POST UTME SKYLINE UNIVERSITY 2021 Commerce | Objective

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Question 1
The concept of comparative advantage in international trade is closely related to the idea of specialization. Explain how specialization leads to increased productivity and efficiency in production.
Correct A. Specialization leads to increased productivity and efficiency in production because it allows firms to focus on producing a limited range of goods and services, thereby reducing costs and improving quality.
B. Specialization leads to increased productivity and efficiency in production because it allows firms to take advantage of economies of scale and reduce their average costs.
C. Specialization leads to increased productivity and efficiency in production because it allows firms to develop and utilize their core competencies and strengths.
D. Specialization leads to increased productivity and efficiency in production because it allows firms to reduce their reliance on external suppliers and improve their supply chain management.

Correct Answer: A

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Question 2
A company is considering two different production processes for a new product. Process A requires an initial investment of ₦1,000,000 and has a variable cost of ₦500 per unit. Process B requires an initial investment of ₦500,000 and has a variable cost of ₦750 per unit. If the company expects to sell 10,000 units of the product, which production process should it choose?
Correct A. Process A
B. Process B
C. Either process is equally profitable
D. Neither process is profitable

Correct Answer: A

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Question 3
A consumer protection agency has received a complaint from a consumer who purchased a product online but received a defective item. The consumer is seeking a refund. What is the legal basis for the consumer's claim?
A. The Sale of Goods Act
Correct B. The Consumer Protection Act
C. The Distance Selling Regulations
D. The Unfair Contract Terms Act

Correct Answer: B

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Question 4
A company is considering the formation of a joint venture with a foreign partner. What are the potential benefits of a joint venture?
A. Access to new markets and customers
B. Sharing of risks and costs
C. Improved efficiency and productivity
Correct D. All of the above

Correct Answer: D

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Question 5
A sole trader is considering the formation of a limited company. What are the potential advantages of a limited company?
A. Limited liability for shareholders
B. Easier access to finance
C. Greater flexibility in management
Correct D. All of the above

Correct Answer: D

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Question 6
A bank's return on equity (ROE) is calculated as net income divided by shareholder equity. If a bank has a net income of ₦120 million and shareholder equity of ₦800 million, what is its ROE?
A. 15%
Correct B. 12%
C. 18%
D. 20%

Correct Answer: B

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Question 7
A company is considering two different marketing strategies: a social media campaign or a print advertising campaign. The social media campaign will cost ₦500,000 and is expected to reach 100,000 people, while the print advertising campaign will cost ₦750,000 and is expected to reach 50,000 people. Which campaign is more cost-effective?
Correct A. Social media campaign
B. Print advertising campaign
C. Both campaigns are equally cost-effective
D. Neither campaign is cost-effective

Correct Answer: A

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Question 8
A warehouse has a storage capacity of 10,000 square meters. The warehouse is currently 75% full, with a total of 7,500 square meters occupied. If the warehouse is to be expanded by 20%, what will be the new storage capacity?
A. 9,000 square meters
B. 10,000 square meters
Correct C. 11,000 square meters
D. 12,000 square meters

Correct Answer: C

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Question 9
A company produces two products: Product A and Product B. The production process for Product A requires 2 hours of labor and 1 hour of machine time, while the production process for Product B requires 1 hour of labor and 2 hours of machine time. If the company has 8 hours of labor available and 10 hours of machine time available, how many units of Product A and Product B can be produced?
Correct A. 10 units of Product A and 5 units of Product B
B. 5 units of Product A and 10 units of Product B
C. 15 units of Product A and 5 units of Product B
D. 10 units of Product A and 10 units of Product B

Correct Answer: A

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Question 10
A life insurance policy has a premium of ₦50,000 per year and a death benefit of ₦1 million. If the policyholder dies after 5 years, what is the total payout to the beneficiary?
Correct A. ₦2.5 million
B. ₦1.25 million
C. ₦1.5 million
D. ₦2 million

