POST UTME ABU 2020 Commerce | Objective

Practice these randomly selected questions to test your readiness.

Question 1
A life insurance policy has a premium of ₦50,000 per annum. The policy pays a benefit of ₦1,000,000 if the policyholder dies within the first 5 years. If the policyholder dies after 5 years, the benefit is ₦500,000. What is the expected value of the policy?
A. ₦475,000
B. ₦525,000
C. ₦575,000
D. ₦625,000
Question 2
In a sole trade business, what is the primary advantage of maintaining accurate records of stock movements?
A. Improved decision-making
B. Enhanced customer satisfaction
C. Increased productivity
D. Better cash flow management
Question 3
A company uses the just-in-time (JIT) inventory system. What is the primary benefit of this system?
A. Reduced inventory costs
B. Improved product quality
C. Increased flexibility in production
D. Enhanced customer satisfaction
Question 4
In a sole trader business, what is the primary advantage of using a sole proprietorship structure?
A. Limited liability
B. Flexibility in decision-making
C. Easy to establish
D. No tax benefits
Question 5
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
B. 20
C. 30
D. 40
Question 6
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
B. ₦1000
C. ₦1500
D. ₦2000
Question 7
A company has a warehouse with a capacity to store 10,000 units of a product. The warehouse is currently 60% full, and the company wants to add more products. If the company wants to maintain a 70% capacity utilization rate, how many more units can be added to the warehouse?
A. 2,000
B. 3,000
C. 4,000
D. 5,000
Question 8
A sole trader's business is considered a separate legal entity from its owner. Which of the following is a consequence of this separation?
A. The owner is personally liable for the business's debts.
B. The business is taxed separately from its owner.
C. The owner has unlimited liability for the business's actions.
D. The business is not required to file its own tax returns.
Question 9
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
C. The availability of resources for research and development
D. The potential for the product to cannibalize existing sales
Question 10
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
D. Enhanced supply chain efficiency
Question 11
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
B. 0.2
C. 0.3
D. 0.4
Question 12
A sole trader business has a turnover of ₦500,000 and a profit of ₦100,000. What is the business's profit margin?
A. 20%
B. 25%
C. 30%
D. 35%
Question 13
A consumer protection law requires that a product's packaging must be designed to prevent accidental opening. A company designs a product with a packaging that has a 90% chance of preventing accidental opening. If the company sells 10,000 units of the product, how many units are expected to have packaging that prevents accidental opening?
A. 9,000
B. 9,500
C. 9,900
D. 10,000
Question 14
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
C. 4,000 units
D. 5,000 units
Question 15
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
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

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