POST UTME AFE BABALOLA UNIVERSITY 2025 Commerce | Objective

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Question 1
In a competitive market, a firm's demand curve is downward sloping. What is the likely effect of an increase in the firm's production costs on its supply curve?
A. The supply curve shifts to the left.
Correct B. The supply curve shifts to the right.
C. The supply curve remains unchanged.
D. The demand curve shifts to the left.

Correct Answer: B

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Question 2
A consumer purchases a product with a price of ₦500 and a utility of 100. If the consumer's income increases by 20%, what is the likely effect on the consumer's demand for the product?
Correct A. The demand for the product increases.
B. The demand for the product decreases.
C. The demand for the product remains unchanged.
D. The demand for the product increases by 20%.

Correct Answer: A

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Question 3
A firm produces a product with a fixed cost of ₦100,000 and a variable cost of ₦50 per unit. If the firm sells 1,000 units of the product, what is the likely effect on the firm's profit?
Correct A. The profit increases by ₦50,000.
B. The profit decreases by ₦50,000.
C. The profit remains unchanged.
D. The profit increases by ₦100,000.

Correct Answer: A

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Question 4
A consumer purchases a product with a price of ₦500 and a utility of 100. If the consumer's income increases by 20%, what is the likely effect on the consumer's demand for the product?
Correct A. The demand for the product increases.
B. The demand for the product decreases.
C. The demand for the product remains unchanged.
D. The demand for the product increases by 20%.

Correct Answer: A

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Question 5
A firm produces a product with a fixed cost of ₦100,000 and a variable cost of ₦50 per unit. If the firm sells 1,000 units of the product, what is the likely effect on the firm's profit?
Correct A. The profit increases by ₦50,000.
B. The profit decreases by ₦50,000.
C. The profit remains unchanged.
D. The profit increases by ₦100,000.

Correct Answer: A

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Question 6
A firm specializes in producing only one good. This specialization is an example of which of the following production concepts?
A. Economies of scale
Correct B. Division of labor
C. Comparative advantage
D. Opportunity cost

Correct Answer: B

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Question 7
A firm's inventory is valued at the lower of cost and net realizable value. This is an example of which of the following inventory valuation methods?
A. First-in, first-out (FIFO)
B. Last-in, first-out (LIFO)
C. Weighted average cost (WAC)
Correct D. Lower of cost and net realizable value (LCNRV)

Correct Answer: D

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Question 8
A consumer protection law that prohibits false or misleading advertising is an example of which of the following types of laws?
A. Administrative law
B. Civil law
C. Criminal law
Correct D. Regulatory law

Correct Answer: D

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Question 9
A firm uses a just-in-time (JIT) inventory system to manage its inventory levels. This system is an example of which of the following inventory management techniques?
A. Materials requirements planning (MRP)
B. Total quality control (TQC)
Correct C. Just-in-time (JIT)
D. Vendor-managed inventory (VMI)

Correct Answer: C

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Question 10
A firm uses a transportation management system to optimize its logistics operations. This system is an example of which of the following transportation management techniques?
Correct A. Route optimization
B. Load planning
C. Freight audit and payment
D. Transportation mode selection

Correct Answer: A

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Question 11
A company has a warehouse with a capacity of 10,000 units. The warehouse is currently 70% full. If the company receives a new shipment of 5,000 units, what is the new percentage of the warehouse that is full?
A. 60%
B. 70%
Correct C. 80%
D. 90%

Correct Answer: C

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Question 12
A sole trader has an annual income of ₦1,500,000 and an annual expenditure of ₦1,200,000. What is the sole trader's profit?
Correct A. ₦300,000
B. ₦400,000
C. ₦500,000
D. ₦600,000

Correct Answer: A

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Question 13
A company has a fleet of 10 trucks that travel an average of 200 km per day. If the company pays ₦0.50 per km for fuel, what is the total daily fuel cost?
A. ₦1,000
Correct B. ₦1,500
C. ₦2,000
D. ₦2,500

