Practice post utme esut commerce 2018 Past Questions

Question 1

A company's sole trader is considering the purchase of a liability insurance policy to cover potential losses from a business interruption. The policy has a premium of ₦250,000 and a deductible of ₦50,000. If the company's expected loss from business interruption is ₦200,000, what is the expected value of perfect insurance?

Correct A. ₦125,000

B. ₦150,000

C. ₦175,000

D. ₦200,000

Correct Answer: A

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Question 2

A consumer protection agency is investigating a complaint about a company's unfair contract terms. The contract states that the consumer must pay a penalty of ₦10,000 for every day late in payment. If the consumer is 30 days late, what is the total penalty payable?

A. ₦250,000

B. ₦300,000

C. ₦350,000

Correct D. ₦400,000

Correct Answer: D

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Question 3

A company is considering exporting its products to a foreign country. The company's export manager has estimated the following costs and revenues for the export transaction:

A. ₦50,000

B. ₦75,000

C. ₦100,000

Correct D. ₦125,000

Correct Answer: D

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Question 4

A bank is considering the purchase of a new software system to manage its customer relationships. The software has a one-time implementation cost of ₦500,000 and an annual maintenance cost of ₦50,000. If the bank expects to use the software for 5 years, what is the total cost of ownership?

A. ₦750,000

B. ₦800,000

C. ₦850,000

Correct D. ₦900,000

Correct Answer: D

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Question 5

A sole trader is considering the purchase of a new business premises. The premises has a purchase price of ₦2,000,000 and an annual rent of ₦200,000. If the sole trader expects to use the premises for 10 years, what is the total cost of ownership?

A. ₦4,000,000

B. ₦4,200,000

C. ₦4,400,000

Correct D. ₦4,600,000

Correct Answer: D

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Question 6

In a perfectly competitive market, the supply curve is upward-sloping because firms are willing to supply more of a good as its price increases. However, this is not the case in a monopoly market. Explain why the supply curve in a monopoly market is downward-sloping.

A. The monopolist has a fixed cost of production that increases as output increases.

B. The monopolist has a decreasing marginal cost of production that increases as output increases.

Correct C. The monopolist has a decreasing marginal revenue that increases as output increases.

D. The monopolist has a fixed price that decreases as output increases.

Correct Answer: C

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Question 7

A firm's revenue is maximized when the marginal revenue (MR) equals the marginal cost (MC). Explain why this is the case.

A. Because the firm's total revenue is maximized when the marginal revenue equals the marginal cost.

B. Because the firm's total cost is minimized when the marginal revenue equals the marginal cost.

Correct C. Because the firm's profit is maximized when the marginal revenue equals the marginal cost.

D. Because the firm's output is maximized when the marginal revenue equals the marginal cost.

Correct Answer: C

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Question 8

A consumer's indifference curve is downward-sloping because the consumer is willing to give up more of one good in order to get more of another good. Explain why this is the case.

Correct A. Because the consumer's marginal utility of one good decreases as the quantity consumed increases.

B. Because the consumer's marginal utility of one good increases as the quantity consumed increases.

C. Because the consumer's marginal utility of one good remains constant as the quantity consumed increases.

D. Because the consumer's marginal utility of one good is zero as the quantity consumed increases.

Correct Answer: A

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Question 9

A firm's demand curve is downward-sloping because the firm is willing to sell more of a good as its price decreases. Explain why this is the case.

A. Because the firm's marginal revenue decreases as the price increases.

Correct B. Because the firm's marginal revenue increases as the price decreases.

C. Because the firm's total revenue is maximized when the price is at its lowest.

D. Because the firm's total revenue is minimized when the price is at its highest.

Correct Answer: B

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Question 10

A consumer's budget constraint is a horizontal line because the consumer has a fixed income that can be spent on any combination of goods. Explain why this is the case.

Correct A. Because the consumer's income is fixed and can be spent on any combination of goods.

B. Because the consumer's income is variable and can be spent on any combination of goods.

C. Because the consumer's income is fixed and can only be spent on one good.

D. Because the consumer's income is variable and can only be spent on one good.

Correct Answer: A

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Question 11

A company's sole trader has a warehouse with a capacity of 1000 units. The company's stock control system uses a first-in-first-out (FIFO) method. If 500 units are received on day 1, 300 units on day 3, and 200 units on day 5, what is the total number of units in the warehouse on day 7?

