POST UTME MOUNTAIN TOP UNIVERSITY 2025 Commerce | Objective

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Question 1
A company's inventory management system uses the Economic Order Quantity (EOQ) model to determine the optimal order quantity. The EOQ model is given by the formula: (Q = sqrt{ rac{2DS}{h}}), where Q is the optimal order quantity, D is the demand rate, S is the ordering cost, and h is the holding cost. If the demand rate is 100 units per month, the ordering cost is ₦1200 per order, and the holding cost is ₦10 per unit per month, what is the optimal order quantity?
A. 200 units
Correct B. 250 units
C. 300 units
D. 350 units

Correct Answer: B

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Question 2
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 must determine whether the seller breached the contract of sale. Which of the following is a key consideration in determining whether the seller breached the contract?
A. The seller's intention to deceive the customer
B. The customer's failure to read the product description
Correct C. The product's failure to meet the seller's warranty
D. The customer's failure to return the product

Correct Answer: C

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Question 3
A bank offers a savings account with a 5% annual interest rate compounded monthly. If a customer deposits ₦100,000 into the account and leaves it for 2 years, what is the total amount in the account at the end of the 2-year period?
A. ₦121,000
B. ₦122,000
C. ₦123,000
Correct D. ₦124,000

Correct Answer: D

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Question 4
A company purchases a liability insurance policy to cover potential lawsuits. The policy has a deductible of ₦500,000 and a premium of ₦200,000 per year. If the company is sued for ₦1,000,000 and the insurance policy covers the lawsuit, what is the company's net loss?
A. ₦400,000
B. ₦450,000
Correct C. ₦500,000
D. ₦550,000

Correct Answer: C

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Question 5
A marketing manager wants to create a campaign to increase sales of a new product. The manager uses a combination of social media advertising and influencer marketing to reach the target audience. Which of the following is a key benefit of using influencer marketing?
A. Increased brand awareness
B. Improved customer engagement
Correct C. Enhanced product credibility
D. Increased sales revenue

Correct Answer: C

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Question 6
A company is considering launching a new product in a foreign market. The product has a high demand in the target market, but the company is concerned about the high transportation costs. Which of the following marketing strategies would be most appropriate for this situation?
A. Market penetration pricing
B. Product differentiation
C. Market segmentation
Correct D. Concentration pricing

Correct Answer: D

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Question 7
A consumer protection agency is investigating a complaint about a company's advertising practices. The company claims that its advertisements are truthful and not misleading. However, the agency has evidence that the company's advertisements are exaggerating the benefits of its product. Which of the following consumer protection laws would be most relevant in this situation?
Correct A. Federal Trade Commission Act
B. Consumer Product Safety Act
C. Truth in Lending Act
D. Fair Credit Reporting Act

Correct Answer: A

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Question 8
A company is considering outsourcing its production to a foreign country. The company is concerned about the potential risks and benefits of this decision. Which of the following production strategies would be most appropriate for this situation?
A. Vertical integration
B. Horizontal integration
Correct C. Outsourcing
D. Contract manufacturing

Correct Answer: C

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Question 9
A company has purchased an insurance policy to protect against losses due to natural disasters. The policy has a deductible of ₦100,000 and a coverage limit of ₦500,000. If the company suffers a loss of ₦750,000 due to a natural disaster, how much will the insurance company pay?
A. ₦350,000
Correct B. ₦450,000
C. ₦550,000
D. ₦650,000

Correct Answer: B

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Question 10
A company is considering launching a new product in a foreign market. The company has conducted market research and has determined that the target market has a high demand for the product. However, the company is concerned about the high transportation costs. Which of the following marketing strategies would be most appropriate for this situation?
A. Market penetration pricing
B. Product differentiation
C. Market segmentation
Correct D. Concentration pricing

Correct Answer: D

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Question 11
A sole trader's business is considered a separate legal entity from its owner. What is the primary advantage of this separation?
Correct A. Limited liability
B. Separate taxation
C. Easier business closure
D. Increased business flexibility

Correct Answer: A

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Question 12
A company's production process involves the following steps: raw material procurement, manufacturing, quality control, and packaging. Which step is most likely to be outsourced?
A. Raw material procurement
Correct B. Manufacturing
C. Quality control
D. Packaging

Correct Answer: B

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Question 13
A warehouse manager is responsible for maintaining a stock level of 500 units. The current stock level is 300 units. If 20 units are received daily, and 15 units are sold daily, what is the expected stock level after 10 days?
A. 350
B. 450
Correct C. 550
D. 650

Correct Answer: C

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Question 14
A company exports 80% of its production to foreign countries. If the company's total production is 1000 units, how many units are exported?
Correct A. 800
B. 900
C. 1000
D. 1200

Correct Answer: A

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Question 15
A business owner purchases a life insurance policy with a premium of ₦100,000 per annum. The policy pays a benefit of ₦500,000 in the event of the business owner's death. What is the insurance company's expected loss if the business owner dies after 5 years?
A. ₦1,250,000
Correct B. ₦1,500,000
C. ₦2,000,000
D. ₦2,500,000

Correct Answer: B

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Question 16
The concept of 'Gresham's Law' in international trade suggests that _______
A. good money drives out bad money
Correct B. bad money drives out good money
C. foreign currency drives out local currency
D. local currency drives out foreign currency

Correct Answer: B

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Question 17
A firm's break-even point is the point at which its _______
A. total revenue equals its total fixed costs
B. total revenue equals its total variable costs
Correct C. total revenue equals its total fixed and variable costs
D. total revenue equals its profit

Correct Answer: C

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Question 18
The _______ of a firm refers to the ability of the firm to adjust its production levels in response to changes in demand
A. elasticity of demand
Correct B. elasticity of supply
C. marginal cost
D. marginal revenue

Correct Answer: B

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Question 19
The _______ of a firm refers to the ability of the firm to adjust its production levels in response to changes in demand
Correct A. elasticity of demand
B. elasticity of supply
C. marginal cost
D. marginal revenue

Correct Answer: A

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Question 20
A _______ is a type of business organization that is owned and controlled by its members
A. partnership
B. corporation
Correct C. cooperative
D. sole proprietorship

Correct Answer: C

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Question 21
The _______ of a firm refers to the ability of the firm to adjust its production levels in response to changes in demand
A. elasticity of demand
Correct B. elasticity of supply
C. marginal cost
D. marginal revenue

Correct Answer: B

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Question 22
A _______ is a type of business organization that is owned and controlled by its members
A. partnership
B. corporation
Correct C. cooperative
D. sole proprietorship

Correct Answer: C

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Question 23
The _______ of a firm refers to the ability of the firm to adjust its production levels in response to changes in demand
Correct A. elasticity of demand
B. elasticity of supply
C. marginal cost
D. marginal revenue

Correct Answer: A

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Question 24
A _______ is a type of business organization that is owned and controlled by its members
A. partnership
B. corporation
Correct C. cooperative
D. sole proprietorship

Correct Answer: C

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Question 25
The _______ of a firm refers to the ability of the firm to adjust its production levels in response to changes in demand
A. elasticity of demand
Correct B. elasticity of supply
C. marginal cost
D. marginal revenue

Correct Answer: B

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