POST UTME ELIZADE UNIVERSITY 2024 Commerce | Objective

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Question 1
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. Which of the following is a correct example of comparative advantage?
A. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 100 units of cloth.
B. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 150 units of cloth.
Correct C. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 50 units of cloth.
D. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 200 units of cloth.

Correct Answer: C

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Question 2
A company is considering two warehouses with different storage capacities. Warehouse A has a capacity of 10,000 units, while Warehouse B has a capacity of 20,000 units. If the company expects to store 15,000 units, which warehouse should it choose?
A. Warehouse A
Correct B. Warehouse B
C. Either warehouse is acceptable
D. Neither warehouse is acceptable

Correct Answer: B

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Question 3
A consumer is considering purchasing a product with a price of ₦1,500 and a discount of 10%. What is the final price of the product?
Correct A. ₦1,350
B. ₦1,400
C. ₦1,450
D. ₦1,500

Correct Answer: A

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Question 4
A company is considering two modes of transportation: road and rail. The cost of transporting goods by road is ₦500 per unit, while the cost of transporting goods by rail is ₦300 per unit. If the company expects to transport 10,000 units, what is the total cost of transportation by road?
Correct A. ₦5,000,000
B. ₦4,500,000
C. ₦4,000,000
D. ₦3,500,000

Correct Answer: A

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Question 5
A sole trader is considering forming a partnership with another individual. What are the advantages of forming a partnership?
Correct A. Increased capital, shared risk, and improved decision-making
B. Increased capital, shared risk, and improved marketing
C. Increased capital, shared risk, and improved accounting
D. Increased capital, shared risk, and improved management

Correct Answer: A

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Question 6
A sole trader's business is considered a separate legal entity from its owner. However, in the event of the owner's death, the business is automatically dissolved. Which of the following is a correct statement regarding the dissolution of a sole trader's business?
A. The business is automatically dissolved and its assets are distributed among the creditors.
Correct B. The business is automatically dissolved and its assets are distributed among the owner's heirs.
C. The business is not automatically dissolved and its assets are distributed among the owner's heirs.
D. The business is not automatically dissolved and its assets are distributed among the creditors.

Correct Answer: B

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Question 7
A company's articles of association specify that the company's shares can be transferred only with the consent of the board of directors. What is the legal term for this type of share?
A. Ordinary share
B. Preference share
C. Deferred share
Correct D. Restricted share

Correct Answer: D

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Question 8
A company's warehouse is stocked with 500 units of product A and 300 units of product B. The company uses a first-in-first-out (FIFO) inventory system. If 200 units of product A are sold, what is the new quantity of product A in the warehouse?
Correct A. 300
B. 400
C. 500
D. 600

Correct Answer: A

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Question 9
A company produces two products, X and Y, using two machines, A and B. The production process for product X requires 2 hours on machine A and 3 hours on machine B, while the production process for product Y requires 3 hours on machine A and 2 hours on machine B. If machine A is available for 6 hours and machine B is available for 6 hours, how many units of product X and product Y can be produced?
Correct A. (10, 8)
B. (8, 10)
C. (12, 6)
D. (6, 12)

Correct Answer: A

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Question 10
A company uses a transportation cost of ₦10 per unit for product X and ₦15 per unit for product Y. If the company produces 100 units of product X and 80 units of product Y, what is the total transportation cost?
A. ₦1,500
B. ₦2,000
Correct C. ₦2,500
D. ₦3,000

Correct Answer: C

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Question 11
A firm specializes in producing only one product. This specialization allows the firm to achieve economies of scale in production. However, it also exposes the firm to a higher risk of obsolescence. What is the name of this type of risk?
A. Specific Risk
Correct B. Undiversifiable Risk
C. Systematic Risk
D. Cyclical Risk

