A Level Business Full-length Online Test 1 (mixed practice MCQs)

1Ch 1 Enterprise

Dev leaves a job paying £27 000 a year and uses savings that earned £1 000 interest a year. His business plan forecasts profits of £18 000, £26 000 and £34 000 in years 1, 2 and 3. Which conclusion is correct?

(a) over three years the business earns £6 000 more than he gave up(b) the business is worthwhile because profit rises every year(c) the business is not worthwhile because year 1 profit is below the salary alone(d) over three years the business earns £6 000 less than he gave up, so non-financial reasons would be needed to justify it

2Ch 1 Enterprise

What is the main purpose of business activity?

(a) to satisfy needs and wants with goods and services(b) to employ as many workers as possible(c) to pay taxes to the government(d) to own as many resources as possible

3Ch 2 Business Structure

Which is the most likely reason for the growth of the tertiary sector as a country develops?

(a) falling incomes(b) more workers in mining(c) lower demand for leisure(d) people spend more of their rising incomes on services

4Ch 2 Business Structure

In a country the output of manufacturing rises by 10% over ten years, yet the secondary sector's share of employment falls from 24% to 18%. Which is the most likely explanation?

(a) people moved into manufacturing from the tertiary sector(b) demand for manufactured goods stopped altogether(c) the sector's labour productivity rose, perhaps due to automation, so fewer workers produced more(d) the primary sector became more important than the secondary sector

5Ch 3 Size of Business

Two firms each have fixed costs of £2.0 million a year. After they merge the combined fixed costs are £3.2 million. What percentage of the old combined fixed costs has been saved?

(a) 0.8%(b) 40%(c) 25%(d) 20%

6Ch 3 Size of Business

Which stakeholder is most likely to gain from a takeover bid at a high premium?

(a) the target's employees(b) the bidder's shareholders(c) the target's suppliers(d) the target's shareholders

7Ch 4 Business Objectives and Stakeholders

A key supplier is the only source of an essential part, so it has high power, but it shows little interest in the firm's decisions. On a power-interest grid, how should the firm manage this supplier?

(a) keep it satisfied, to avoid losing its support(b) monitor it with minimum effort(c) keep it informed and involved in every decision(d) ignore it

8Ch 4 Business Objectives and Stakeholders

A company raises its dividend and cuts its training budget to increase profit this year. Which is the most likely short-run effect on stakeholders?

(a) all stakeholders gain equally(b) employees gain and shareholders lose(c) no stakeholder is affected(d) shareholders gain, while employees' development and future productivity may suffer

9Ch 5 Human Resource Management

What is the main purpose of asking for a reference from a candidate's previous employer?

(a) to check the candidate's record, reliability and honesty(b) to test the candidate's aptitude(c) to find out the candidate's age(d) to negotiate the candidate's pay

10Ch 5 Human Resource Management

A software company needs AI expertise that none of its staff have, and needs it quickly. Which recruitment choice is best?

(a) external recruitment, because it brings in new skills, though it costs more and takes time to settle in(b) internal recruitment, because it is always cheaper(c) internal recruitment, because promotion motivates staff(d) not recruiting, because the firm can never gain skills

11Ch 6 Motivation and Management

Pay linked to an appraisal of an individual's performance against targets is

(a) profit sharing(b) performance-related pay(c) a salary(d) a fringe benefit

12Ch 6 Motivation and Management

A salesperson earns £1,200 a month plus 5% commission on sales of £40,000. What is her monthly pay?

(a) £3,200(b) £2,000(c) £1,260(d) £41,200

13Ch 7 The Nature of Marketing

A firm has sales of £30 million in a market worth £250 million. A year later its sales are £39 million in a market worth £300 million. What is its new market share?

(a) 12%(b) 13%(c) 30%(d) 9%

14Ch 7 The Nature of Marketing

Which promotion method is most typical of B2B marketing?

(a) television advertising(b) celebrity endorsement(c) personal selling by trained sales staff(d) "buy one get one free" offers

15Ch 8 Market Research

Which is quantitative data?

(a) customers' feelings about a brand(b) comments on a website(c) ideas from an interview(d) the number of customers who rated a service 4 or 5

16Ch 8 Market Research

Which is a purpose of market research?

(a) to identify the size and growth of a market(b) to set the wage rates of employees(c) to record the business's transactions(d) to calculate the depreciation of machinery

17Ch 9 The Marketing Mix

Which is an intangible attribute of a product?

(a) its brand image(b) its size(c) its weight(d) its materials

18Ch 9 The Marketing Mix

A product with a low market share in a fast-growing market is a

(a) cash cow(b) star(c) dog(d) question mark

19Ch 10 The Nature of Operations

A clothing maker buys all its cotton from one supplier whose farms are using water faster than it is replaced. Which is the greatest threat to the sustainability of the clothing maker's operations?

(a) the cotton may be slightly cheaper than other suppliers' cotton(b) the supplier may soon be unable to deliver enough cotton(c) its workers may become more productive(d) its factory may be located near the farms

20Ch 10 The Nature of Operations

Which is a benefit of labour-intensive operations?

