1) Why is understanding opportunity cost important for business decision-making? a) It ensures the highest price is always chosen b) It helps managers evaluate the trade-offs when allocating resources c) It guarantees profit margins remain stable d) It eliminates the need for budgeting e) It increases product demand f) It ensures employees remain motivated 2) What is the main risk of overtrading for a rapidly growing business? a) Falling prices in the market b) Increased employee turnover c) Insufficient working capital to support expansion d) Excessive reliance on customer feedback e) Too much government regulation f) Lack of new product development 3) Which leadership style is most effective when a business faces a crisis requiring quick decisions? a) Laissez-faire b) Autocratic c) Democratic d) Consultative e) Transformational f) Bureaucratic 4) Which of the following is an example of capital-intensive production? a) A restaurant using chefs to prepare meals b) An office hiring many customer service staff c) A car factory using automated robotics d) A farmer using manual tools e) A delivery firm hiring additional drivers f) A clothing store hiring models for advertising 5) Which factor would most likely influence a multinational company’s decision on location? a) Access to skilled labour b) Presence of local family-owned businesses c) Distance from global headquarters d) Cost of office furniture e) Availability of leisure facilities f) Number of local sports teams 6) Which of the following would most likely improve a business’s cash flow in the short term? a) Paying suppliers early b) Increasing inventory levels c) Selling underused assets d) Investing in R&D e) Expanding to a new market f) Increasing staff training budget 7) Why might a democratic leadership style slow down decision-making? a) It requires little feedback b) It excludes junior staff c) It involves employee consultation d) It uses written memos only e) It increases profits too fast f) It leads to role confusion 8) What does the Statement of Financial Position show? a) Only the revenue a company earned this year b) How much profit was made in the last quarter c) A snapshot of a business’s assets and liabilities d) A list of total monthly expenses e) The salaries of directors f) Customer feedback ratings 9) How can a business improve labour productivity? a) Reduce wages b) Invest in employee training and better tools c) Limit employee breaks d) Increase overtime without rest e) Hire more supervisors f) Restrict teamwork 10) Which of the following is a limitation of secondary research? a) It takes too long to collect b) It is always too expensive c) It may not be tailored to the business's needs d) It requires highly trained researchers e) It always includes competitor insights f) It avoids surveys and interviews 11) How does a tariff affect international trade? a) It eliminates all import restrictions b) It subsidises domestic industries c) It makes imported goods more expensive d) It promotes perfect competition e) It reduces export incentives f) It lowers productivity 12) What is meant by external economies of scale? a) Cost savings from internal departments b) Savings due to industry-wide improvements c) Decreased demand in a shrinking market d) Efficiency from hiring family members e) Savings from lower quality standards f) Reducing product variety 13) Why might a government support small businesses? a) To increase market monopolies b) To avoid technological advancement c) To promote employment and innovation d) To restrict competition e) To reduce global trade f) To raise unemployment 14) Which is a reason for choosing batch production? a) To produce unique, one-off items b) To simplify management c) To reduce waste while maintaining variety d) To limit worker specialisation e) To increase customisation for each customer f) To eliminate stock control 15) Why might a business conduct market segmentation? a) To lower product quality b) To target groups more effectively c) To raise raw material costs d) To design a generic marketing campaign e) To avoid meeting consumer needs f) To increase prices randomly 16) What is one likely reason for setting a price skimming strategy? a) To eliminate all competitors quickly b) To attract low-income customers c) To maximise revenue from early adopters d) To comply with government price controls e) To drive down demand f) To increase inventory turnover 17) Which function is typically associated with the Human Resources department? a) Managing production quality b) Analysing marketing data c) Recruiting and training staff d) Writing company blog posts e) Creating investment portfolios f) Developing new packaging machines 18) What does lean production aim to achieve? a) More layers of management b) Minimal waste and maximum efficiency c) Unlimited production costs d) Expensive outsourcing e) Constant stock build-up f) Slower response to demand 19) What is a trade union’s primary role? a) Promote managerial salaries b) Negotiate improved working conditions for employees c) Prevent industrial training d) Increase supplier power e) Handle profit distribution f) Organise team-building events 20) In which situation is decentralisation most useful? a) When strict control is needed b) In a small sole trader firm c) In large firms needing quicker local decisions d) In monopolies with uniform products e) When