Practice post utme covenant university commerce 2022 Past Questions

Question 1

In a perfectly competitive market, what is the relationship between the marginal revenue (MR) and marginal cost (MC) of a firm?

A. MR > MC

B. MR < MC

Correct C. MR = MC

D. MR = 0

Correct Answer: C

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Question 2

A firm is considering two production processes: one that requires a fixed cost of ₦100,000 and a variable cost of ₦50 per unit, and another that requires a fixed cost of ₦150,000 and a variable cost of ₦30 per unit. If the selling price of the product is ₦80 per unit, which production process should the firm adopt?

Correct A. Process 1

B. Process 2

C. Both processes are equally profitable

D. Neither process is profitable

Correct Answer: A

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Question 3

A company is considering launching a new product. The market research indicates that the demand for the product will be 100 units in the first year, increasing by 20% each year for the next 5 years. If the company wants to maximize its profits, what should it do?

Correct A. Launch the product immediately

B. Delay the launch for 2 years

C. Delay the launch for 5 years

D. Do not launch the product

Correct Answer: A

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Question 4

A firm is considering two marketing strategies: one that involves a high level of advertising and another that involves a low level of advertising. If the firm's objective is to maximize its sales revenue, which marketing strategy should it adopt?

Correct A. High advertising strategy

B. Low advertising strategy

C. Both strategies are equally effective

D. Neither strategy is effective

Correct Answer: A

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Question 5

A company is considering outsourcing its logistics operations to a third-party provider. If the company's objective is to minimize its costs, what should it do?

Correct A. Outsource the logistics operations

B. Do not outsource the logistics operations

C. Both options are equally cost-effective

D. Neither option is cost-effective

Correct Answer: A

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Question 6

A company has two production lines, A and B. Line A produces 60 units per hour, while line B produces 40 units per hour. If the company operates for 8 hours a day, what is the total number of units produced by both lines in a day?

A. 480

B. 640

Correct C. 800

D. 960

Correct Answer: C

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Question 7

A firm has two warehouses, X and Y. Warehouse X has a capacity of 1000 units, while warehouse Y has a capacity of 500 units. If the firm receives 1200 units of stock, how many units can be stored in warehouse X?

Correct A. 1000

B. 800

C. 600

D. 400

Correct Answer: A

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Question 8

A company has a sole trader business. The company's profit is calculated as follows: Revenue - Cost of Goods Sold - Operating Expenses. If the company's revenue is ₦1,500,000, cost of goods sold is ₦800,000, and operating expenses are ₦200,000, what is the company's profit?

Correct A. ₦500,000

B. ₦600,000

C. ₦700,000

D. ₦800,000

Correct Answer: A

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Question 9

A firm has a production process that involves the following steps: Raw Materials → Work-in-Progress → Finished Goods. If the firm's production process has a 20% defect rate, what is the probability that a randomly selected unit from the finished goods inventory is defective?

A. 0.2

Correct B. 0.4

C. 0.6

D. 0.8

Correct Answer: B

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Question 10

A company has a fleet of vehicles that are used for transportation. The company's insurance policy has a deductible of ₦50,000. If the company incurs a loss of ₦200,000, what is the amount that the company will have to pay out of pocket?

A. ₦0

Correct B. ₦50,000

C. ₦100,000

D. ₦150,000

Correct Answer: B

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Question 11

A company is sued for violating the Consumer Protection Act. The court rules that the company must pay damages to the consumer. However, the company appeals the decision, arguing that the consumer was aware of the risks involved in purchasing the product. Which of the following is a valid defense against the consumer protection claim?

Correct A. The consumer was aware of the risks involved in purchasing the product.

B. The company did not intentionally violate the Consumer Protection Act.

C. The product was not defective at the time of sale.

D. The consumer did not suffer any damages as a result of the product's defect.

Correct Answer: A

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Question 12

A firm specializes in producing only one product, which is a type of electronic device. The firm has a high level of expertise in producing this product and has a strong brand reputation. What is the primary advantage of this specialization?

A. The firm can produce a wide range of products.

B. The firm can reduce its production costs.

Correct C. The firm can improve its quality control.