(a) the lowest cost per unit at high output(b) flexibility to make customised products(c) perfectly consistent quality(d) no recruitment or training needed

21Ch 11 Inventory Management, Capacity Utilisation and Outsourcing

What is rationalisation?

(a) increasing maximum capacity(b) buying more inventory(c) reducing maximum capacity, e.g. closing a production line(d) outsourcing marketing

22Ch 11 Inventory Management, Capacity Utilisation and Outsourcing

What is Just in Case (JIC)?

(a) ordering only when a customer orders(b) holding large buffer inventories in case of delays or surges in demand(c) outsourcing all production(d) producing at 100% capacity

23Ch 12 Business Finance and Sources of Finance

A business factors invoices worth £20,000. The factor pays 80% now and the rest, less a fee of 4% of the invoice value, later. How much does the business receive in total?

(a) £16,000(b) £800(c) £15,200(d) £19,200

24Ch 12 Business Finance and Sources of Finance

Which is most suitable for a cash shortage lasting a few weeks?

(a) a share issue(b) a mortgage(c) a bank overdraft(d) debentures

25Ch 13 Forecasting and Managing Cash Flows

In one month a business has a negative net cash flow, yet its closing balance is still positive. How is this possible?

(a) the closing balance is calculated without the opening balance(b) inflows and outflows are always equal(c) the closing balance shows the profit(d) the opening balance was larger than the net outflow

26Ch 13 Forecasting and Managing Cash Flows

The opening balance is (£1,500). Inflows are £8,200 and outflows are £9,100. What is the closing balance?

(a) £900(b) (£900)(c) £2,400(d) (£2,400)

27Ch 14 Costs and Break-even Analysis

Using question 14, the business sells 4,000 units. What is its margin of safety?

(a) 7,000 units(b) 3,000 units(c) 0.75 units(d) 1,000 units

28Ch 14 Costs and Break-even Analysis

Which is a limitation of break-even analysis?

(a) it ignores fixed costs(b) it assumes all output is sold at one price(c) it cannot show profit(d) it needs the cash-flow forecast

29Ch 15 Budgets and Variances

A department head cuts maintenance spending by half to produce a favourable variance and earn her bonus. What is the most likely long-term problem?

(a) wages will automatically fall(b) the variance will turn adverse immediately(c) machines may break down more often, which stops production and costs more later(d) the budget for the next year will be zero

30Ch 16 External Influences on Business Activity

Which is a supply-side policy?

(a) raising interest rates(b) improving training and education to raise productivity(c) raising income tax(d) weakening the currency

31Ch 17 Business Strategy

Which activity belongs to the strategic analysis stage of strategic management?

(a) writing departmental budgets(b) assessing external factors using PEST analysis(c) leading staff through a change(d) choosing between growth options using a decision tree

32Ch 18 Organisational Structure

Authority is

(a) the right to make decisions and give instructions(b) the duty to complete a task(c) a type of staff function(d) the number of levels in a business

33Ch 19 Business Communication

The chief executive records a video telling staff about a new dress code. Staff have no way to reply. The main weakness of this approach is that

(a) the business cannot check that staff understood the message(b) the video is slower than a written notice(c) the message cannot reach staff in different sites(d) staff cannot watch it more than once

34Ch 20 Leadership and HRM Strategy

A packing firm employed 40 workers and produced 12,000 units a week. After expansion it employs 45 workers and produces 13,500 units a week. What has happened to labour productivity?

(a) it is unchanged at 300 units per worker(b) it has risen by 12.5%(c) it has risen by 1,500 units(d) it has fallen because more workers are employed

35Ch 21 Marketing Analysis

Price rises by 10% and quantity demanded falls by 15%. What is the PED?

(a) −0.67(b) −1.5(c) −25(d) +1.5

36Ch 22 Marketing Strategy

Which is most likely to result from a country joining a free trade area?

(a) higher tariffs on goods from other members(b) fewer foreign competitors(c) exports to members become dearer(d) exports to other members become cheaper

37Ch 23 Location and Scale

A growing manufacturer can now afford a specialist finance director and a head of purchasing, whom a small firm could not justify. This is an example of

(a) an external economy of scale(b) a technical economy of scale(c) a managerial economy of scale(d) a diseconomy of scale

38Ch 24 Quality Management and Operations Strategy

360 of 24,000 units are defective. What is the defect rate?

(a) 1.5%(b) 15%(c) 0.15%(d) 6.7%

39Ch 25 Financial Statements and Analysis of Published Accounts

A machine costs £50,000 and has a residual value of £10,000. Managers change the estimated useful life from 4 years to 5 years. What is the effect on the yearly depreciation charge and on reported operating profit?

(a) depreciation rises by £2,000 and profit falls by £2,000(b) depreciation falls by £2,000 and profit rises by £2,000(c) depreciation is unchanged and profit is unchanged(d) depreciation falls by £10,000 and profit rises by £10,000

40Ch 26 Investment Appraisal and Finance and Accounting Strategy

A limitation of published accounts is that they

(a) are historical and may not predict the future(b) are checked by auditors(c) follow accounting rules(d) are available to the public

A Level Business Full Test 1

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