Practice post utme bowen university commerce 2023 Past Questions

Question 1

In a perfectly competitive market, the supply curve is perfectly elastic, and the demand curve is downward sloping. If the price of a commodity increases by 10%, what will be the effect on the quantity supplied?

A. The quantity supplied will decrease by 10%

Correct B. The quantity supplied will increase by 10%

C. The quantity supplied will remain unchanged

D. The quantity supplied will increase by 20%

Correct Answer: B

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Question 2

A company has a production function given by Q = 2L^0.5K^0.5, where Q is the quantity produced, L is the labor input, and K is the capital input. If the price of labor increases by 20% and the price of capital remains constant, what will be the effect on the quantity produced?

A. The quantity produced will increase by 10%

Correct B. The quantity produced will decrease by 10%

C. The quantity produced will remain unchanged

D. The quantity produced will increase by 20%

Correct Answer: B

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Question 3

A firm is considering two investment projects, A and B. Project A has a net present value (NPV) of ₦100,000 and a payback period of 5 years, while project B has an NPV of ₦120,000 and a payback period of 3 years. Which project should the firm choose?

A. Project A

Correct B. Project B

C. Both projects are equally attractive

D. Neither project is attractive

Correct Answer: B

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Question 4

A company has a cost function given by C = 2L + 3K, where C is the total cost, L is the labor input, and K is the capital input. If the price of labor increases by 20% and the price of capital remains constant, what will be the effect on the total cost?

Correct A. The total cost will increase by 10%

B. The total cost will decrease by 10%

C. The total cost will remain unchanged

D. The total cost will increase by 20%

Correct Answer: A

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Question 5

A firm is considering two marketing strategies, A and B. Strategy A has a market share of 20% and a profit margin of 15%, while strategy B has a market share of 30% and a profit margin of 10%. Which strategy should the firm choose?

A. Strategy A

Correct B. Strategy B

C. Both strategies are equally attractive

D. Neither strategy is attractive

Correct Answer: B

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Question 6

A sole trader's business is registered under the Companies and Allied Matters Act (CAMA). What is the primary implication of this registration?

A. The sole trader is now a company limited by shares.

B. The sole trader is exempt from paying personal income tax.

Correct C. The sole trader's business is now subject to the provisions of CAMA.

D. The sole trader's business is now a partnership.

Correct Answer: C

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Question 7

A company limited by shares has a capital of ₦5,000,000, divided into 500,000 ordinary shares of ₦10 each. If the company issues 200,000 shares at a premium of ₦5 per share, what is the total amount received from the issue of shares?

A. ₦20,000,000

Correct B. ₦25,000,000

C. ₦30,000,000

D. ₦35,000,000

Correct Answer: B

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Question 8

A consumer purchases a product with a recommended retail price of ₦10,000. The consumer is offered a discount of 10% and a further discount of 5% on the discounted price. What is the final price paid by the consumer?

A. ₦9,000

Correct B. ₦9,050

C. ₦9,100

D. ₦9,150

Correct Answer: B

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Question 9

A company's production process involves the use of a machine that can produce 500 units per hour. If the company operates for 8 hours a day and 5 days a week, what is the total number of units produced in a week?

A. 15,000

Correct B. 20,000

C. 25,000

D. 30,000

Correct Answer: B

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Question 10

A company uses a just-in-time (JIT) inventory system to manage its inventory. What is the primary advantage of using a JIT system?

A. Reduced inventory costs

B. Improved product quality

C. Increased production efficiency

Correct D. Reduced lead times

Correct Answer: D

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Question 11

A company is considering the introduction of a new product line. The product requires a significant investment in marketing and production. However, the company's financial statements indicate that it has a high debt-to-equity ratio. Which of the following financial ratios would be most relevant in evaluating the company's ability to take on this new product line?

Correct A. Debt-to-Equity Ratio

B. Return on Equity (ROE)

C. Current Ratio

D. Interest Coverage Ratio

Correct Answer: A

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Question 12

A consumer purchases a product with a price of ₦15,000. The product has a 10% discount for the first 100 customers. If the consumer is the 101st customer, what is the price of the product?

A. ₦13,500

B. ₦14,000

C. ₦14,500

Correct D. ₦15,000

Correct Answer: D

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Question 13

A company has a warehouse with a capacity of 10,000 units. The company receives a shipment of 5,000 units. The warehouse is currently 70% full. What is the total capacity of the warehouse after the new shipment?

A. 8,500 units

B. 9,000 units

C. 9,500 units

Correct D. 10,000 units

Correct Answer: D

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Question 14

A policyholder purchases a life insurance policy with a premium of ₦50,000 per annum. The policy has a 5-year term and a surrender value of 20% of the premium paid. What is the total surrender value after 5 years?

