POST UTME LEAD CITY UNIVERSITY 2017 Commerce | Objective

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Question 1
A company is considering the use of just-in-time (JIT) inventory management system. Which of the following is a major advantage of JIT?
Correct A. Reduced inventory costs
B. Improved product quality
C. Increased production capacity
D. Enhanced customer service

Correct Answer: A

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Question 2
A sole trader is considering the formation of a partnership. What are the main advantages of forming a partnership?
A. Limited liability for partners
Correct B. Increased access to capital
C. Improved management structure
D. Enhanced tax benefits

Correct Answer: B

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Question 3
A company is considering the use of a production process that involves the use of robots. What are the main advantages of using robots in production?
Correct A. Increased productivity
B. Improved product quality
C. Reduced labor costs
D. Enhanced flexibility

Correct Answer: A

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Question 4
A consumer is considering the purchase of a product that has a warranty period of 2 years. What are the main advantages of purchasing a product with a warranty?
Correct A. Increased product reliability
B. Improved customer service
C. Enhanced product quality
D. Reduced maintenance costs

Correct Answer: A

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Question 5
A bank is considering the use of a new financial product that involves the use of derivatives. What are the main advantages of using derivatives in finance?
A. Reduced risk exposure
Correct B. Improved investment returns
C. Enhanced liquidity
D. Increased leverage

Correct Answer: B

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Question 6
A firm specializes in producing only one good. This specialization is an example of which of the following concepts?
Correct A. Division of Labor
B. Economies of Scale
C. Comparative Advantage
D. Opportunity Cost

Correct Answer: A

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Question 7
A country's trade deficit is 100 billion. If the country's GDP is 2 trillion, what is the trade deficit as a percentage of GDP?
A. 0.05%
Correct B. 0.5%
C. 5%
D. 50%

Correct Answer: B

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Question 8
A firm's revenue is 100,000 and its cost of goods sold is 60,000. What is the firm's gross profit?
Correct A. 40,000
B. 60,000
C. 80,000
D. 100,000

Correct Answer: A

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Question 9
A country's inflation rate is 5% and its interest rate is 10%. What is the real interest rate?
A. 5%
Correct B. 7.5%
C. 10%
D. 15%

Correct Answer: B

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Question 10
A firm's assets are 100,000, liabilities are 50,000, and equity is 50,000. What is the firm's debt-to-equity ratio?
A. 1:1
Correct B. 1:2
C. 2:1
D. 3:1

Correct Answer: B

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Question 11
The Central Bank of Nigeria (CBN) uses the monetary policy instrument of Open Market Operations (OMO) to control the money supply in the economy. Which of the following is a correct statement about the effect of OMO on the money supply?
A. OMO increases the money supply in the economy
Correct B. OMO decreases the money supply in the economy
C. OMO has no effect on the money supply in the economy
D. OMO increases the money supply in the economy, but only in the short run

Correct Answer: B

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Question 12
A company is considering the introduction of a new product into the market. The product has a high demand elasticity of 0.8. If the company increases the price of the product by 10%, what will be the percentage change in the quantity demanded?
Correct A. -8%
B. -10%
C. -12%
D. -15%

Correct Answer: A

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Question 13
A firm is considering the introduction of a new product into the market. The product has a fixed cost of ₦500,000 and a variable cost of ₦100 per unit. If the firm sells 10,000 units of the product, what will be the total revenue?
A. ₦1,000,000
Correct B. ₦1,500,000
C. ₦2,000,000
D. ₦2,500,000

Correct Answer: B

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Question 14
A company is considering the introduction of a new product into the market. The product has a market share of 20%. If the company increases the price of the product by 15%, what will be the new market share?
A. 15%
Correct B. 18%
C. 20%
D. 22%

Correct Answer: B

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Question 15
A firm is considering the introduction of a new product into the market. The product has a fixed cost of ₦200,000 and a variable cost of ₦50 per unit. If the firm sells 5,000 units of the product, what will be the total cost?
A. ₦250,000
Correct B. ₦300,000
C. ₦350,000
D. ₦400,000

Correct Answer: B

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Question 16
A sole trader's business is registered under the Companies and Allied Matters Act (CAMA) 2020. Which of the following is a requirement for registration?
A. Obtain a Tax Identification Number (TIN)
Correct B. Register with the Corporate Affairs Commission (CAC)
C. Obtain a Business Name Certificate
D. Obtain a Patent for the business name

Correct Answer: B

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Question 17
A consumer purchases a product from a retailer, but the product is defective. The consumer sues the retailer for breach of contract. Which of the following is a defense available to the retailer?
A. The consumer failed to inspect the product before purchase
Correct B. The retailer had no knowledge of the defect
C. The consumer is estopped from claiming damages
D. The product was sold as is

Correct Answer: B

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Question 18
A bank offers a loan to a customer at an interest rate of 12% per annum. The loan is repayable in 5 years. What is the total interest paid by the customer over the loan period?
A. ₦10,000
Correct B. ₦12,500
C. ₦15,000
D. ₦17,500

Correct Answer: B

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Question 19
A company purchases a life insurance policy for one of its employees. The policy pays a benefit of ₦1 million in the event of the employee's death. What is the premium paid by the company for the policy?
A. ₦50,000
B. ₦75,000
C. ₦100,000
Correct D. ₦125,000

Correct Answer: D

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Question 20
A transport company operates a fleet of buses on a route between two cities. The company charges a fare of ₦500 per kilometer. If the distance between the two cities is 200 kilometers, what is the total fare paid by a passenger for the journey?
A. ₦100,000
B. ₦120,000
C. ₦150,000
Correct D. ₦200,000

Correct Answer: D

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Question 21
A company's financial statements show that its cost of goods sold is ₦1,500,000 and its selling expenses are ₦800,000. If the company's net income is ₦250,000, what is its gross profit?
Correct A. ₦1,350,000
B. ₦1,400,000
C. ₦1,450,000
D. ₦1,500,000

Correct Answer: A

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Question 22
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's output is 100 units and the number of workers (L) is 25, how many machines (K) are required?
A. 10
Correct B. 15
C. 20
D. 25

Correct Answer: B

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Question 23
A company's balance sheet shows that its total assets are ₦5,000,000, its total liabilities are ₦2,000,000, and its equity is ₦3,000,000. What is its debt-to-equity ratio?
A. 0.5
Correct B. 0.67
C. 0.75
D. 1.0

Correct Answer: B

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Question 24
A firm's supply function is given by P = 2Q + 10. If the firm's output is 5 units, what is the price per unit?
A. 15
Correct B. 20
C. 25
D. 30

Correct Answer: B

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Question 25
A company's cash flow statement shows that its net income is ₦1,000,000, its depreciation is ₦200,000, and its change in working capital is ₦300,000. What is its cash flow from operations?
A. ₦1,500,000
Correct B. ₦1,600,000
C. ₦1,700,000
D. ₦1,800,000

Correct Answer: B

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