Practice Post UTME RHEMA UNIVERSITY commerce 2019 Past Questions

Question 1

In a perfectly competitive market, the supply curve is upward-sloping because of the law of increasing marginal opportunity cost. What is the name of this law?

A. Law of Diminishing Marginal Utility

Correct B. Law of Increasing Marginal Opportunity Cost

C. Law of Diminishing Marginal Returns

D. Law of Increasing Marginal Productivity

Correct Answer: B

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Question 2

A company's break-even point is the point at which its total revenue equals its total fixed costs. What is the formula for calculating the break-even point?

A. TR = TFC + TVC

B. TR = TFC + AVC

Correct C. TR = TFC + AFC

D. TR = TVC + AFC

Correct Answer: C

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Question 3

A firm's production function is given by Q = 2L + 3K. If the firm's output is 15 units, and the price of labor is ₦100 per unit, and the price of capital is ₦200 per unit, what is the total cost of production?

A. ₦2500

B. ₦3000

Correct C. ₦3500

D. ₦4000

Correct Answer: C

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Question 4

A country's balance of payments account is given by the following equation: BOP = X - M. If the country's exports are ₦100 billion, and its imports are ₦80 billion, what is the balance of payments?

Correct A. ₦20 billion

B. ₦30 billion

C. ₦40 billion

D. ₦50 billion

Correct Answer: A

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Question 5

A firm's demand curve is given by the equation Qd = 100 - 2P. If the price of the good is ₦50, what is the quantity demanded?

A. 50 units

Correct B. 75 units

C. 100 units

D. 125 units

Correct Answer: B

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Question 6

A consumer protection agency has been established to regulate the activities of businesses in a particular industry. The agency has the power to investigate complaints, impose fines, and revoke licenses. However, the agency's decision-making process is not transparent, and the public is not aware of the criteria used to determine which businesses to investigate. Which of the following is the most likely consequence of this situation?

Correct A. The agency's lack of transparency will lead to a decrease in public trust in the agency.

B. The agency's lack of transparency will lead to an increase in complaints against businesses.

C. The agency's lack of transparency will lead to a decrease in the number of businesses that are investigated.

D. The agency's lack of transparency will lead to an increase in the number of fines imposed on businesses.

Correct Answer: A

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Question 7

A company is considering investing in a new transportation system to reduce its carbon footprint. The system uses a combination of electric and hydrogen fuel cell technology. However, the company is concerned about the high upfront costs of the system. Which of the following is the most likely benefit of investing in this system?

Correct A. Reduced greenhouse gas emissions

B. Increased fuel efficiency

C. Improved air quality

D. Enhanced brand reputation

Correct Answer: A

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Question 8

A warehouse is using a first-in-first-out (FIFO) inventory management system. However, the warehouse has a high turnover rate, and the inventory is constantly being replenished. Which of the following is the most likely consequence of using this system?

A. The warehouse will experience a decrease in inventory levels.

Correct B. The warehouse will experience an increase in inventory levels.

C. The warehouse will experience a decrease in inventory turnover.

D. The warehouse will experience an increase in inventory turnover.

Correct Answer: B

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Question 9

A company is considering implementing a new insurance policy to protect against business risks. The policy includes a deductible of ₦100,000 and a maximum payout of ₦500,000. Which of the following is the most likely benefit of implementing this policy?

Correct A. Reduced financial risk

B. Increased financial risk

C. Improved cash flow

D. Enhanced brand reputation

Correct Answer: A

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Question 10

A consumer has purchased a product from a company, but the product has a manufacturing defect. The consumer is seeking compensation from the company. Which of the following is the most likely legal principle that will be applied in this situation?

A. Ultrahazardous activity

Correct B. Strict liability

C. Negligence

D. Privity of contract

Correct Answer: B

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Question 11

The concept of specialization in production is closely related to the idea of comparative advantage. Explain how a country can benefit from specializing in the production of a particular good, even if it is not the most efficient producer of that good.

Correct A. By exporting the good and importing other goods that it is more efficient in producing

B. By reducing the cost of production and increasing the quality of the good

C. By increasing the demand for the good and reducing the supply of other goods

D. By reducing the trade deficit and increasing the trade surplus

Correct Answer: A

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Question 12

A company is considering two different marketing strategies for its new product. Strategy A involves a high level of advertising and promotion, while Strategy B involves a low level of advertising and promotion. Which strategy is more likely to be effective in increasing sales?

Correct A. Strategy A, because it involves a high level of advertising and promotion

B. Strategy B, because it involves a low level of advertising and promotion

C. Strategy A, because it involves a low level of advertising and promotion

D. Strategy B, because it involves a high level of advertising and promotion

Correct Answer: A

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Question 13

A firm is considering two different production processes for its product. Process A involves a high level of labor and a low level of capital, while Process B involves a low level of labor and a high level of capital. Which process is more likely to be efficient?

