MCQ revision test 5

The managers of a business propose to retain all of its profit to finance automation of its production. This is most likely to cause conflict with:

• employees and lenders.

• employees and shareholders.

• lenders and suppliers.

• shareholders and suppliers.

A business is able to reduce unit costs because of lessons learned throughout the period in which it has existed. This is known as:

• economies of scale.

• economies of scope.

• synergy.

• the experience curve.

In a decision tree the net gain of a decision is the:

• average pay-off of the outcomes.

• expected value of the best decision minus the expected value of the next best decision.

• expected value minus the initial cost.

• total pay-off of the outcomes minus the initial cost.

Which one of these changes is most likely to lead to higher costs and higher demand for a product?

• An increase in the rate of inflation

• A rise in interest rates

• Introducing fair trade principles

• More competition

The business produces and sells 10 million units of output. Price rises from £5 to £9. As a result, profit changes:

• from minus £10m to £30m.

• from minus £10m to £40m.

• from £10m to £30m.

• from £10m to £40m.

Stated below are three possible changes for a business.

Other things being equal, which of the following changes is the most likely to lead to an increase in employee costs as a percentage of turnover?

• A 1 and 2 only

• B 2 and 3 only

• C 2 only

• D 3 only

The owner of a business which sells hot drinks asks a focus group of customers for their views. This market research reveals that customers prefer to have cakes with their drinks. In terms of Ansoff’s matrix, the subsequent decision to introduce cakes is an example of:

• A diversification, resulting from qualitative market research.

• B diversification, resulting from quantitative market research.

• C product development, resulting from qualitative market research.

• D product development, resulting from quantitative market research.

A product’s price rises by 20% and its sales volume falls by 10%. All of its competitors leave their prices unchanged. The product’s market share, as measured by sales volume, remains the same. Which of these statements is false?

• The market size, measured by volume, remains unchanged.

• The product’s market share, measured by value, increases.

• The product’s price elasticity of demand is inelastic.

• The product’s sales value rises.

Statement 1: ‘In a network diagram, the path with the lowest total float time is the critical path.’

Statement 2: ‘In a network diagram, at least one activity must have a float time.’

Read statements 1 and 2 and select the correct option from the following options.

• A Statement 1 is true. Statement 2 is true.

• B Statement 1 is true. Statement 2 is false.

• C Statement 1 is false. Statement 2 is true.

• D Statement 1 is false. Statement 2 is false.

Statement 1: ‘A business might improve the quality of its product in order to make its demand more price elastic.’

Statement 2: ‘A business might improve the quality of its product in order to increase added value.’

Read Statements 1 and 2 and select the correct option from the following options.

• A Statement 1 is true. Statement 2 is true.

• B Statement 1 is true. Statement 2 is false.

• C Statement 1 is false. Statement 2 is true.

• D Statement 1 is false. Statement 2 is false.