Correct Answer: B

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Question 12
A company has a cash balance of ₦500,000 and a bank overdraft of ₦200,000. The company's current liabilities are ₦800,000. What is the company's net current liability?
A. ₦100,000
B. ₦300,000
Correct C. ₦400,000
D. ₦500,000

Correct Answer: C

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Question 13
A sole trader has a business income of ₦1,000,000 and personal income of ₦500,000. The sole trader's business expenses are ₦200,000. What is the sole trader's profit?
A. ₦600,000
Correct B. ₦700,000
C. ₦800,000
D. ₦900,000

Correct Answer: B

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Question 14
A company has a warehouse with a capacity of 10,000 units. The company's current stock level is 8,000 units. The company receives a new shipment of 2,000 units. What is the company's new stock level?
A. 6,000
B. 8,000
C. 10,000
Correct D. 12,000

Correct Answer: D

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Question 15
A bank has a reserve requirement of 10% and a cash reserve of ₦100,000. The bank's total deposits are ₦1,000,000. What is the bank's required reserve?
A. ₦90,000
Correct B. ₦100,000
C. ₦110,000
D. ₦120,000

Correct Answer: B

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Question 16
A company is considering exporting its products to a foreign market. Which of the following is a key factor to consider in the decision-making process?
A. Political stability of the foreign country
Correct B. Economic conditions of the foreign country
C. Cultural differences between the foreign country and the company's home country
D. Environmental regulations of the foreign country

Correct Answer: B

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Question 17
A sole trader is considering expanding its business by taking on a partner. What are the potential advantages of this decision?
A. Increased financial resources
B. Improved decision-making
C. Enhanced reputation
Correct D. All of the above

Correct Answer: D

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Question 18
A company is considering investing in a new project. The project has a high potential return on investment, but it also carries a high level of risk. What is the primary factor that the company should consider when making its decision?
A. Expected return on investment
Correct B. Risk level of the project
C. Time required to complete the project
D. Cost of the project

Correct Answer: B

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Question 19
A company is considering using a new transportation method to deliver its products. The new method has a higher cost than the current method, but it also has a faster delivery time. What is the primary factor that the company should consider when making its decision?
A. Cost of the new method
B. Delivery time of the new method
C. Reliability of the new method
Correct D. All of the above

Correct Answer: D

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Question 20
A company is considering using a new insurance policy to protect its business. The policy has a higher premium than the current policy, but it also provides a higher level of coverage. What is the primary factor that the company should consider when making its decision?
A. Cost of the new policy
B. Level of coverage provided by the new policy
C. Reliability of the new policy
Correct D. All of the above

Correct Answer: D

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Question 21
A sole trader's business is exposed to various risks, including market risk, credit risk, and operational risk. Which of the following is the most effective way to manage these risks?
Correct A. Diversification of business activities
B. Insurance coverage for business assets
C. Hedging against market fluctuations
D. Risk avoidance through business closure

Correct Answer: A

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Question 22
A company has a warehouse with a capacity of 10,000 units. The current stock level is 8,000 units, and the company receives a new shipment of 2,000 units. What is the new stock level?
A. 8000
Correct B. 10000
C. 12000
D. 15000

Correct Answer: B

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Question 23
A business is considering investing in a new project with a potential return on investment (ROI) of 15%. However, the project also carries a risk of losing 10% of the initial investment. What is the expected return on investment (ROI) for this project?
A. 0.05
B. 0.1
Correct C. 0.15
D. 0.2

Correct Answer: C

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Question 24
A company uses the just-in-time (JIT) inventory management system. What is the primary advantage of this system?
Correct A. Reduced inventory costs
B. Improved product quality
C. Increased production efficiency
D. Enhanced customer satisfaction

Correct Answer: A

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Question 25
A business is considering outsourcing its logistics operations to a third-party provider. What is the primary benefit of outsourcing logistics?
A. Reduced transportation costs
B. Improved delivery times
C. Enhanced customer satisfaction
Correct D. Increased flexibility in supply chain management

Correct Answer: D

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