1.5.3b Impact of legislation on businesses Quiz: Pearson Edexcel Business, Unit 5

The 20 questions

1. What is the main cost to a business of complying with legislation?

   • Giving up ownership of the business to the regulator that enforces the law
   • Spending time and money on training, systems and compliance checks
   • Paying a fixed fee to the government for every product that the business sells
   • Losing all customers who prefer rival businesses in the local market area

2. A business that fails to meet health and safety rules may face which consequence?

   • An automatic award of a government contract
   • Fines and possible prosecution
   • A reduction in its tax bill for the year
   • A guaranteed increase in its sales from the publicity

3. How might data protection legislation affect a business that holds customer data?

   • It has no obligations because it is a small business
   • It can sell customer data to any third party without asking the customer
   • It must store and use customer data securely and only for lawful purposes
   • It must delete all customer records after one day regardless of need

4. Which of these is an effect of minimum wage legislation on a business?

   • It reduces the business's need to pay wages to any staff at all
   • It allows the business to pay staff in shares instead of wages
   • It increases the wage cost the business must pay to eligible staff
   • It removes the need for the business to pay any tax on wages

5. A new law requires all food packaging to show nutritional information. What is the most likely effect on a food manufacturer?

   • It will be exempt from all other legislation
   • It will be required to lower its prices by law
   • It must redesign its packaging, which adds cost
   • It must stop selling all food products to customers

6. What is the consequence for a business of not meeting its legal obligations?

   • It may face penalties, legal action and reputational damage
   • It is guaranteed a grant from the government to make up for the problem
   • It is automatically given an exemption from future laws
   • It gains extra customers who admire its willingness to break rules

7. Which of these is a cost of meeting consumer law obligations for a shop?

   • Stopping all sales of goods that customers might want to return
   • Paying the shop's owner a bonus for every return that is made
   • Buying a new property every time a refund is given
   • Training staff to handle returns and refunds correctly

8. A business must provide employees with pension contributions under new legislation. What is the effect?

   • It reduces the business's employment costs because staff are paid less
   • It means the business no longer needs to pay wages to employees
   • It has no effect on any business costs at all
   • It increases the business's employment costs

9. Which of these is a benefit to a business of complying with legislation?

   • It guarantees the business a monopoly on its market for as long as the law applies
   • It allows the business to ignore its competitors' prices when setting its own
   • It can build trust with customers and reduce the risk of legal action
   • It removes all costs from the business's operations once the rules are in place

10. A business does not provide a safe working environment and an employee is injured. What is the most likely outcome for the business?

    • Prosecution, compensation claims and possible fines
    • A reduction in its tax bill because of the injury
    • A government award for the best employer of the year
    • An automatic increase in its share price

11. Why might a business welcome a change in legislation that sets clear standards?

    • Clear standards can level the playing field so that all competitors follow the same rules
    • Clear standards mean the business no longer needs to pay any taxes at all to government
    • Clear standards allow the business to set any price it likes for its products
    • Clear standards allow the business to avoid all future legal obligations under the law

12. Which of these is a cost a business faces when a new environmental regulation is introduced?

    • Upgrading equipment to cut emissions to the required level
    • Losing its right to sell products in any market
    • Moving all its operations to a different country automatically
    • Paying the environmental regulator a fee for each sale to customers

13. What is the main purpose of legislation affecting how businesses advertise?

    • To set the amount a business must spend on advertising each and every year
    • To stop businesses from advertising at all in any form on any media platform
    • To require businesses to advertise every product on national television each year
    • To stop businesses from making false or misleading claims about their products

14. A business is found to be breaking a law on discrimination in hiring. Which is the most likely effect?

    • The business may face a tribunal claim and compensation to the affected person
    • The business is given free publicity by the government in the national press
    • The business gains a tax reduction for having been reported to the authorities
    • The business is excused from paying its staff for the rest of the financial year

15. Why must a business keep records to show it has complied with legislation?

    • Records remove the need for the business to comply with any rules in its sector
    • Records are only needed if the business has more than 1,000 customers on its books
    • Records allow the business to avoid all legal checks by regulators in future years
    • Records provide evidence that the business has met its legal obligations if challenged

16. A business sells a product that is later banned by new legislation. What is the most likely effect?

    • It must stop selling the product, which may reduce sales and revenue
    • It must increase production of the product to meet demand from the government
    • It receives a grant to cover all costs of the ban automatically
    • It gains a monopoly, because all rivals must also stop selling

17. Which of these is an example of legislation that affects a business's costs?

    • A rule requiring a company to publish its logo in its annual report
    • Rules on the temperature a canteen must keep its food stored at
    • Rules requiring a minimum wage for employees
    • Rules on the times at which a company may hold its annual general meeting

18. How might legislation on working hours affect a business?

    • It must stop all production as soon as the legal limit is reached
    • It has no effect because working hours are not covered by any law
    • It allows the business to ask staff to work unlimited hours without pay
    • It may need to hire extra staff or pay overtime to keep production going

19. A business complies with a new law by changing its product design. Which marketing mix element is most affected?

    • Place
    • Promotion, because the law stops all advertising of products
    • Product
    • Price, because it is the only element that can change under law

20. Which of these best describes the impact of legislation on businesses?

    • It can increase costs and change how a business operates, while protecting others
    • It has no effect on how a business is run, since laws are only guidelines to follow
    • It always reduces costs for businesses, because compliance is free of charge to firms
    • It only affects businesses that are listed on the stock exchange and their investors

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