Practice post utme abu commerce 2020 Past Questions

Question 1

In a sole trader business, what is the primary advantage of using a petty cash system?

Correct A. Improved cash flow management

B. Enhanced customer satisfaction

C. Increased employee productivity

D. Reduced administrative costs

Correct Answer: A

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Question 2

A company is considering the introduction of a new product line. The marketing manager has identified three potential target markets. Which of the following marketing strategies would be most appropriate for a market with a high level of competition?

A. Differentiation strategy

Correct B. Cost leadership strategy

C. Focus strategy

D. Market penetration strategy

Correct Answer: B

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Question 3

A consumer protection agency has received a complaint from a customer who purchased a defective product. The product was sold with a one-year warranty. Which of the following would be the most appropriate course of action for the agency?

A. Order the manufacturer to replace the product

Correct B. Compensate the customer for the defective product

C. Require the manufacturer to provide a refund

D. Take no action as the warranty has expired

Correct Answer: B

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Question 4

A company is considering the use of a just-in-time (JIT) inventory system. Which of the following would be a major advantage of implementing a JIT system?

A. Reduced inventory costs

B. Improved customer satisfaction

C. Increased employee productivity

Correct D. Enhanced supply chain efficiency

Correct Answer: D

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Question 5

A business is considering the use of a foreign exchange market to hedge against exchange rate risk. Which of the following would be a major advantage of using a forward contract?

Correct A. Reduced exchange rate risk

B. Improved cash flow management

C. Increased employee productivity

D. Enhanced supply chain efficiency

Correct Answer: A

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Question 6

In a sole trade business, what is the primary advantage of maintaining accurate records of stock movements?

Correct A. Improved decision-making

B. Enhanced customer satisfaction

C. Increased productivity

D. Better cash flow management

Correct Answer: A

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Question 7

A company is considering the introduction of a new product line. What type of risk is the company exposed to?

Correct A. Market risk

B. Credit risk

C. Operational risk

D. Liquidity risk

Correct Answer: A

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Question 8

A consumer purchases a product with a price tag of ₦1,500. If the consumer is entitled to a 10% discount, what is the amount the consumer needs to pay?

Correct A. ₦1,350

B. ₦1,400

C. ₦1,450

D. ₦1,500

Correct Answer: A

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Question 9

A company has a warehouse with a capacity to store 5,000 units of stock. If the company receives an order for 2,000 units, what is the remaining capacity of the warehouse?

A. 2,000 units

B. 3,000 units

Correct C. 4,000 units

D. 5,000 units

Correct Answer: C

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Question 10

A bank offers a loan of ₦500,000 at an interest rate of 12% per annum. If the loan is repayable in 5 years, what is the total amount the borrower needs to pay?

A. ₦625,000

B. ₦650,000

C. ₦675,000

Correct D. ₦700,000

Correct Answer: D

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Question 11

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 units to 121 units, and its capital input from 100 units to 121 units, by how many percentage points will the quantity produced increase?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 12

A firm's demand function is given by P = 100 - 2Q, where P is the price and Q is the quantity demanded. If the firm's marginal revenue function is MR = 200 - 4Q, what is the firm's optimal quantity produced?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 13

A company's cost function is given by C = 100 + 2L + 3K, where C is the total cost, L is the labor input, and K is the capital input. If the company increases its labor input from 50 units to 75 units, and its capital input from 50 units to 75 units, by how much will the total cost increase?

A. ₦500

Correct B. ₦1000

C. ₦1500

D. ₦2000

Correct Answer: B

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Question 14

A firm's revenue function is given by R = 100Q - 2Q^2, where R is the total revenue and Q is the quantity sold. If the firm's marginal revenue function is MR = 100 - 4Q, what is the firm's optimal quantity sold?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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Question 15

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 units to 121 units, and its capital input from 100 units to 121 units, by how many percentage points will the quantity produced increase?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 16

In a just-in-time (JIT) inventory system, what is the primary goal of the warehouse manager?

A. To minimize inventory costs

B. To maximize storage capacity

Correct C. To reduce lead times

D. To increase inventory turnover

Correct Answer: C

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Question 17

A company has two business units: A and B. Unit A has a profit margin of 20% and unit B has a profit margin of 15%. If the total profit is ₦1,500,000, what is the profit of unit A?

Correct A. ₦300,000

B. ₦375,000

C. ₦450,000

D. ₦525,000

Correct Answer: A

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Question 18

A trucking company has a fleet of 50 trucks. If 10 trucks are out of service for maintenance, what is the probability that a randomly selected truck is out of service?

A. 0.1

Correct B. 0.2

C. 0.3

D. 0.4

Correct Answer: B

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Question 19

A company has a warehouse with a capacity of 10,000 units. If the current inventory level is 8,000 units and the demand rate is 500 units per day, what is the reorder point?

A. 6,000

B. 7,000

Correct C. 8,000

D. 9,000

Correct Answer: C

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Question 20

A company has a production capacity of 1,000 units per day. If the current production level is 800 units per day and the demand rate is 700 units per day, what is the production shortfall?

A. 100

B. 200

Correct C. 300

D. 400

Correct Answer: C

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Question 21

The concept of 'production specialization' in commerce refers to the practice of focusing on the production of a specific good or service, thereby developing expertise and efficiency in that area. Which of the following is a key benefit of production specialization?

A. Increased competition

B. Improved quality control

Correct C. Reduced production costs

D. Enhanced customer satisfaction

Correct Answer: C

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Question 22

A company is considering the introduction of a new product line. The product requires a significant investment in research and development, but it is expected to generate substantial revenue. Which of the following is a key consideration for the company?

A. The potential impact on the company's market share

B. The level of competition in the market

Correct C. The availability of resources for research and development

D. The potential for the product to cannibalize existing sales

Correct Answer: C

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Question 23

A sole trader is considering the purchase of a new piece of equipment for their business. The equipment will cost ₦50,000 and is expected to increase revenue by ₦20,000 per month. Which of the following is a key consideration for the sole trader?

Correct A. The potential impact on the company's cash flow

B. The level of competition in the market

C. The availability of resources for the purchase

D. The potential for the equipment to increase the company's market share

Correct Answer: A

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Question 24

A company is considering the introduction of a new product line. The product requires a significant investment in research and development, but it is expected to generate substantial revenue. Which of the following is a key consideration for the company?

A. The potential impact on the company's market share

B. The level of competition in the market

Correct C. The availability of resources for research and development

D. The potential for the product to cannibalize existing sales

Correct Answer: C

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Question 25

A company is considering the introduction of a new product line. The product requires a significant investment in research and development, but it is expected to generate substantial revenue. Which of the following is a key consideration for the company?

A. The potential impact on the company's market share

B. The level of competition in the market

Correct C. The availability of resources for research and development

D. The potential for the product to cannibalize existing sales

Correct Answer: C

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