Practice Post UTME LEAD CITY UNIVERSITY commerce 2022 Past Questions

Question 1

The Central Bank of Nigeria (CBN) uses the following monetary policy tools to regulate the money supply in the economy. Which of the following is NOT a monetary policy tool used by the CBN?

A. Open Market Operations (OMO)

B. Reserve Requirements

Correct C. Fiscal Policy

D. Direct Credit Facility

Correct Answer: C

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Question 2

A firm produces two goods, X and Y, using two inputs, labor (L) and capital (K). The production function for good X is given by X = 2L^0.5K^0.5. The production function for good Y is given by Y = 3L^0.25K^0.75. If the firm has 100 units of labor and 200 units of capital, how many units of good X will it produce?

A. 20

Correct B. 30

C. 40

D. 50

Correct Answer: B

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Question 3

A consumer has the following budget constraint: 2X + 3Y = 100. The consumer's indifference curves are given by U = 2X^0.5Y^0.5. If the consumer is initially at point (20, 20), what is the new point on the indifference curve that the consumer will move to if the price of good X increases by 20%?

Correct A. (15, 25)

B. (20, 20)

C. (25, 15)

D. (30, 10)

Correct Answer: A

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Question 4

A firm is considering two different modes of transportation to transport its goods. Mode A costs ₦100 per unit of goods transported and has a fixed cost of ₦10,000. Mode B costs ₦120 per unit of goods transported and has a fixed cost of ₦20,000. If the firm needs to transport 1,000 units of goods, which mode of transportation should it choose?

Correct A. Mode A

B. Mode B

C. Both modes are equally expensive

D. Neither mode is suitable

Correct Answer: A

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Question 5

A consumer has the following utility function: U = 2X^0.5Y^0.5. The consumer's budget constraint is given by 2X + 3Y = 100. If the consumer is initially at point (20, 20), what is the new point on the indifference curve that the consumer will move to if the price of good Y increases by 20%?

A. (15, 25)

B. (20, 20)

Correct C. (25, 15)

D. (30, 10)

Correct Answer: C

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Question 6

A company's production function is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is the labor input, and K is the capital input. If the company increases its labor input from 100 to 121 units, and its capital input from 100 to 121 units, by how many percentage points will its quantity produced increase?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 7

A firm's demand function is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's fixed cost is ₦1000 and its variable cost is ₦10 per unit, what is the profit-maximizing price?

A. ₦50

Correct B. ₦60

C. ₦70

D. ₦80

Correct Answer: B

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Question 8

A company's production function is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is the labor input, and K is the capital input. If the company increases its labor input from 100 to 121 units, and its capital input from 100 to 121 units, what is the new quantity produced?

A. 121

B. 144

Correct C. 169

D. 196

Correct Answer: C

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Question 9

A firm's demand function is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's fixed cost is ₦1000 and its variable cost is ₦10 per unit, what is the profit-maximizing quantity?

A. 40

B. 50

Correct C. 60

D. 70

Correct Answer: C

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Question 10

A company's production function is given by Q = 100L^0.5K^0.5, where Q is the quantity produced, L is the labor input, and K is the capital input. If the company increases its labor input from 100 to 121 units, and its capital input from 100 to 121 units, by how many percentage points will its quantity produced increase?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 11

A company is considering two marketing strategies: a mass marketing approach and a niche marketing approach. Which strategy is more likely to result in higher customer satisfaction?

A. Mass marketing

Correct B. Niche marketing

C. Both are equally effective

D. Neither is effective

Correct Answer: B

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Question 12

A firm is considering investing in a new production facility. The facility will cost ₦500 million to build and will generate annual revenues of ₦200 million. What is the payback period of the investment?

A. 2 years

Correct B. 3 years

C. 4 years

D. 5 years

Correct Answer: B

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Question 13

A bank is considering offering a new credit card product. The product will have an annual fee of ₦10,000 and an interest rate of 20% per annum. What is the effective annual interest rate of the product?

