Practice post utme babcock university commerce 2017 Past Questions

Question 1

In a perfectly competitive market, the supply curve is upward-sloping because

Correct A. Firms are willing to supply more of the good as its price increases.

B. Firms are willing to supply less of the good as its price increases.

C. Firms are willing to supply the same quantity of the good regardless of its price.

D. Firms are willing to supply more of the good as its price decreases.

Correct Answer: A

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Question 2

A company's financial leverage ratio is 2.5. This means that for every 1 unit of equity, the company has

Correct A. 2.5 units of debt

B. 1 unit of debt

C. 0.4 units of debt

D. 5 units of debt

Correct Answer: A

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Question 3

A consumer's indifference curve is downward-sloping because

Correct A. The consumer is willing to trade off one good for another.

B. The consumer is unwilling to trade off one good for another.

C. The consumer is indifferent between the two goods.

D. The consumer is willing to trade off one good for another at a constant rate.

Correct Answer: A

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Question 4

A firm's production function is given by Q = 2L + 3K. If the firm's labor and capital inputs are increased by 20% and 15% respectively, the new production function will be

Correct A. Q = 2.4L + 3.45K

B. Q = 2.4L + 3.15K

C. Q = 2.2L + 3.45K

D. Q = 2.2L + 3.15K

Correct Answer: A

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Question 5

A country's trade balance is given by TB = X - M, where X is the value of exports and M is the value of imports. If the country's exports and imports are 100 billion and 120 billion respectively, the trade balance will be

Correct A. -20 billion

B. 20 billion

C. -10 billion

D. 10 billion

Correct Answer: A

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Question 6

A company's sole trader has been sued for negligence in the storage of goods. The company's insurance policy has a deductible of ₦50,000. If the company is liable for ₦200,000, what is the amount the company must pay out of pocket?

A. ₦50,000

Correct B. ₦150,000

C. ₦200,000

D. ₦250,000

Correct Answer: B

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Question 7

A company is considering a marketing strategy that involves offering a 10% discount to customers who purchase a product within a certain time frame. If the original price of the product is ₦1,000, what is the minimum price the company must charge to ensure a profit of ₦200?

A. ₦800

Correct B. ₦900

C. ₦1,000

D. ₦1,100

Correct Answer: B

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Question 8

A bank has a loan of ₦500,000 at an interest rate of 12% per annum compounded annually. If the interest is compounded for 2 years, what is the total amount the borrower must repay?

A. ₦562,000

B. ₦600,000

Correct C. ₦625,000

D. ₦650,000

Correct Answer: C

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Question 9

A company's sole trader has a warehouse with a capacity to store 10,000 units of goods. If the company receives an order for 5,000 units, what is the maximum number of units the company can store in the warehouse?

A. 5,000

B. 7,500

Correct C. 10,000

D. 12,500

Correct Answer: C

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Question 10

A company is considering a marketing strategy that involves offering a free gift to customers who purchase a product within a certain time frame. If the cost of the gift is ₦50,000 and the company expects to sell 1,000 units, what is the total cost of the marketing strategy?

A. ₦50,000

B. ₦75,000

Correct C. ₦100,000

D. ₦125,000

Correct Answer: C

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Question 11

A company's production function is given by the Cobb-Douglas production function: Q = 10L^0.4K^0.6. If the company's output is 100 units, and the price of labor is ₦200 per unit, and the price of capital is ₦300 per unit, what is the optimal combination of labor and capital that the company should use?

A. L = 10, K = 5

Correct B. L = 5, K = 10

C. L = 20, K = 3

D. L = 15, K = 4

Correct Answer: B

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Question 12

A firm is considering two different production processes. Process A requires an initial investment of ₦100,000 and has a fixed cost of ₦20,000 per unit. Process B requires an initial investment of ₦150,000 and has a fixed cost of ₦15,000 per unit. If the firm expects to produce 10,000 units per year, which process should it choose?

Correct A. Process A

B. Process B

C. Both processes are equally profitable

D. Neither process is profitable

Correct Answer: A

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Question 13

A bank offers a 5-year fixed deposit account with an interest rate of 10% per annum compounded annually. If a customer deposits ₦100,000 at the beginning of the first year, how much will the customer have at the end of the fifth year?

Correct A. ₦163,918.62

B. ₦164,918.62

C. ₦165,918.62

D. ₦166,918.62

Correct Answer: A

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Question 14

A company's revenue function is given by R(x) = 2x^2 + 10x + 5, where x is the number of units sold. If the company's marginal revenue is ₦50 per unit, what is the value of x?

A. x = 5

Correct B. x = 10

C. x = 15

D. x = 20

Correct Answer: B

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Question 15

A firm is considering two different investment opportunities. Opportunity A has a 20% chance of returning ₦100,000 and a 80% chance of returning ₦0. Opportunity B has a 50% chance of returning ₦50,000 and a 50% chance of returning ₦0. Which opportunity should the firm choose?