Correct Answer: B

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Question 14
A company has a warehouse with a capacity of 5,000 units. The warehouse is currently 50% full. If the company receives a new shipment of 2,000 units, what is the new percentage of the warehouse that is full?
A. 55%
Correct B. 60%
C. 65%
D. 70%

Correct Answer: B

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Question 15
A company has a fleet of 5 trucks that travel an average of 150 km per day. If the company pays ₦0.75 per km for fuel, what is the total daily fuel cost?
A. ₦1,125
Correct B. ₦1,500
C. ₦1,875
D. ₦2,250

Correct Answer: B

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Question 16
A company's financial statements show that its current ratio is 2.5 and its acid-test ratio is 1.8. What can be inferred about the company's liquidity position?
A. The company has a high level of liquidity and can easily meet its short-term obligations.
Correct B. The company has a moderate level of liquidity and may face some difficulties in meeting its short-term obligations.
C. The company has a low level of liquidity and is likely to face significant difficulties in meeting its short-term obligations.
D. The company's liquidity position cannot be determined from the given information.

Correct Answer: B

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Question 17
A warehouse has a storage capacity of 10,000 square meters. The warehouse is currently 70% full. If the warehouse is to be expanded by 20% of its current capacity, what will be the new storage capacity?
A. 12,000 square meters
B. 13,000 square meters
Correct C. 14,000 square meters
D. 15,000 square meters

Correct Answer: C

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Question 18
A sole trader has an annual turnover of ₦5 million and a net profit of ₦1.2 million. What is the sole trader's profit margin?
A. 24%
B. 25%
Correct C. 26%
D. 27%

Correct Answer: C

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Question 19
A company imports goods worth ₦10 million from a foreign country. The company pays a customs duty of 10% on the imported goods. What is the total amount paid by the company?
A. ₦11 million
Correct B. ₦11.5 million
C. ₦12 million
D. ₦12.5 million

Correct Answer: B

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Question 20
A bank has a reserve requirement of 10% for its customers. If a customer deposits ₦100,000 into their account, how much will the bank reserve?
Correct A. ₦10,000
B. ₦11,000
C. ₦12,000
D. ₦13,000

Correct Answer: A

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Question 21
A company's production function is given by the Cobb-Douglas production function: Q = 10L^0.4K^0.6, where Q is the quantity produced, L is labor, and K is capital. If the company wants to increase its production by 20% while keeping labor constant, what percentage increase in capital is required?
A. 15%
B. 20%
Correct C. 25%
D. 30%

Correct Answer: C

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Question 22
A firm is considering two different transportation modes to move its products from the factory to the warehouse. The cost of using mode A is given by C_A = 10x + 20y, where x is the distance and y is the weight of the product. The cost of using mode B is given by C_B = 15x + 15y. If the distance and weight of the product are 100 km and 500 kg respectively, which mode of transportation is more cost-effective?
A. Mode A
Correct B. Mode B
C. Both modes are equally cost-effective
D. Neither mode is cost-effective

Correct Answer: B

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Question 23
A company is considering two different storage options for its products: Option A, which costs 100 per unit and has a capacity of 1000 units, and Option B, which costs 150 per unit and has a capacity of 2000 units. If the company needs to store 1500 units of products, which option is more cost-effective?
Correct A. Option A
B. Option B
C. Both options are equally cost-effective
D. Neither option is cost-effective

Correct Answer: A

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Question 24
A firm is considering two different export markets for its products: Market A, which has a demand function of Q_A = 100 - 2P_A, and Market B, which has a demand function of Q_B = 150 - 3P_B. If the firm wants to maximize its revenue, which market should it target?
A. Market A
Correct B. Market B
C. Both markets are equally attractive
D. Neither market is attractive

Correct Answer: B

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Question 25
A company is considering two different production processes for its products: Process A, which has a production function of Q_A = 2L_A^0.5K_A^0.5, and Process B, which has a production function of Q_B = 3L_B^0.6K_B^0.4. If the company wants to increase its production by 25% while keeping labor constant, which process is more cost-effective?
Correct A. Process A
B. Process B
C. Both processes are equally cost-effective
D. Neither process is cost-effective

Correct Answer: A

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