Correct Answer: A

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Question 11
A company's marketing strategy involves a mix of advertising, sales promotions, and public relations. Which of the following is a key benefit of using a mix of these strategies?
A. Increased brand awareness
B. Improved customer loyalty
Correct C. Enhanced product differentiation
D. Reduced marketing costs

Correct Answer: C

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Question 12
A sole trader's business is affected by the following factors: market demand, competition, and government regulations. Which of the following is a key characteristic of a sole trader's business?
A. Limited liability
Correct B. Unlimited liability
C. Partnership
D. Company

Correct Answer: B

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Question 13
A company's financial statements include the following accounts: assets, liabilities, equity, revenues, and expenses. Which of the following is a key principle of accounting?
Correct A. Matching principle
B. Materiality principle
C. Consistency principle
D. Going concern principle

Correct Answer: A

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Question 14
A bank's cash management system involves the following components: cash forecasting, cash budgeting, and cash flow management. Which of the following is a key benefit of effective cash management?
Correct A. Improved liquidity
B. Reduced risk
C. Increased profitability
D. Enhanced customer satisfaction

Correct Answer: A

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Question 15
A company's marketing mix involves the following elements: product, price, promotion, and place. Which of the following is a key characteristic of a product?
Correct A. Tangible
B. Intangible
C. Homogeneous
D. Heterogeneous

Correct Answer: A

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Question 16
In a just-in-time (JIT) inventory system, what is the primary goal of the reorder point?
A. To minimize inventory costs
B. To maximize inventory turnover
Correct C. To ensure that stockouts are minimized
D. To reduce lead times

Correct Answer: C

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Question 17
A company is considering the implementation of a new marketing strategy. Which of the following is a key advantage of a pull strategy?
A. It focuses on the customer's needs
B. It emphasizes the product's features
Correct C. It involves creating a sense of urgency
D. It is more cost-effective

Correct Answer: C

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Question 18
A consumer purchases a product with a warranty. What is the primary purpose of the warranty?
A. To provide a sense of security
B. To guarantee a certain level of quality
Correct C. To protect the consumer from defects
D. To promote the product's features

Correct Answer: C

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Question 19
A company is considering the implementation of a new insurance policy. Which of the following is a key benefit of a comprehensive insurance policy?
Correct A. It provides coverage for all types of risks
B. It offers a high level of customization
C. It is more cost-effective
D. It provides a sense of security

Correct Answer: A

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Question 20
A business is considering the implementation of a new marketing strategy. Which of the following is a key characteristic of a relationship marketing strategy?
Correct A. It focuses on building long-term relationships
B. It emphasizes the product's features
C. It involves creating a sense of urgency
D. It is more cost-effective

Correct Answer: A

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Question 21
A company's marketing strategy involves a 20% increase in advertising expenditure. If the initial advertising expenditure is ₦1,500,000, what is the new advertising expenditure?
A. ₦1,800,000
B. ₦1,600,000
Correct C. ₦1,800,000
D. ₦1,600,000

Correct Answer: C

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Question 22
A sole trader's business generates an average profit of ₦250,000 per annum. If the business is taxed at a rate of 25%, what is the sole trader's tax liability?
Correct A. ₦62,500
B. ₦62,500
C. ₦62,500
D. ₦62,500

Correct Answer: A

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Question 23
A company's stock control system involves a first-in-first-out (FIFO) inventory management policy. If the company has 100 units of a product with a cost of ₦500 per unit, and 50 units are sold, what is the total cost of the units sold?
Correct A. ₦25,000
B. ₦25,000
C. ₦25,000
D. ₦25,000

Correct Answer: A

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Question 24
A company's marketing strategy involves a 20% increase in advertising expenditure. If the initial advertising expenditure is ₦1,500,000, what is the new advertising expenditure?
A. ₦1,800,000
B. ₦1,600,000
Correct C. ₦1,800,000
D. ₦1,600,000

Correct Answer: C

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Question 25
A sole trader's business generates an average profit of ₦250,000 per annum. If the business is taxed at a rate of 25%, what is the sole trader's tax liability?
Correct A. ₦62,500
B. ₦62,500
C. ₦62,500
D. ₦62,500

Correct Answer: A

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