A. Opportunity A

Correct B. Opportunity B

C. Both opportunities are equally attractive

D. Neither opportunity is attractive

Correct Answer: B

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Question 16

The concept of 'Gross National Product' (GNP) is closely related to the concept of 'National Income' (NI). Discuss the relationship between GNP and NI, and explain how they are calculated.

Correct A. GNP is the total value of all goods and services produced within a country's borders, while NI is the total income earned by a country's citizens, regardless of where they reside.

B. GNP is the total income earned by a country's citizens, while NI is the total value of all goods and services produced within a country's borders.

C. GNP is the total value of all goods and services produced within a country's borders, while NI is the total income earned by a country's citizens, including those living abroad.

D. GNP is the total income earned by a country's citizens, while NI is the total value of all goods and services produced within a country's borders, minus the value of imports.

Correct Answer: A

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Question 17

A company is considering two different marketing strategies: a high-low pricing strategy and a penetration pricing strategy. Discuss the advantages and disadvantages of each strategy, and explain how they can be used to achieve the company's marketing objectives.

Correct A. High-low pricing strategy: This strategy involves charging high prices for a product during its introduction and then reducing the price over time. Advantages: creates a sense of urgency, increases perceived value. Disadvantages: may deter price-sensitive customers.

B. Penetration pricing strategy: This strategy involves charging low prices for a product to attract a large market share. Advantages: increases market share, attracts price-sensitive customers. Disadvantages: may lead to price wars, reduces profit margins.

C. High-low pricing strategy: This strategy involves charging low prices for a product during its introduction and then increasing the price over time. Advantages: increases market share, attracts price-sensitive customers. Disadvantages: may lead to price wars, reduces profit margins.

D. Penetration pricing strategy: This strategy involves charging high prices for a product to create a sense of exclusivity. Advantages: creates a sense of exclusivity, increases perceived value. Disadvantages: may deter price-sensitive customers.

Correct Answer: A

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Question 18

A company has a policy of paying its employees a fixed salary of ₦50,000 per month, plus a bonus of 10% of their monthly salary. If an employee's monthly salary is ₦40,000, what is their total monthly income?

A. ₦50,000

B. ₦44,000

Correct C. ₦48,000

D. ₦52,000

Correct Answer: C

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Question 19

A company has a policy of paying its employees a fixed salary of ₦50,000 per month, plus a bonus of 10% of their monthly salary. If an employee's monthly salary is ₦40,000, what is their total monthly income?

A. ₦50,000

B. ₦44,000

Correct C. ₦48,000

D. ₦52,000

Correct Answer: C

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Question 20

A company has a policy of paying its employees a fixed salary of ₦50,000 per month, plus a bonus of 10% of their monthly salary. If an employee's monthly salary is ₦40,000, what is their total monthly income?

A. ₦50,000

B. ₦44,000

Correct C. ₦48,000

D. ₦52,000

Correct Answer: C

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Question 21

The concept of comparative advantage in international trade is based on the idea that countries should specialize in producing goods for which they have a lower opportunity cost compared to other countries. Which of the following is a correct example of comparative advantage?

A. Country A produces 100 units of good X and 50 units of good Y, while Country B produces 50 units of good X and 100 units of good Y.

Correct B. Country A produces 100 units of good X and 50 units of good Y, while Country B produces 50 units of good X and 100 units of good Y, but Country A has a lower opportunity cost of producing good X.

C. Country A produces 100 units of good X and 50 units of good Y, while Country B produces 50 units of good X and 100 units of good Y, but Country B has a lower opportunity cost of producing good Y.

D. Country A produces 100 units of good X and 50 units of good Y, while Country B produces 50 units of good X and 100 units of good Y, but both countries have the same opportunity cost of producing both goods.

Correct Answer: B

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Question 22

A company's marketing mix consists of the 4 Ps: product, price, promotion, and place. Which of the following is a correct example of a product?

Correct A. A new smartphone with advanced features.

B. A new restaurant in town.

C. A new marketing campaign.

D. A new employee at the company.

Correct Answer: A

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Question 23

A consumer's utility function is given by U(x, y) = 2x + 3y. If the consumer's income is ₦1000 and the prices of good x and good y are ₦2 and ₦3 respectively, what is the consumer's optimal bundle?

A. x = 200, y = 100.

Correct B. x = 150, y = 150.

C. x = 100, y = 200.

D. x = 50, y = 250.

Correct Answer: B

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Question 24

A company's insurance policy covers losses up to ₦100,000. If the company suffers a loss of ₦120,000, what is the company's maximum payout?

Correct A. ₦100,000.

B. ₦120,000.

C. ₦80,000.

D. ₦60,000.

Correct Answer: A

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Question 25

A consumer's demand curve for a good is given by Qd = 100 - 2P. If the price of the good is ₦20, what is the consumer's quantity demanded?

A. 10 units.

Correct B. 20 units.

C. 30 units.

D. 40 units.

Correct Answer: B

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