hiring new board members f) In centralised economies 21) What is the main reason a public limited company must publish its financial results? a) To encourage employee motivation b) To prevent competitors from copying products c) To comply with legal requirements and maintain transparency d) To promote customer loyalty e) To influence government policy f) To raise local awareness 22) How could inflation affect a business’s costs? a) It reduces utility expenses b) It lowers employee salaries c) It increases raw material and wage costs d) It leads to more investment in capital e) It decreases loan repayments f) It cuts advertising costs 23) Which of the following is a function of a business’s operations department? a) Creating recruitment policies b) Designing marketing strategies c) Managing inventory and quality control d) Conducting market research e) Handling employee benefits f) Writing financial reports 24) Why might a business carry out a SWOT analysis before entering a new market? a) To choose a pricing strategy b) To identify internal strengths and external threats c) To avoid applying for a loan d) To calculate total revenue e) To find customer email addresses f) To measure employee productivity 25) Which pricing strategy is best for attracting customers in a highly competitive market? a) Skimming b) Penetration pricing c) Cost-plus pricing d) Premium pricing e) Dynamic pricing f) Price discrimination 26) How does product differentiation benefit a business? a) It increases supplier control b) It helps the product stand out in the market c) It reduces the need for advertising d) It makes pricing easier e) It ensures legal compliance f) It decreases production costs 27) What is one risk of entering a joint venture with a foreign business? a) Access to new markets b) Reduced bureaucracy c) Loss of control over key decisions d) Lower setup costs e) Greater brand exposure f) Stronger team morale 28) How can quality assurance differ from quality control? a) It focuses on final inspection only b) It is only used in the service sector c) It involves checking throughout the production process d) It reduces staff workload e) It only applies to exports f) It encourages equipment investment 29) What would be a likely result of high employee turnover? a) Increased team stability b) Lower training costs c) Greater recruitment and onboarding expenses d) Improved customer relationships e) More consistent service quality f) Reduced insurance costs 30) What does a high gearing ratio suggest about a business? a) It is not borrowing any money b) It relies heavily on loans to finance its operations c) It has strong cash flow d) It avoids all financial risk e) It is investing in ethical sourcing f) It uses only internal finance 31) Which factor is most likely to affect the exchange rate of a currency? a) The size of the workforce b) Political and economic stability c) Company market share d) Marketing budgets e) The level of innovation f) The value of imports alone 32) What is the primary purpose of a break-even analysis? a) To forecast future profits b) To calculate staff wages c) To determine when a business will start making a profit d) To estimate total revenue e) To plan staff holidays f) To measure inflation 33) Which of the following is an internal source of finance? a) Bank loan b) Retained profit c) Venture capital d) Trade credit e) Government grant f) Mortgage 34) What is meant by delayering in a business structure? a) Adding more staff to teams b) Reducing levels of hierarchy to improve communication c) Hiring only temporary employees d) Expanding the marketing department e) Increasing vertical integration f) Removing all senior managers 35) Which factor is most likely to increase job satisfaction? a) Micromanagement b) Lack of recognition c) Opportunities for career progression d) Strict dress codes e) Long working hours f) Unclear expectations 36) How can a rise in interest rates affect a business with large loans? a) It will reduce its repayment amounts b) It will improve employee motivation c) It will increase its interest expenses d) It will attract more customers e) It will decrease supplier payments f) It will lower overhead costs 37) What is a potential consequence of poor stock control? a) Higher staff retention b) Improved supply chain relations c) Overstocking or understocking, affecting sales and costs d) Better cash flow e) Increased staff loyalty f) Stable pricing 38) Which of the following is a reason to use off-the-job training? a) To lower training costs b) To keep staff in the workplace c) To gain access to specialised skills and knowledge d) To avoid scheduling changes e) To build loyalty to supervisors f) To increase overtime pay 39) What is meant by a business objective? a) A legal requirement from the government b) A long-term desire of competitors c) A specific and measurable goal set to guide the business d) A method for reducing tax e) A forecast of national income f) A summary of employee roles 40) How might environmental concerns influence a business strategy? a) They reduce customer loyalty b) They have no effect on decision-making c) They may lead to more sustainable product designs d) They eliminate all production risks e) They allow illegal dumping f) They increase employee salaries

End of Year quiz 2 IGCSE Business

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