POST UTME OSUSTECH 2018 Commerce | Objective

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Question 1
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.
Correct B. 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, but Country A has a lower opportunity cost of producing cloth.
C. 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, but Country B has a lower opportunity cost of producing wheat.
D. 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, but both countries have the same opportunity cost of producing both goods.

Correct Answer: B

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Question 2
A company has a portfolio of stocks and bonds with a total value of ₦10,000,000. The stocks have a beta of 1.2 and the bonds have a beta of 0.5. If the market risk premium is 8%, what is the expected return on the portfolio?
Correct A. 12%
B. 10%
C. 8%
D. 6%

Correct Answer: A

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Question 3
A firm is considering two different investment projects. Project A has a net present value (NPV) of ₦1,000,000 and a payback period of 5 years. Project B has an NPV of ₦1,500,000 and a payback period of 3 years. Which project should the firm choose?
A. Project A
Correct B. Project B
C. Both projects are equally attractive
D. Neither project is attractive

Correct Answer: B

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Question 4
A company has a cash balance of ₦5,000,000 and a current ratio of 2:1. If the company's accounts receivable are ₦2,000,000, what is the amount of its current liabilities?
A. ₦2,000,000
Correct B. ₦3,000,000
C. ₦4,000,000
D. ₦5,000,000

Correct Answer: B

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Question 5
A firm is considering a new product launch. The product's expected sales are 10,000 units per year, with a price of ₦100 per unit. The variable cost per unit is ₦50, and the fixed cost is ₦500,000. What is the firm's expected profit?
A. ₦1,000,000
Correct B. ₦1,500,000
C. ₦2,000,000
D. ₦2,500,000

Correct Answer: B

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Question 6
A company is considering two investment options: Option A, which has a 10% chance of yielding a 20% return, and Option B, which has a 20% chance of yielding a 10% return. If the company is risk-averse, which option should it choose?
Correct A. Option A
B. Option B
C. Both options are equally good
D. Neither option is good

Correct Answer: A

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Question 7
A firm is considering expanding its operations to a new market. The market research indicates that the demand for the firm's product is price-elastic, with a price elasticity of -2. If the firm increases the price of its product by 10%, what will be the percentage change in demand?
Correct A. -20%
B. -10%
C. 0%
D. 10%

Correct Answer: A

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Question 8
A company is considering two different advertising strategies: Strategy A, which involves a one-time payment of ₦100,000, and Strategy B, which involves a monthly payment of ₦10,000 for 12 months. If the company expects to generate a return of 20% on its advertising investment, which strategy should it choose?
A. Strategy A
Correct B. Strategy B
C. Both strategies are equally good
D. Neither strategy is good

Correct Answer: B

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Question 9
A firm is considering exporting its product to a foreign market. The firm's product is currently priced at ₦100,000 in the domestic market. If the exchange rate is 1 USD = 500 NGN, and the firm expects to sell the product for 200 in the foreign market, what will be the percentage change in the firm's revenue?
A. 0%
B. 10%
C. 20%
Correct D. 50%

Correct Answer: D

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Question 10
A company is considering two different modes of transportation for its goods: Mode A, which involves a one-time payment of ₦50,000, and Mode B, which involves a monthly payment of ₦5,000 for 10 months. If the company expects to generate a return of 15% on its transportation investment, which mode should it choose?
A. Mode A
Correct B. Mode B
C. Both modes are equally good
D. Neither mode is good

Correct Answer: B

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Question 11
A company's marketing strategy involves a mix of advertising and public relations. Which of the following is a key benefit of using public relations in a marketing mix?
A. Increased brand awareness
B. Improved customer loyalty
Correct C. Enhanced reputation
D. Increased sales

Correct Answer: C

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Question 12
A firm's foreign trade involves importing goods from a foreign country. Which of the following is a key consideration in determining the optimal quantity of imports?
A. The firm's production costs
B. The firm's market demand
Correct C. The foreign country's export prices
D. The firm's transportation costs

Correct Answer: C

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Question 13
A company's insurance policy covers losses due to fire. Which of the following is a key factor in determining the premium rate?
A. The company's assets value
Correct B. The company's risk exposure
C. The insurance company's profit margin
D. The government's tax rate

Correct Answer: B

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Question 14
A firm's marketing strategy involves a mix of advertising and sales promotions. Which of the following is a key benefit of using sales promotions in a marketing mix?
A. Increased brand awareness
B. Improved customer loyalty
C. Enhanced reputation
Correct D. Increased sales

Correct Answer: D

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Question 15
A company's transportation costs involve both fixed and variable costs. Which of the following is a key consideration in determining the optimal transportation mode?
A. The firm's production costs
B. The firm's market demand
Correct C. The transportation mode's capacity
D. The transportation mode's speed

Correct Answer: C

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Question 16
The Consumer Protection Act of 1999 provides for the establishment of the National Consumer Protection Agency. What is the primary function of this agency?
A. To investigate complaints from consumers
B. To regulate the activities of businesses
C. To provide education and awareness to consumers
Correct D. To enforce consumer protection laws

Correct Answer: D

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Question 17
A company imports goods from a foreign country and sells them in Nigeria. What type of trade is this?
A. Export
B. Import
C. Domestic trade
Correct D. International trade

Correct Answer: D

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Question 18
A bank offers a loan of ₦1,000,000 at an interest rate of 12% per annum. How much will the borrower pay after one year?
Correct A. ₦1,120,000
B. ₦1,100,000
C. ₦1,080,000
D. ₦1,060,000

Correct Answer: A

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Question 19
A company has a warehouse with a capacity of 10,000 units. If it receives a shipment of 5,000 units, what is the new capacity?
A. 10,000
Correct B. 15,000
C. 20,000
D. 5,000

Correct Answer: B

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Question 20
A firm's revenue is given by the equation R = 2x^2 + 5x - 3, where x is the number of units sold. If the firm sells 10 units, what is the revenue?
A. ₦23
B. ₦25
Correct C. ₦27
D. ₦29

Correct Answer: C

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Question 21
In a perfectly competitive market, the supply curve is upward-sloping because of the law of increasing opportunity costs. However, in a perfectly competitive market, firms are price-takers and cannot influence the market price. Explain why this is the case.
Correct A. Because firms in a perfectly competitive market are price-takers and cannot influence the market price.
B. Because firms in a perfectly competitive market are price-makers and can influence the market price.
C. Because firms in a perfectly competitive market are subject to the law of increasing opportunity costs.
D. Because firms in a perfectly competitive market are not subject to the law of increasing opportunity costs.

Correct Answer: A

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Question 22
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's labor and capital inputs are 4 and 9 respectively, what is the firm's output?
A. 16
B. 32
Correct C. 64
D. 128

Correct Answer: C

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Question 23
A firm's demand function is given by Q = 100 - 2P. If the firm's price is 20, what is the firm's quantity demanded?
A. 40
B. 60
C. 80
Correct D. 100

Correct Answer: D

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Question 24
A firm's revenue function is given by R = 100P - 2P^2. If the firm's price is 20, what is the firm's revenue?
A. 300
Correct B. 400
C. 500
D. 600

Correct Answer: B

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Question 25
A firm's cost function is given by C = 100 + 2L + 3K. If the firm's labor and capital inputs are 4 and 9 respectively, what is the firm's total cost?
A. 200
B. 300
Correct C. 400
D. 500

Correct Answer: C

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