A. ₦250,000

B. ₦275,000

C. ₦300,000

Correct D. ₦325,000

Correct Answer: D

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Question 15

A company has a sole proprietorship business with a capital of ₦200,000. The company has a profit of ₦50,000. What is the owner's equity after the profit is distributed?

Correct A. ₦250,000

B. ₦225,000

C. ₦200,000

D. ₦175,000

Correct Answer: A

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Question 16

A company's marketing strategy involves creating a new product line that targets a specific demographic. The company's advertising budget is ₦500 million, and it plans to allocate 30% of this budget to social media advertising. If the company's social media advertising budget is ₦150 million, what is the total marketing budget for the new product line?

A. ₦500 million

Correct B. ₦600 million

C. ₦700 million

D. ₦800 million

Correct Answer: B

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Question 17

A sole trader, Mr. A, has a business income of ₦1.2 million and expenses of ₦800,000. If he has a capital of ₦300,000, what is his profit?

A. ₦200,000

B. ₦300,000

Correct C. ₦400,000

D. ₦500,000

Correct Answer: C

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Question 18

A company has a share capital of ₦10 million, divided into 100,000 ordinary shares of ₦100 each. If the company issues 20,000 ordinary shares at a premium of ₦20 per share, what is the total amount received from the issue of shares?

A. ₦400,000

B. ₦500,000

C. ₦600,000

Correct D. ₦700,000

Correct Answer: D

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Question 19

A consumer protection agency receives a complaint from a customer who purchased a product online. The customer alleges that the product was not as described and was defective. The agency's investigation reveals that the product was indeed defective, but the seller had provided a clear description of the product. What is the agency's likely course of action?

A. Order the seller to refund the customer's money

Correct B. Order the seller to replace the defective product

C. Close the case as the seller provided a clear description of the product

D. Refer the case to the police for further investigation

Correct Answer: B

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Question 20

A company's insurance policy covers losses due to fire, theft, and natural disasters. The policy has a deductible of ₦100,000 and a premium of ₦500,000 per year. If the company suffers a loss of ₦750,000 due to fire, what is the amount the company must pay out of pocket?

A. ₦0

B. ₦50,000

Correct C. ₦100,000

D. ₦150,000

Correct Answer: C

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Question 21

A company is considering a new marketing strategy that involves partnering with a popular social media influencer. The influencer has a large following and is known for promoting products that align with the company's brand values. However, the company is concerned about the potential risks associated with partnering with an influencer, including the possibility of negative publicity and the potential for the influencer to promote competing products. Which of the following is the most appropriate way for the company to mitigate these risks?

A. Negotiate a contract that includes a non-compete clause

Correct B. Conduct thorough research on the influencer's past promotions and reputation

C. Require the influencer to disclose any potential conflicts of interest

D. Limit the scope of the partnership to a specific product or service

Correct Answer: B

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Question 22

A warehouse is using a first-in-first-out (FIFO) inventory management system. If the warehouse receives a new shipment of goods on day 1, and the oldest goods in the warehouse are from day 3, what is the probability that the next item sold will be from the new shipment?

Correct A. 0.5

B. 0.75

C. 0.25

D. 0.33

Correct Answer: A

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Question 23

A company is considering expanding its operations to a new country. The company has identified several potential locations, but is concerned about the potential risks associated with operating in a new market. Which of the following is the most appropriate way for the company to mitigate these risks?

Correct A. Conduct thorough market research and analysis

B. Establish a local subsidiary or joint venture

C. Partner with a local business or organization

D. Limit the scope of the expansion to a specific product or service

Correct Answer: A

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Question 24

A bank is considering offering a new type of loan product to its customers. The loan product would have a variable interest rate that is tied to the prime lending rate. Which of the following is the most appropriate way for the bank to manage the risk associated with this loan product?

A. Use a credit scoring model to assess the creditworthiness of borrowers

B. Require borrowers to make regular payments based on a fixed schedule

C. Offer a fixed interest rate to borrowers

Correct D. Use a hedging strategy to manage interest rate risk

Correct Answer: D

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Question 25

A transportation company is considering offering a new type of service to its customers. The service would involve using electric vehicles to transport passengers. Which of the following is the most appropriate way for the company to manage the risk associated with this new service?

Correct A. Use a fleet management system to track and maintain the electric vehicles

B. Offer a discount to customers who use the electric vehicles

C. Require customers to sign a contract to use the electric vehicles

D. Use a hedging strategy to manage fuel price risk

Correct Answer: A

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