POST UTME AL-HIKMAH UNIVERSITY 2021 Commerce | Objective

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Question 1
In a perfectly competitive market, the supply curve is perfectly elastic. What is the implication of this for the firm's ability to influence the market price?
A. The firm has significant market power to influence the market price.
Correct B. The firm has no ability to influence the market price.
C. The firm's ability to influence the market price is uncertain.
D. The firm's ability to influence the market price depends on the market structure.

Correct Answer: B

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Question 2
A company is considering two different production processes for a new product. Process A has a higher fixed cost but a lower variable cost, while Process B has a lower fixed cost but a higher variable cost. Which process should the company choose if it expects to produce 10,000 units?
Correct A. Process A
B. Process B
C. It depends on the company's expectations for future production levels.
D. The company should choose the process with the lower total cost.

Correct Answer: A

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Question 3
A firm is considering expanding its product line to include a new product. The new product has a higher price elasticity of demand than the firm's existing products. What is the implication of this for the firm's pricing strategy?
A. The firm should increase the price of the new product.
B. The firm should decrease the price of the new product.
C. The firm should maintain the same price for the new product.
Correct D. The firm should consider the price elasticity of demand for the new product when setting its price.

Correct Answer: D

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Question 4
A company is considering outsourcing its production to a foreign country. The company expects to save on labor costs but is concerned about the potential risks associated with outsourcing. What is the primary risk associated with outsourcing?
Correct A. Loss of control over production
B. Increased labor costs
C. Decreased product quality
D. Increased risk of intellectual property theft

Correct Answer: A

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Question 5
A firm is considering using a new marketing strategy to increase sales. The new strategy involves offering a discount to customers who purchase a certain product. What is the primary goal of this marketing strategy?
A. To increase the price of the product
Correct B. To increase the quantity sold of the product
C. To increase the profit margin of the product
D. To decrease the marketing expenses of the product

Correct Answer: B

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Question 6
A company's inventory management system uses the Economic Order Quantity (EOQ) model to determine the optimal order quantity. The EOQ model is given by the formula: EOQ = √(2DS/H), where D is the annual demand, S is the ordering cost, and H is the holding cost. If the annual demand is 10,000 units, the ordering cost is ₦50 per order, and the holding cost is ₦5 per unit per year, what is the optimal order quantity?
A. 1,000 units
B. 5,000 units
Correct C. 10,000 units
D. 20,000 units

Correct Answer: C

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Question 7
A consumer protection agency receives a complaint from a customer who purchased a product online. The customer claims that the product was not as described and that the seller failed to deliver the product within the agreed timeframe. The agency must determine whether the seller has breached the Consumer Protection Act. Which of the following is a key principle of the Consumer Protection Act?
Correct A. The seller must provide a clear and accurate description of the product
B. The seller must deliver the product within the agreed timeframe
C. The consumer has the right to cancel the purchase at any time
D. The consumer must pay for the product before delivery

Correct Answer: A

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Question 8
A company purchases a liability insurance policy to protect against potential lawsuits. The policy has a premium of ₦100,000 per year. If the company expects to pay out ₦500,000 in claims per year, what is the expected value of the insurance policy?
A. ₦300,000
Correct B. ₦400,000
C. ₦500,000
D. ₦600,000

Correct Answer: B

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Question 9
A company exports goods to a foreign country. The company must comply with the foreign country's import regulations, which include a 10% tariff on all imported goods. If the company exports ₦1,000,000 worth of goods, what is the total cost of the goods to the foreign buyer?
A. ₦1,100,000
Correct B. ₦1,200,000
C. ₦1,300,000
D. ₦1,400,000

Correct Answer: B

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Question 10
A company uses a just-in-time (JIT) inventory system to manage its inventory. The JIT system relies on continuous replenishment of inventory to meet customer demand. Which of the following is a key benefit of the JIT system?
A. Reduced inventory costs
B. Improved customer service
C. Increased efficiency
Correct D. All of the above

Correct Answer: D

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Question 11
A company's marketing strategy involves creating a new product line. The company has a fixed cost of ₦500,000 and a variable cost of ₦200 per unit. If the selling price of each unit is ₦300, what is the break-even point in units?
A. 1000 units
Correct B. 2000 units
C. 5000 units
D. 10,000 units