A. Process A, because it involves a high level of labor and a low level of capital

Correct B. Process B, because it involves a low level of labor and a high level of capital

C. Process A, because it involves a low level of labor and a high level of capital

D. Process B, because it involves a high level of labor and a low level of capital

Correct Answer: B

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Question 14

A company is considering two different distribution channels for its product. Channel A involves a high level of intermediaries and a low level of direct sales, while Channel B involves a low level of intermediaries and a high level of direct sales. Which channel is more likely to be effective in reaching the target market?

A. Channel A, because it involves a high level of intermediaries and a low level of direct sales

Correct B. Channel B, because it involves a low level of intermediaries and a high level of direct sales

C. Channel A, because it involves a low level of intermediaries and a high level of direct sales

D. Channel B, because it involves a high level of intermediaries and a low level of direct sales

Correct Answer: B

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Question 15

A firm is considering two different pricing strategies for its product. Strategy A involves a high price and a low level of discounts, while Strategy B involves a low price and a high level of discounts. Which strategy is more likely to be effective in increasing sales?

A. Strategy A, because it involves a high price and a low level of discounts

Correct B. Strategy B, because it involves a low price and a high level of discounts

C. Strategy A, because it involves a low price and a high level of discounts

D. Strategy B, because it involves a high price and a low level of discounts

Correct Answer: B

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Question 16

A company is considering two different advertising strategies for its product. Strategy A involves a high level of advertising and promotion, while Strategy B involves a low level of advertising and promotion. Which strategy is more likely to be effective in increasing sales?

Correct A. Strategy A, because it involves a high level of advertising and promotion

B. Strategy B, because it involves a low level of advertising and promotion

C. Strategy A, because it involves a low level of advertising and promotion

D. Strategy B, because it involves a high level of advertising and promotion

Correct Answer: A

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Question 17

A firm is considering two different production processes for its product. Process A involves a high level of labor and a low level of capital, while Process B involves a low level of labor and a high level of capital. Which process is more likely to be efficient?

A. Process A, because it involves a high level of labor and a low level of capital

Correct B. Process B, because it involves a low level of labor and a high level of capital

C. Process A, because it involves a low level of labor and a high level of capital

D. Process B, because it involves a high level of labor and a low level of capital

Correct Answer: B

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Question 18

The Central Bank of Nigeria (CBN) uses the monetary policy instrument of Open Market Operations (OMO) to increase the money supply in the economy. What is the primary effect of OMO on the money supply?

A. Increase the reserve requirements of commercial banks

B. Sell government securities to commercial banks

Correct C. Increase the money supply by injecting liquidity into the economy

D. Decrease the interest rate to stimulate borrowing

Correct Answer: C

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Question 19

A company has a production function given by Q = 100K^0.5L^0.5, where Q is the quantity produced, K is the capital and L is the labor. If the company increases the capital from 100 to 121, by what percentage will the quantity produced increase?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 20

A firm is considering two investment projects. Project A has a 10% chance of generating a return of ₦100,000 and a 90% chance of generating a return of ₦50,000. Project B has a 20% chance of generating a return of ₦120,000 and an 80% chance of generating a return of ₦30,000. Which project has a higher expected return?

Correct A. Project A

B. Project B

C. Both projects have the same expected return

D. Neither project has a higher expected return

Correct Answer: A

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Question 21

A company has a portfolio of assets with a beta of 1.2. If the market return is 8%, what is the expected return on the portfolio?

A. 6%

B. 8%

C. 10%

Correct D. 12%

Correct Answer: D

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Question 22

A firm is considering two different modes of transportation to transport its goods. Mode A costs ₦10,000 per unit and has a probability of 0.8 of being on time. Mode B costs ₦15,000 per unit and has a probability of 0.9 of being on time. Which mode of transportation has a lower expected cost?

Correct A. Mode A

B. Mode B

C. Both modes have the same expected cost

D. Neither mode has a lower expected cost

Correct Answer: A

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Question 23

A sole trader's business is registered under which of the following?

A. Partnership

B. Limited Liability Company

Correct C. Sole Proprietorship

D. Cooperative Society

Correct Answer: C

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Question 24

A company's Memorandum of Association is a document that outlines its

A. Objectives

B. Share Capital

C. Directors and Shareholders

Correct D. All of the above

Correct Answer: D

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Question 25

A bank's cash reserve ratio is the proportion of its total deposits that it is required to hold in the form of

Correct A. Cash

B. Bonds

C. Loans

D. Investments

Correct Answer: A

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