A. 20%

B. 21%

Correct C. 22%

D. 23%

Correct Answer: C

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Question 14

A company is considering outsourcing its logistics operations to a third-party provider. The provider will charge a fee of 10% of the total revenue generated by the company. What is the opportunity cost of outsourcing the logistics operations?

Correct A. 10% of revenue

B. 20% of revenue

C. 30% of revenue

D. 40% of revenue

Correct Answer: A

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Question 15

A firm is considering investing in a new insurance product. The product will have a premium of ₦50,000 per annum and will provide a benefit of ₦100,000 in the event of a claim. What is the expected value of the product?

A. ₦50,000

Correct B. ₦60,000

C. ₦70,000

D. ₦80,000

Correct Answer: B

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Question 16

A company is considering the introduction of a new product line. The product line has a high fixed cost of ₦500,000 and a variable cost of ₦200 per unit. The selling price of the product is ₦300 per unit. If the company expects to sell 2,000 units, what is the minimum price at which the product should be sold to break even?

A. ₦250

B. ₦275

Correct C. ₦300

D. ₦325

Correct Answer: C

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Question 17

A firm is considering the introduction of a new product. The product has a high fixed cost of ₦1,000,000 and a variable cost of ₦150 per unit. The selling price of the product is ₦250 per unit. If the firm expects to sell 5,000 units, what is the minimum price at which the product should be sold to break even?

A. ₦175

B. ₦200

Correct C. ₦225

D. ₦250

Correct Answer: C

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Question 18

A company is considering the introduction of a new product line. The product line has a high fixed cost of ₦750,000 and a variable cost of ₦250 per unit. The selling price of the product is ₦350 per unit. If the company expects to sell 3,000 units, what is the minimum price at which the product should be sold to break even?

A. ₦275

B. ₦300

Correct C. ₦325

D. ₦350

Correct Answer: C

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Question 19

A firm is considering the introduction of a new product. The product has a high fixed cost of ₦1,500,000 and a variable cost of ₦200 per unit. The selling price of the product is ₦300 per unit. If the firm expects to sell 6,000 units, what is the minimum price at which the product should be sold to break even?

A. ₦225

B. ₦250

Correct C. ₦275

D. ₦300

Correct Answer: C

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Question 20

A company is considering the introduction of a new product line. The product line has a high fixed cost of ₦1,250,000 and a variable cost of ₦300 per unit. The selling price of the product is ₦400 per unit. If the company expects to sell 4,000 units, what is the minimum price at which the product should be sold to break even?

A. ₦275

B. ₦300

Correct C. ₦325

D. ₦350

Correct Answer: C

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Question 21

The concept of specialization in production refers to the process by which a firm focuses on producing a specific product or service, thereby increasing its efficiency and reducing costs. Which of the following is a characteristic of specialization in production?

A. Increased competition in the market

B. Improved product quality

Correct C. Reduced production costs

D. Increased production time

Correct Answer: C

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Question 22

A firm has the following production costs: Fixed costs = ₦100,000, Variable costs = ₦50x, where x is the number of units produced. The firm produces 100 units. What is the total cost of production?

A. ₦150,000

Correct B. ₦200,000

C. ₦250,000

D. ₦300,000

Correct Answer: B

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Question 23

A firm has the following insurance policy: Premium = ₦10,000, Deductible = ₦5,000. If the firm suffers a loss of ₦20,000, how much will it pay in insurance claims?

A. ₦5,000

Correct B. ₦10,000

C. ₦15,000

D. ₦20,000

Correct Answer: B

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Question 24

A firm exports goods worth ₦100,000 to a foreign country. If the exchange rate is 1 USD = ₦200, how much is the export worth in USD?

A. ₦50,000

B. ₦100,000

C. ₦150,000

Correct D. ₦200,000

Correct Answer: D

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Question 25

A firm has a warehouse with a capacity of 1,000 units. If it receives a shipment of 500 units, what is the new capacity?

A. 500

B. 1,000

Correct C. 1,500

D. 2,000

Correct Answer: C

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