Correct Answer: B

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Question 12
A sole trader has a business income of ₦1,500,000 and a business expense of ₦800,000. What is the sole trader's profit before tax?
Correct A. ₦700,000
B. ₦800,000
C. ₦900,000
D. ₦1,000,000

Correct Answer: A

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Question 13
A company has a production capacity of 10,000 units per day. If the company operates for 20 days, what is the total production?
A. 100,000 units
Correct B. 200,000 units
C. 500,000 units
D. 1,000,000 units

Correct Answer: B

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Question 14
A bank has a reserve requirement of 10% and a cash reserve of ₦1,000,000. If the bank's total deposits are ₦10,000,000, what is the bank's required reserve?
A. ₦1,000,000
Correct B. ₦1,500,000
C. ₦2,000,000
D. ₦2,500,000

Correct Answer: B

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Question 15
A company has a production cost of ₦500 per unit and a selling price of ₦700 per unit. If the company produces 5,000 units, what is the company's total revenue?
A. ₦3,500,000
B. ₦4,000,000
Correct C. ₦4,500,000
D. ₦5,000,000

Correct Answer: C

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Question 16
A sole trader's business is considered a separate legal entity from the owner's personal assets. Which of the following is a characteristic of a sole trader's business?
A. Unlimited liability
Correct B. Separate legal entity
C. Partnership
D. Limited liability

Correct Answer: B

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Question 17
A company's articles of association may provide for the appointment of a managing director. What is the primary responsibility of a managing director?
A. To manage the company's day-to-day operations
Correct B. To make strategic decisions on behalf of the company
C. To represent the company in legal matters
D. To prepare the company's financial statements

Correct Answer: B

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Question 18
A company's memorandum of association may provide for the issue of preference shares. What is the primary characteristic of preference shares?
Correct A. They have a fixed dividend rate
B. They have a voting right
C. They have a priority claim on assets
D. They are redeemable at the option of the company

Correct Answer: A

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Question 19
A company's articles of association may provide for the appointment of a secretary. What is the primary responsibility of a secretary?
A. To manage the company's day-to-day operations
B. To prepare the company's financial statements
C. To represent the company in legal matters
Correct D. To maintain the company's statutory records

Correct Answer: D

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Question 20
A company's memorandum of association may provide for the issue of debentures. What is the primary characteristic of debentures?
Correct A. They are a type of loan
B. They are a type of share
C. They are a type of preference share
D. They are a type of ordinary share

Correct Answer: A

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Question 21
In a perfectly competitive market, the law of supply states that as the price of a commodity increases, the quantity supplied will
A. increase
Correct B. decrease
C. remain constant
D. shift to the left

Correct Answer: B

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Question 22
A firm's production function is given by Q = 2L^0.5 + 3K^0.5. If the firm's labor and capital inputs are increased by 20% and 15% respectively, what is the percentage change in output?
A. 5%
Correct B. 10%
C. 15%
D. 20%

Correct Answer: B

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Question 23
A company is considering two different marketing strategies: Strategy A, which involves a 10% increase in advertising expenditure, and Strategy B, which involves a 5% decrease in advertising expenditure. If the company's current advertising expenditure is ₦100,000, what is the total advertising expenditure under Strategy A?
Correct A. ₦110,000
B. ₦105,000
C. ₦100,000
D. ₦95,000

Correct Answer: A

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Question 24
A firm's demand function is given by Q = 100 - 2P. If the price of the commodity is increased by 20%, what is the new quantity demanded?
A. 80
Correct B. 60
C. 40
D. 20

Correct Answer: B

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Question 25
A company is considering two different production processes: Process A, which involves a fixed cost of ₦50,000 and a variable cost of ₦10 per unit, and Process B, which involves a fixed cost of ₦30,000 and a variable cost of ₦15 per unit. If the company produces 1,000 units, what is the total cost under Process A?
Correct A. ₦60,000
B. ₦65,000
C. ₦70,000
D. ₦75,000

Correct Answer: A

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