Practice post utme wellspring university commerce 2019 Past Questions

Question 1

In a perfectly competitive market, what is the relationship between the marginal revenue product of labor and the market wage?

A. The marginal revenue product of labor is equal to the market wage.

B. The marginal revenue product of labor is greater than the market wage.

Correct C. The marginal revenue product of labor is less than the market wage.

D. The marginal revenue product of labor is unrelated to the market wage.

Correct Answer: C

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Question 2

A company is considering two different marketing strategies: a high-low strategy and a penetration pricing strategy. Which strategy is more likely to increase market share in the short run?

A. High-low strategy

Correct B. Penetration pricing strategy

C. Both strategies are equally effective

D. Neither strategy is effective

Correct Answer: B

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Question 3

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current output is 16 units and the number of workers (L) is 4, how many units of capital (K) are required?

A. 4

Correct B. 8

C. 16

D. 32

Correct Answer: B

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Question 4

A company is considering investing in a new project with the following cash flows: Year 1: -100,000; Year 2: 50,000; Year 3: 75,000. What is the net present value (NPV) of the project if the discount rate is 10%?

A. -20,000

Correct B. 10,000

C. 20,000

D. 30,000

Correct Answer: B

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Question 5

A firm's demand function is given by Q = 100 - 2P. If the firm's current price is 20, what is the quantity demanded?

A. 40

Correct B. 60

C. 80

D. 100

Correct Answer: B

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Question 6

In a market with perfect competition, the demand curve for a firm's product is downward sloping. What is the implication of this for the firm's profit-maximizing output?

Correct A. The firm will produce at the point where MR = MC

B. The firm will produce at the point where P = MC

C. The firm will produce at the point where MR = P

D. The firm will produce at the point where MC = P

Correct Answer: A

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Question 7

A firm is considering two production technologies: one that requires an initial investment of ₦10 million and another that requires an initial investment of ₦20 million. The first technology has a higher marginal cost but a lower fixed cost. Which technology should the firm choose if it expects to produce 10,000 units?

A. The firm should choose the technology with the higher fixed cost

Correct B. The firm should choose the technology with the lower marginal cost

C. The firm should choose the technology with the higher marginal cost

D. The firm should choose the technology with the lower fixed cost

Correct Answer: B

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Question 8

A company has a warehouse with a capacity of 10,000 units. The company receives an order for 8,000 units and has already stored 4,000 units in the warehouse. What is the minimum number of units the company needs to order to fulfill the order?

A. 2,000

B. 4,000

Correct C. 6,000

D. 8,000

Correct Answer: C

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Question 9

A firm has a 10% chance of losing ₦10 million and a 90% chance of gaining ₦20 million. What is the expected value of the firm's investment?

A. ₦1 million

Correct B. ₦2 million

C. ₦10 million

D. ₦20 million

Correct Answer: B

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Question 10

A company is considering two marketing strategies: one that involves a 10% increase in price and another that involves a 20% increase in advertising. Which strategy should the company choose if it expects to increase sales by 10%?

A. The company should choose the strategy with the higher price increase

Correct B. The company should choose the strategy with the higher advertising increase

C. The company should choose the strategy with the lower price increase

D. The company should choose the strategy with the lower advertising increase

Correct Answer: B

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Question 11

The Consumer Protection Act of 1999 provides for the establishment of the National Consumer Protection Agency. What is the primary function of this agency?

A. To investigate consumer complaints and provide redress

Correct B. To regulate consumer transactions and prevent unfair business practices

C. To educate consumers on their rights and responsibilities

D. To provide consumer credit counseling and debt management services

Correct Answer: B

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Question 12

A company has a policy of paying its employees a bonus of 10% of their annual salary. If an employee's annual salary is ₦500,000, what is the bonus amount?

Correct A. ₦50,000

B. ₦40,000

C. ₦45,000

D. ₦55,000

Correct Answer: A

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Question 13

A firm produces two products, A and B, using two inputs, labor and capital. The production function for product A is given by ( Q_A = 2L + 3K ), and for product B is given by ( Q_B = 3L + 2K ). If the firm has 10 units of labor and 8 units of capital, what is the total output?

A. 20 units

B. 30 units

Correct C. 40 units

D. 50 units

Correct Answer: C

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Question 14

A company has a sole proprietorship business. What is the primary advantage of this business structure?

Correct A. Easy to set up and maintain

B. Limited liability for owners

C. Pass-through taxation

D. Ability to issue stocks and bonds

Correct Answer: A

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Question 15

A firm exports goods to a foreign country. What is the primary risk associated with this business activity?