A. 1200

B. 1100

Correct C. 1000

D. 900

Correct Answer: C

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Question 12

A business owner purchases a life insurance policy for ₦500,000 with a premium payment of ₦50,000 per annum. If the policy has a 10-year term, what is the total premium paid?

A. ₦500,000

B. ₦600,000

C. ₦700,000

Correct D. ₦800,000

Correct Answer: D

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Question 13

A company exports goods worth ₦1,000,000 to a foreign country. If the exchange rate is 1 USD = ₦500, what is the value of the goods in USD?

A. ₦500,000

Correct B. ₦1,000,000

C. ₦1,500,000

D. ₦2,000,000

Correct Answer: B

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Question 14

A consumer protection law requires that all goods sold in a store must have a price tag. If a store sells 1000 units of a product at ₦100 each, what is the total revenue generated?

A. ₦100,000

B. ₦200,000

C. ₦300,000

Correct D. ₦400,000

Correct Answer: D

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Question 15

A company has two business units: a sole trader and a partnership. If the sole trader has a profit of ₦200,000 and the partnership has a profit of ₦300,000, what is the total profit of the company?

A. ₦400,000

B. ₦500,000

C. ₦600,000

Correct D. ₦700,000

Correct Answer: D

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Question 16

In a sole trade business, what is the primary advantage of using a sole trader structure?

A. Limited liability

B. Easy to set up

Correct C. Flexibility in decision-making

D. No tax benefits

Correct Answer: C

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Question 17

A company has a turnover of ₦5,000,000 and a profit of ₦1,200,000. What is the company's profit margin?

A. 24%

Correct B. 25%

C. 26%

D. 27%

Correct Answer: B

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Question 18

A consumer purchases a product for ₦10,000 and sells it for ₦15,000. What is the consumer's profit?

A. ₦5,000

Correct B. ₦5,500

C. ₦6,000

D. ₦6,500

Correct Answer: B

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Question 19

A company has a capital of ₦2,000,000 and a reserve of ₦1,500,000. What is the company's total capital?

Correct A. ₦3,500,000

B. ₦3,500,500

C. ₦3,500,000

D. ₦3,500,500

Correct Answer: A

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Question 20

A sole trader has a turnover of ₦1,000,000 and a profit of ₦200,000. What is the sole trader's profit margin?

Correct A. 20%

B. 21%

C. 22%

D. 23%

Correct Answer: A

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Question 21

The Central Bank of Nigeria (CBN) uses the monetary policy instrument of reserve requirement to control the money supply in the economy. If the CBN increases the reserve requirement ratio from 10% to 15%, what is the likely effect on the money supply?

A. The money supply will increase

Correct B. The money supply will decrease

C. The money supply will remain unchanged

D. The money supply will fluctuate

Correct Answer: B

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Question 22

A company is considering the introduction of a new product. The product has a high fixed cost of production, but the variable cost per unit is low. Which of the following is a characteristic of the product?

A. Economies of scale

B. Diseconomies of scale

C. Constant returns to scale

Correct D. Increasing returns to scale

Correct Answer: D

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Question 23

A consumer protection agency has received a complaint from a consumer who purchased a product that was not as described. The agency wants to investigate the complaint. Which of the following is a step in the investigation process?

Correct A. Gathering evidence

B. Conducting interviews

C. Analyzing documents

D. Making a decision

Correct Answer: A

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Question 24

A company is considering the introduction of a new product. The product has a high fixed cost of production, but the variable cost per unit is low. Which of the following is a characteristic of the product?

A. Economies of scale

B. Diseconomies of scale

C. Constant returns to scale

Correct D. Increasing returns to scale

Correct Answer: D

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Question 25

A consumer protection agency has received a complaint from a consumer who purchased a product that was not as described. The agency wants to investigate the complaint. Which of the following is a step in the investigation process?

Correct A. Gathering evidence

B. Conducting interviews

C. Analyzing documents

D. Making a decision

Correct Answer: A

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POST UTME ESUT 2018 Commerce | Objective

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