct Answer: B

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Question 8
A company has two production facilities, A and B. Facility A produces 100 units per day, while facility B produces 200 units per day. If the company operates for 5 days, what is the total number of units produced?
A. 1000
B. 1200
Correct C. 1500
D. 2000

Correct Answer: C

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Question 9
A bank offers a 5% interest rate on deposits. If a customer deposits ₦10,000, how much interest will they earn in one year?
A. ₦500
Correct B. ₦1,000
C. ₦1,500
D. ₦2,000

Correct Answer: B

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Question 10
A firm's production function is given by the equation Q = 2L + 3K, where Q is the quantity produced, L is the number of labor hours, and K is the amount of capital. If the firm uses 10 labor hours and 5 units of capital, how many units will it produce?
A. 10
B. 15
Correct C. 20
D. 25

Correct Answer: C

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Question 11
A company's marketing strategy involves a mix of advertising, sales promotions, and public relations. Which of the following is NOT a characteristic of a successful marketing strategy?
A. It is focused on the target market
B. It is flexible and adaptable to changing market conditions
Correct C. It is solely dependent on advertising
D. It is customer-centric

Correct Answer: C

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Question 12
A firm's warehousing and stock control system involves the use of a just-in-time inventory system. What is the main advantage of this system?
A. Reduced inventory costs
B. Improved customer service
Correct C. Increased inventory turnover
D. Reduced transportation costs

Correct Answer: C

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Question 13
A consumer protection law requires that all goods sold in a particular market must meet certain safety standards. What is the main purpose of this law?
A. To protect consumers from unfair business practices
Correct B. To ensure that goods sold meet certain safety standards
C. To promote competition among businesses
D. To reduce the cost of goods sold

Correct Answer: B

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Question 14
A company's marketing strategy involves the use of a mix of marketing research, advertising, and sales promotions. Which of the following is NOT a characteristic of a successful marketing strategy?
A. It is focused on the target market
B. It is flexible and adaptable to changing market conditions
Correct C. It is solely dependent on marketing research
D. It is customer-centric

Correct Answer: C

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Question 15
A firm's transport and communication system involves the use of a mix of road, rail, and air transportation. What is the main advantage of this system?
A. Reduced transportation costs
Correct B. Improved delivery times
C. Increased transportation capacity
D. Reduced inventory costs

Correct Answer: B

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Question 16
A sole trader's business is considered a separate legal entity from its owner. However, the owner is personally liable for the business's debts. Which of the following best describes the relationship between a sole trader and their business?
A. Separate legal entity with limited liability
B. Separate legal entity with unlimited liability
Correct C. No legal entity with unlimited liability
D. No legal entity with limited liability

Correct Answer: C

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Question 17
A company's Memorandum of Association (MoA) outlines the company's objectives, powers, and business operations. Which of the following is NOT a typical objective of a company's MoA?
A. To generate profits for shareholders
Correct B. To engage in charitable activities
C. To conduct business in a socially responsible manner
D. To provide employment opportunities for its employees

Correct Answer: B

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Question 18
A company's Articles of Association (AoA) outlines the rules and regulations governing the company's internal management and operations. Which of the following is a typical provision of a company's AoA?
A. The number of directors required to form a quorum
Correct B. The procedure for calling and conducting general meetings
C. The method of valuation of shares in the event of a winding-up
D. The procedure for appointing a liquidator

Correct Answer: B

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Question 19
A company's Memorandum of Association (MoA) and Articles of Association (AoA) collectively form the company's constitution. Which of the following is a key difference between the MoA and AoA?
Correct A. The MoA outlines the company's objectives, while the AoA outlines the rules and regulations governing the company's internal management and operations
B. The MoA outlines the rules and regulations governing the company's internal management and operations, while the AoA outlines the company's objectives
C. The MoA and AoA are interchangeable terms
D. The MoA and AoA are not relevant to a company's constitution

Correct Answer: A

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Question 20
A sole trader's business is considered a separate legal entity from its owner. However, the owner is personally liable for the business's debts. Which of the following best describes the relationship between a sole trader and their business?
A. Separate legal entity with limited liability
B. Separate legal entity with unlimited liability
Correct C. No legal entity with unlimited liability
D. No legal entity with limited liability

Correct Answer: C

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Question 21
A company's inventory management system uses the Economic Order Quantity (EOQ) model to determine the optimal order quantity. If the demand rate is 100 units per month, the ordering cost is ₦50 per order, and the holding cost is ₦10 per unit per month, what is the optimal order quantity?
A. 200 units
B. 300 units
Correct C. 400 units
D. 500 units

Correct Answer: C

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Question 22
A sole trader, Mr. A, has a business income of ₦500,000 and business expenses of ₦200,000. If he has a personal income of ₦300,000 and personal expenses of ₦100,000, what is his total tax liability?
A. ₦50,000
B. ₦75,000
Correct C. ₦100,000
D. ₦125,000

Correct Answer: C

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Question 23
A company's transport department uses a fleet of vehicles to transport goods. If the company has a total of 10 vehicles, and each vehicle has a capacity of 5 tons, what is the total capacity of the fleet?
A. 50 tons
B. 75 tons
Correct C. 100 tons
D. 125 tons

Correct Answer: C

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Question 24
A bank's investment portfolio consists of stocks, bonds, and mutual funds. If the bank has a total investment of ₦1,000,000, and the stocks account for 30% of the portfolio, what is the value of the stocks?
A. ₦300,000
B. ₦350,000
Correct C. ₦400,000
D. ₦450,000

Correct Answer: C

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Question 25
A company's insurance policy has a premium of ₦50,000 per year. If the company has a deductible of ₦20,000, and the policy pays out ₦30,000 per claim, what is the expected value of the policy?
A. ₦40,000
B. ₦45,000
Correct C. ₦50,000
D. ₦55,000

Correct Answer: C

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