POST UTME AAUA 2024 Commerce | Objective

Practice these randomly selected questions to test your readiness.

Question 1
A company uses the following production function: Q = 2L^2 + 5K. If the price of labor is ₦50 per unit and the price of capital is ₦100 per unit, and the company wants to maximize its profit, what is the optimal level of labor?
A. 10 units
B. 20 units
C. 30 units
D. 40 units
Question 2
A sole trader's business is affected by a natural disaster that destroys a significant portion of its inventory. The sole trader has insurance coverage for such events. Which of the following is a characteristic of this type of insurance?
A. Contingent Liability
B. Uninsurable Risk
C. Specified Peril
D. Uninsurable Loss
Question 3
A firm is considering investing in a new production facility. The facility will require an initial investment of ₦10 million and will generate annual profits of ₦2 million for the next 5 years. If the firm's cost of capital is 10%, what is the net present value of the investment?
A. ₦5,000,000
B. ₦7,000,000
C. ₦9,000,000
D. ₦11,000,000
Question 4
A company has 100,000 shares issued and outstanding. If 80% of the shares are held by the public, how many shares are held by the public?
A. 80000
B. 90000
C. 100000
D. 120000
Question 5
A company is considering expanding its operations to a new market. The company has estimated that the expansion will require an initial investment of ₦8 million and will generate annual profits of ₦3 million for the next 4 years. If the company's cost of capital is 15%, what is the net present value of the investment?
A. ₦10,000,000
B. ₦12,000,000
C. ₦14,000,000
D. ₦16,000,000
Question 6
A company is considering launching a new product in a foreign market. The company has estimated that the product will generate annual sales of ₦5 million for the next 3 years. If the company's cost of capital is 12%, what is the present value of the expected cash flows?
A. ₦12,000,000
B. ₦15,000,000
C. ₦18,000,000
D. ₦20,000,000
Question 7
In a sole trade business, what is the primary advantage of using a sole trader structure?
A. Limited liability
B. Unlimited liability
C. Easy to set up
D. Flexibility in decision-making
Question 8
A firm producing both goods and services is an example of a _______ business unit.
A. sole trade
B. company
C. partnership
D. cooperative
Question 9
A company produces two products, A and B, using two inputs, labor and capital. The production function for product A is given by Q_A = 2L^0.5K^0.5, while the production function for product B is given by Q_B = 3L^0.7K^0.3. If the company has 100 units of labor and 50 units of capital available, how many units of product A and product B should it produce to maximize profits?
A. Q_A = 20, Q_B = 30
B. Q_A = 30, Q_B = 20
C. Q_A = 25, Q_B = 25
D. Q_A = 15, Q_B = 35
Question 10
The concept of risk management in insurance is closely related to the idea of diversification. Explain how diversification can help reduce risk in an insurance portfolio.
A. Diversification can help reduce risk by spreading investments across different asset classes, reducing exposure to any one particular risk.
B. Diversification can increase risk by concentrating investments in a single asset class, increasing exposure to potential losses.
C. Diversification has no impact on risk in an insurance portfolio.
D. Diversification can only be applied to investment portfolios, not insurance portfolios.
Question 11
A consumer is considering purchasing a product online. Which of the following is a key factor that influences their decision to make a purchase?
A. Price of the product
B. Quality of the product
C. Ease of return policy
D. Shipping costs
Question 12
In a perfectly competitive market, the supply curve is horizontal and the demand curve is downward-sloping. Given that the market equilibrium price is ₦150 and the quantity demanded is 100 units, what is the consumer surplus?
A. ₦15,000
B. ₦20,000
C. ₦25,000
D. ₦30,000
Question 13
The _______ of a firm refers to the process of creating and communicating value to customers.
A. marketing
B. advertising
C. public relations
D. sales
Question 14
A company has a share capital of ₦1,000,000, divided into 100,000 ordinary shares of ₦10 each. If the company issues 20,000 shares to the public, what is the total amount received from the public?
A. ₦200,000
B. ₦400,000
C. ₦600,000
D. ₦800,000
Question 15
A company has a risk management strategy that involves diversification. What is the primary benefit of diversification?
A. Reduced risk
B. Increased risk
C. Improved liquidity
D. Enhanced profitability

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