D. The firm can increase its market share.

Correct Answer: C

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Question 13

A company is considering launching a new product in the market. The company has conducted market research and has identified a potential target audience. However, the company is unsure about the best marketing strategy to use. Which of the following marketing strategies is most likely to be effective in reaching the target audience?

Correct A. Social media marketing.

B. Television advertising.

C. Print advertising.

D. Influencer marketing.

Correct Answer: A

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Question 14

A bank is considering offering a new type of loan to its customers. The loan will have a variable interest rate that is tied to the prime lending rate. Which of the following is a potential risk associated with this type of loan?

A. The borrower may default on the loan.

Correct B. The interest rate may increase rapidly.

C. The borrower may not be able to afford the loan payments.

D. The bank may not be able to recover the loan amount.

Correct Answer: B

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Question 15

A person purchases a life insurance policy that pays out a lump sum in the event of their death. The policy has a premium payment term of 20 years. Which of the following is a potential risk associated with this type of policy?

A. The policy may lapse if the premiums are not paid on time.

Correct B. The policy may not pay out if the person dies within the premium payment term.

C. The policy may not pay out if the person dies after the premium payment term.

D. The policy may not pay out if the person dies due to a pre-existing medical condition.

Correct Answer: B

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Question 16

A company is considering the purchase of a new machine that will cost ₦5,000,000. The machine is expected to last for 5 years and will save the company ₦1,200,000 per year in labor costs. The company's cost of capital is 10% per annum. What is the net present value (NPV) of the machine?

A. ₦1,500,000

Correct B. ₦2,000,000

C. ₦2,500,000

D. ₦3,000,000

Correct Answer: B

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Question 17

A sole trader, Mr. Ade, has a business that sells electronics. He has the following assets and liabilities: Assets: ₦500,000 in cash, ₦200,000 in accounts receivable, and ₦300,000 in inventory. Liabilities: ₦100,000 in accounts payable. What is Mr. Ade's net worth?

A. ₦600,000

B. ₦700,000

Correct C. ₦800,000

D. ₦900,000

Correct Answer: C

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Question 18

A company has a warehouse with a capacity of 10,000 units. The company receives a shipment of 5,000 units and already has 3,000 units in stock. What is the new stock level?

A. 8,000

B. 9,000

Correct C. 10,000

D. 11,000

Correct Answer: C

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Question 19

A consumer protection law requires that all products sold in a particular state must have a warning label indicating the potential health risks associated with the product. A company that sells a product without the warning label is liable for any damages caused to the consumer. What is the purpose of the warning label?

Correct A. To inform consumers of the potential health risks associated with the product

B. To protect the company from liability

C. To promote the sale of the product

D. To increase the price of the product

Correct Answer: A

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Question 20

A company uses a just-in-time (JIT) inventory system to manage its inventory. The company receives a shipment of 1,000 units and already has 500 units in stock. What is the new stock level?

A. 1,000

Correct B. 1,500

C. 2,000

D. 2,500

Correct Answer: B

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Question 21

A company uses a first-in-first-out (FIFO) inventory system to manage its inventory. The company receives a shipment of 1,000 units and already has 500 units in stock. What is the new stock level?

A. 1,000

B. 1,500

Correct C. 2,000

D. 2,500

Correct Answer: C

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Question 22

A company uses a last-in-first-out (LIFO) inventory system to manage its inventory. The company receives a shipment of 1,000 units and already has 500 units in stock. What is the new stock level?

A. 1,000

B. 1,500

C. 2,000

Correct D. 2,500

Correct Answer: D

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Question 23

A company uses a perpetual inventory system to manage its inventory. The company receives a shipment of 1,000 units and already has 500 units in stock. What is the new stock level?

A. 1,000

Correct B. 1,500

C. 2,000

D. 2,500

Correct Answer: B

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Question 24

A company uses a barcoding system to manage its inventory. The company receives a shipment of 1,000 units and already has 500 units in stock. What is the new stock level?

A. 1,000

B. 1,500

C. 2,000

D. 2,500

Correct Answer: VIEW ANSWER

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Question 25

A firm's production function is given by the equation ( Q = 2L^2 + 5K^2 ), where Q is the quantity produced, L is the number of labor units, and K is the number of capital units. If the firm wants to produce 100 units of output, how many labor units are required if the capital units are 4?

A. 10

Correct B. 20

C. 30

D. 40

Correct Answer: B

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