Lesson 5.1.3

5.1.3 Efficiencies and Costs of Business Growth Quiz: NCFE Business & Enterprise, Unit 5

20 questions · by Revision Ninja

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This free Efficiencies and Costs of Business Growth quiz has 20 multiple choice questions for the NCFE Level 1/2 Technical Award in Business and Enterprise (NCFE Business & Enterprise), Unit 5: Growth. It covers lesson 5.1.3, Efficiencies and Costs of Business Growth, one of the ready-made revision sets written with Revision Ninja and organised by unit on Qwiz Rush.

Use it as a starter, a plenary or an end-of-unit check: host it live on the board and students join with a game code on their own devices — no student accounts and nothing to install — or set it for independent revision with Free Play, where each student works through the questions alone.

Every question runs on a 20-second countdown and the fastest correct answers score the most. All the questions and their choices are listed below so you can see what the quiz covers; the answers are revealed in the game. Want to change something? Make your own copy and edit it in your library.

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The 20 questions

  1. Why is it useful for a manager to know where diseconomies of scale begin?

    • It sets the price customers will pay per unit
    • It shows the output at which the firm would break even
    • It shows the size beyond which growth raises costs
    • It shows how fast the cost of materials is rising

  2. A supermarket chain agrees a lower price per crate by ordering ten times as many. Which economy of scale is this?

    • Managerial economies
    • Purchasing economies
    • Financial economies
    • Marketing economies

  3. Which of these is a managerial economy of scale?

    • Borrowing at a lower interest rate than rivals
    • Employing specialist managers for each function
    • Spreading advert costs over more shoppers
    • Buying components in bulk at a big discount

  4. A factory installs an automated production line that runs day and night. Why does cost per unit fall?

    • Banks lend to the firm at lower interest rates
    • Machinery costs are spread across more output
    • Raw materials become cheaper to buy per unit
    • The advertising budget is shared over more sales

  5. A chain of 500 shops books one national TV slot instead of 500 local ones. Why does this cut cost per shop?

    • The same fee is spread across many outlets
    • Specialist buyers cut waste in each stockroom
    • Bigger lorries cut the fuel cost of each delivery
    • Suppliers offer bigger discounts on bulk orders

  6. Why can a large plc usually borrow money more cheaply than a small sole trader?

    • Lenders see it as a lower risk of default
    • It buys its raw materials in larger batches
    • Interest rates are set lower for older firms
    • Its shares can be sold on the stock market

  7. A firm grows so big that its average cost per unit starts to rise. What is happening?

    • Its fixed costs have started to rise
    • It has passed its break-even point
    • It is suffering diseconomies of scale
    • It is enjoying economies of scale

  8. A firm runs 40 sites and head office cannot keep them working to one plan. Why do its unit costs rise?

    • Effort is duplicated and materials get wasted
    • Delivery lorries have to travel further to each site
    • Staff feel less valued and work more slowly
    • Managers must be paid much higher salaries

  9. In a big supermarket, an instruction from the board takes weeks to reach checkout staff and arrives garbled. What is the best fix?

    • Give each checkout worker a bonus for speed
    • Install faster tills so queues clear more quickly
    • Hire more middle managers to pass the messages down
    • Cut out layers to shorten the chain of command

  10. Which statement best defines economies of scale?

    • Total revenue grows faster than output
    • Average cost per unit rises as output grows
    • Total cost stays the same as the firm expands
    • Average cost per unit falls as output grows

  11. A dairy gives a supermarket chain a large discount because it takes 10,000 crates at a time, while the corner shop next door pays full price. Which economy of scale is this?

    • Technical economies of scale
    • Financial economies of scale
    • Purchasing economies of scale
    • Managerial economies of scale

  12. Which of these shows a business gaining a managerial economy of scale?

    • It spreads one TV advert over millions of units sold
    • It wins a 20% discount by ordering materials in bulk
    • It employs a specialist to run its human resources
    • Its managers negotiate a lower interest rate on loans

  13. A bakery buys an industrial oven costing £200,000 that bakes 10,000 loaves an hour. Which type of economy of scale is it gaining?

    • Purchasing economies of scale
    • Financial economies of scale
    • Marketing economies of scale
    • Technical economies of scale

  14. A firm pays £1 million for a national TV advert. If it sells 10 million units rather than 1 million, what happens to the advertising cost per unit?

    • It falls from £1.00 to £0.50
    • It rises from £0.10 to £1.00
    • It falls from £1.00 to £0.10
    • It stays at £1.00 for every unit

  15. Why does a bank usually charge a big supermarket chain less interest on a loan than it charges the corner shop next door?

    • It borrows over a shorter period, so less interest builds up
    • It can repay the loan out of its retained profit
    • Banks see it as a lower risk and it can offer security
    • It gives the bank a share of its profits in return

  16. A firm keeps growing, and past a certain size its average cost per unit starts to rise again. What is this called?

    • Economies of scale
    • Rising fixed costs
    • The break-even point
    • Diseconomies of scale

  17. Head office sends an instruction down through six layers of management. By the time shop staff hear it, the message has changed. Which diseconomy of scale is this?

    • Managers losing control of what staff actually do
    • Workers losing motivation in a large firm
    • Departments unknowingly duplicating each other's work
    • Communication breaking down as a firm grows

  18. Sales promises next-day delivery while the factory is told to cut overtime, so orders keep arriving late. Which diseconomy of scale does this show?

    • Messages distorted in a long chain of command
    • Managers unable to supervise every worker
    • Poor coordination between departments' goals
    • Workers feeling like a small cog in a machine

  19. Staff at a 20,000-employee firm say they feel like a tiny cog in a machine, and productivity is falling. Which action best tackles this diseconomy of scale?

    • Pay all staff a bonus linked to the firm's yearly profit
    • Give small teams real responsibility for their own work
    • Add middle managers so each worker is supervised more closely
    • Centralise decisions at head office to keep quality consistent

  20. A factory's total costs are £40,000 when it makes 1,000 units and £60,000 when it makes 2,000 units. What has happened to the cost per unit?

    • Stayed the same at £40 per unit
    • Fallen from £40 to £20 per unit
    • Fallen from £40 to £30 per unit
    • Risen from £30 to £40 per unit