Correct A. Exchange rate fluctuations

B. Tariffs and trade barriers

C. Cultural and language differences

D. Transportation and logistics costs

Correct Answer: A

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Question 16

A company is considering two different marketing strategies for its new product. The first strategy involves a high level of advertising and promotion, while the second strategy involves a low level of advertising and promotion. Which of the following is a potential advantage of the first strategy?

Correct A. Increased brand awareness

B. Reduced production costs

C. Improved customer loyalty

D. Enhanced product quality

Correct Answer: A

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Question 17

A firm is considering exporting its products to a foreign market. Which of the following is a potential benefit of exporting?

Correct A. Increased market share

B. Improved product quality

C. Reduced production costs

D. Enhanced brand reputation

Correct Answer: A

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Question 18

A company is considering implementing a just-in-time (JIT) inventory system. Which of the following is a potential advantage of JIT?

Correct A. Reduced inventory costs

B. Improved product quality

C. Enhanced customer service

D. Increased production efficiency

Correct Answer: A

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Question 19

A sole trader is considering hiring an employee to help with the business. Which of the following is a potential advantage of hiring an employee?

Correct A. Increased productivity

B. Improved product quality

C. Enhanced customer service

D. Reduced business risk

Correct Answer: A

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Question 20

A company is considering implementing a new accounting system. Which of the following is a potential benefit of implementing a new accounting system?

Correct A. Improved financial reporting

B. Enhanced budgeting and forecasting

C. Reduced accounting costs

D. Increased tax compliance

Correct Answer: A

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Question 21

In a warehouse with a storage capacity of 100,000 units, the inventory turnover ratio is 5 times per year. If the cost of holding inventory is 20% per annum, calculate the optimal order quantity using the Economic Order Quantity (EOQ) model.

Correct A. ( EOQ = sqrt{rac{2 imes 100,000 imes 0.20}{5}} )

B. ( EOQ = sqrt{rac{2 imes 100,000 imes 0.20}{5 imes 0.20}} )

C. ( EOQ = sqrt{rac{2 imes 100,000 imes 0.20}{5 imes 0.20 imes 0.20}} )

D. ( EOQ = sqrt{rac{2 imes 100,000 imes 0.20}{5 imes 0.20 imes 0.20 imes 0.20}} )

Correct Answer: A

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Question 22

A company has a cash reserve of ₦1,500,000 and wants to invest in a project with a required return of 12% per annum. If the project has a beta of 1.2 and the risk-free rate is 6% per annum, calculate the cost of equity using the Capital Asset Pricing Model (CAPM).

Correct A. ( r_e = 6% + 1.2 imes (12% - 6%) )

B. ( r_e = 6% + 1.2 imes (12% + 6%) )

C. ( r_e = 6% + 1.2 imes (12% imes 6%) )

D. ( r_e = 6% + 1.2 imes (12% div 6%) )

Correct Answer: A

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Question 23

A consumer protection agency has received a complaint about a company's unfair business practices. The company has a market share of 70% and has been accused of engaging in price-fixing. If the agency finds that the company has indeed engaged in price-fixing, what is the likely outcome?

Correct A. The company will be fined ₦1 million and required to pay compensation to affected consumers.

B. The company will be required to divest its assets and transfer ownership to a new entity.

C. The company will be allowed to continue operating with minimal penalties.

D. The company will be shut down and its assets seized.

Correct Answer: A

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Question 24

A bank has a loan portfolio of ₦10 billion and wants to calculate its expected loss using the Expected Loss (EL) model. If the probability of default is 5% and the loss given default is 50%, calculate the expected loss.

Correct A. ( EL = 10,000,000,000 imes 0.05 imes 0.50 )

B. ( EL = 10,000,000,000 imes 0.05 + 0.50 )

C. ( EL = 10,000,000,000 imes 0.05 div 0.50 )

D. ( EL = 10,000,000,000 imes 0.05 imes 0.50 imes 0.50 )

Correct Answer: A

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Question 25

A company has a warehouse with a storage capacity of 50,000 units and wants to determine the optimal order quantity using the Economic Order Quantity (EOQ) model. If the cost of holding inventory is 15% per annum and the inventory turnover ratio is 3 times per year, calculate the optimal order quantity.

Correct A. ( EOQ = sqrt{rac{2 imes 50,000 imes 0.15}{3}} )

B. ( EOQ = sqrt{rac{2 imes 50,000 imes 0.15}{3 imes 0.15}} )

C. ( EOQ = sqrt{rac{2 imes 50,000 imes 0.15}{3 imes 0.15 imes 0.15}} )

D. ( EOQ = sqrt{rac{2 imes 50,000 imes 0.15}{3 imes 0.15 imes 0.15 imes 0.15}} )

Correct Answer: A

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