1.3 Business Studies End of Topic Test

Which three of the following are the most likely reason why individuals would want to start in business as a sole trader? 

• To increase their earnings  

• They dislike taking risks 

• Because they enjoy a challenge 

• To give them greater control over their future 

• They prefer to work for someone else 

Which one of the following would be a non-financial objective for individuals to start a business?  

• To increase income 

• To get greater work satisfaction 

• To accumulate wealth 

• To maximise profit 

Kim Lawton has just set up a restaurant in London. She wants the business to be profitable within six months. After that, she hopes profits will increase sufficiently for her to open a second restaurant within two years. Her personal objective is to own a small chain of restaurants within five years which would make her a wealthy person earning a large amount of money.  

• To give customer service 

• To increase her income 

• To let someone else make the decisions 

• To become wealthy 

• To help others 

   

 

An example of Persuasion is.. 

• Preparing a production schedule for the next four weeks 

• Talking a supplier round to giving an extra 2% discount on an order 

• Ordering in 20% more stock in the hope that sales will increase shortly 

• Employing a worker who turns out to be much better and more skilled than expected 

• Following the loss of an important customer, deciding to prioritise getting more orders 

An example of Initiative is.. 

• Preparing a production schedule for the next four weeks 

• Talking a supplier round to giving an extra 2% discount on an order 

• Ordering in 20% more stock in the hope that sales will increase shortly 

• Employing a worker who turns out to be much better and more skilled than expected 

• Following the loss of an important customer, deciding to prioritise getting more orders 

An example of Risk Taking is…. 

• Preparing a production schedule for the next four weeks 

• Talking a supplier round to giving an extra 2% discount on an order 

• Ordering in 20% more stock in the hope that sales will increase shortly 

• Employing a worker who turns out to be much better and more skilled than expected 

• Following the loss of an important customer, deciding to prioritise getting more orders 

Which three of the following are examples of variable costs? 

• Rent on a factory unit 

• The cost of clothes bought by a high street fashion boutique 

• The salary of the managing director of a company 

• Coca-cola drinks in a fast food restaurant 

• Diesel fuel used by a taxi driver 

A paint ball business charges customers £10 for each paint ball session. Last year customers paid for 5000 sessions. The year, it increased its prices to £11 but the number of sessions sold fell to 4000. What effect will this have had on revenues? 

• Increase by 10 % 

• Fall by £10,000 

• Change from £50,000 to £44,000 

• Increase by £1000 

A maker of electric guitars has fixed costs of £2000 per month. Last month, it manufactured 50 guitars items. Its variable cost was £70 per guitar. This month, it has produced 60 guitars and the variable cost per guitar has stayed the same. What effect will this have on its total costs? Its costs will increase: 

• By 20% 

• By £700 

• From £3500 to £4200 

• By £70 

A small bakery has just launched a new range of cakes. Which of the following is not a cash inflow for the small baker business? 

• Capital from the owner to help launch the range 

• Buying ingredients for the cakes 

• A loan to help launch the range 

• Sales from the new range of cakes