POST UTME WELLSPRING UNIVERSITY 2021 Commerce | Objective

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Question 1
A sole trader's business is considered a separate legal entity from its owner. Which of the following best describes this concept?
Correct A. Separate legal entity
B. Unlimited liability
C. No separate legal entity
D. No unlimited liability

Correct Answer: A

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Question 2
A company's memorandum of association is a document that outlines the company's
A. Objects and powers
B. Share capital and shareholding
C. Directors and their powers
Correct D. All of the above

Correct Answer: D

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Question 3
A consumer protection law that prohibits unfair contract terms is the
Correct A. Unfair Contract Terms Act
B. Consumer Protection Act
C. Sale of Goods Act
D. Supply of Goods and Services Act

Correct Answer: A

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Question 4
A company's articles of association is a document that outlines the company's
A. Objects and powers
B. Share capital and shareholding
C. Directors and their powers
Correct D. Management and administration

Correct Answer: D

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Question 5
A sole trader's business is considered a separate legal entity from its owner. Which of the following best describes this concept?
Correct A. Separate legal entity
B. Unlimited liability
C. No separate legal entity
D. No unlimited liability

Correct Answer: A

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Question 6
A company specializes in producing high-quality leather goods. It has a production capacity of 10,000 units per month. The company uses a just-in-time inventory system and receives raw materials on a weekly basis. If the company's lead time is 2 weeks, what is the maximum inventory level it can hold?
Correct A. 5,000 units
B. 10,000 units
C. 15,000 units
D. 20,000 units

Correct Answer: A

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Question 7
A bank offers a 5-year fixed deposit account with an interest rate of 12% per annum compounded annually. If a customer deposits ₦100,000 at the beginning of the first year, how much will the customer have at the end of the fifth year?
Correct A. ₦163,217.89
B. ₦163,217.90
C. ₦163,217.91
D. ₦163,217.92

Correct Answer: A

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Question 8
A company has two production lines: Line A and Line B. Line A produces 60% of the company's total output, while Line B produces 40%. If the company's total output is 10,000 units per month, how many units does Line B produce?
A. 4,000 units
Correct B. 4,500 units
C. 5,000 units
D. 5,500 units

Correct Answer: B

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Question 9
A sole trader has a business income of ₦500,000 and a business expense of ₦200,000. What is the sole trader's business profit?
Correct A. ₦300,000
B. ₦300,001
C. ₦300,002
D. ₦300,003

Correct Answer: A

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Question 10
A company uses a first-in-first-out (FIFO) inventory system. If the company has 100 units of a product with a cost of ₦50 per unit and 50 units of the same product with a cost of ₦60 per unit, what is the average cost per unit of the product?
A. ₦52.50
Correct B. ₦53.00
C. ₦53.50
D. ₦54.00

Correct Answer: B

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Question 11
In a perfectly competitive market, what is the relationship between the marginal revenue product (MRP) of a firm and the marginal factor cost (MFC)?
A. MRP = MFC
B. MRP > MFC
Correct C. MRP < MFC
D. MRP and MFC are unrelated

Correct Answer: C

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Question 12
A company has the following data on its production costs: Fixed costs = ₦100,000, Variable costs = ₦50x, and Total revenue = ₦150x. What is the break-even point?
A. ₦50,000
B. ₦75,000
Correct C. ₦100,000
D. ₦125,000

Correct Answer: C

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Question 13
A consumer has the following utility function: U(x,y) = 2x + 3y. If the prices of x and y are ₦5 and ₦3 respectively, and the consumer has a budget of ₦20, what is the optimal consumption bundle?
A. (2,4)
Correct B. (4,2)
C. (3,3)
D. (1,5)

Correct Answer: B

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Question 14
A firm has the following production function: Q = 2L^2 + 3K. If the prices of labor and capital are ₦10 and ₦5 respectively, and the firm has a budget of ₦50, what is the optimal input bundle?
A. (2,5)
Correct B. (5,2)
C. (3,3)
D. (1,10)

Correct Answer: B

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Question 15
A company has the following data on its stock prices: Initial price = ₦100, Current price = ₦120, and Dividend yield = 5%. What is the expected return on investment?
A. 10%
Correct B. 12%
C. 15%
D. 18%

Correct Answer: B

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Question 16
In a perfectly competitive market, the law of diminishing marginal utility implies that the demand curve for a product is likely to be:
Correct A. A downward-sloping curve
B. A horizontal line
C. A vertical line
D. An upward-sloping curve

Correct Answer: A

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Question 17
A company's production function is given by the equation Q = 2L^2 + 5K, where Q is the quantity produced, L is the number of labor hours, and K is the amount of capital. If the company wants to produce 100 units of output, how many labor hours are required if the amount of capital is 10?
A. 20 labor hours
B. 30 labor hours
Correct C. 40 labor hours
D. 50 labor hours

Correct Answer: C

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Question 18
A consumer has a budget of ₦1000 and a preference for two goods, A and B. The prices of the goods are ₦200 and ₦300 respectively. Using the budget constraint equation, find the consumer's optimal consumption bundle.
Correct A. (2, 1)
B. (1, 2)
C. (3, 0)
D. (0, 3)

Correct Answer: A

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Question 19
A firm's cost function is given by the equation C = 2L + 5K, where C is the total cost, L is the number of labor hours, and K is the amount of capital. If the firm wants to minimize its cost, how many labor hours should it hire if the amount of capital is 10?
A. 10 labor hours
Correct B. 20 labor hours
C. 30 labor hours
D. 40 labor hours

Correct Answer: B

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Question 20
A company's revenue function is given by the equation R = 2Q^2, where R is the revenue and Q is the quantity sold. If the company wants to maximize its revenue, how many units should it sell?
A. 10 units
B. 20 units
Correct C. 30 units
D. 40 units

Correct Answer: C

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Question 21
The concept of 'limited liability' is a fundamental principle of which business unit?
A. Sole Trade
B. Partnership
Correct C. Company
D. Cooperative

Correct Answer: C

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Question 22
A company's financial statements are audited annually by an independent auditor. What is the primary purpose of this audit?
A. To verify the company's tax returns
B. To ensure compliance with regulatory requirements
Correct C. To provide an opinion on the company's financial position
D. To identify areas for cost reduction

Correct Answer: C

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Question 23
A sole trader's business is affected by a natural disaster, resulting in significant financial losses. What type of insurance policy can the sole trader claim to recover losses?
Correct A. Business Interruption Insurance
B. Public Liability Insurance
C. Professional Indemnity Insurance
D. Employers' Liability Insurance

Correct Answer: A

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Question 24
A company's marketing strategy involves the use of social media platforms to promote its products. What type of communication channel is being used?
A. Print Media
B. Electronic Media
Correct C. Digital Media
D. Personal Selling

Correct Answer: C

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Question 25
A bank's primary function is to act as a financial intermediary between savers and borrowers. What type of financial institution is this?
Correct A. Commercial Bank
B. Investment Bank
C. Central Bank
D. Development Bank

Correct Answer: A

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