Lesson 2.3.3b

2.3.3b Controlling costs and gaining competitive advantage through quality Quiz: Pearson Edexcel Business, Unit 8

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 2.3.3b, Controlling costs and gaining competitive advantage through quality: 20 multiple choice questions for the Pearson Edexcel GCSE Business (1BS0), Unit 8: Making operational decisions, written with Revision Ninja.

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The 20 questions

  1. How can a business use quality to control costs?

    • By spending as much as possible on advertising each product line in the market
    • By reducing waste and rework, which lowers the cost of producing each good
    • By buying the most expensive raw materials available so that the output looks better
    • By paying the lowest possible wage to every member of staff on the production line

  2. How can high quality give a business a competitive advantage?

    • Customers always choose it because its products are the most expensive
    • Rivals are forced to close because they are not allowed to sell any goods
    • Customers may choose its products over rivals' because they are reliable
    • Customers buy more of its products only when it reduces the quality of goods

  3. A business's rejected items cost £3 each in wasted materials. It rejects 400 items in a month. How much is wasted?

    • £400
    • £133
    • £1,200
    • £3,400

  4. A business improves quality so that rejects fall from 400 to 100 items a month, saving £3 per item. What is the monthly saving?

    • £1,200
    • £400
    • £300
    • £900

  5. Which is a way that a business can gain a competitive advantage through quality?

    • Offering a longer product warranty that competitors cannot afford to match
    • Using the cheapest materials available so that the price of each product can be lowered
    • Selling every product at the same price regardless of how well it has been made
    • Cutting quality checks to reduce the number of staff that the business needs to employ

  6. Why does a consistently high-quality product help a business keep its customers?

    • Customers only buy high-quality goods when they are given a free gift
    • Customers are less likely to notice price changes when quality is high
    • Customers stop comparing products with those of any other business
    • Customers trust the product and are less likely to switch to a rival

  7. A business spends £2,000 a month on quality checks and saves £2,600 a month in fewer returns. What is the net monthly saving?

    • £2,000
    • £600
    • £1,300
    • £4,600

  8. Which is a way that high quality can help a business control its costs over time?

    • Higher quality means the business can stop paying suppliers for materials
    • Lower quality means that the business needs to employ fewer staff overall
    • Fewer complaints and returns mean less spending on refunds and replacements
    • More complaints mean the business can charge more for each product

  9. A rival sells similar products at a lower price but has frequent faults. Why might a business with higher quality still outsell it?

    • Customers may pay a little more for products that work reliably
    • Customers will only buy from businesses that have no competitors at all
    • Customers never complain about faults on cheaper products
    • Customers always prefer goods with the highest possible price

  10. Why might investing in quality initially increase costs?

    • Quality requires the business to stop selling its goods to a proportion of its customers
    • Equipment, training and inspection need spending before savings from fewer faults appear
    • Quality increases the number of faults that must be replaced each month by the business
    • Quality automatically reduces the number of goods a business is able to produce each day

  11. Which measure best shows whether a business is controlling costs through quality?

    • The number of different colours in which the product is available
    • The rise in the number of directors appointed to the board each year
    • The fall in the number of returns and rework per month over time
    • The number of advertisements placed in newspapers during a quarter

  12. Which is a reason why good quality reduces a business's reputational risk?

    • Reputation is unaffected by the quality of the goods that a business sells
    • Customers stop talking about a business that sells reliable products
    • Fewer faulty products mean fewer public complaints and negative reviews
    • Negative reviews increase when a business improves its quality

  13. A business has a unit cost of £8 and a selling price of £12. Quality improvements cut unit cost to £7 without changing the price. What is the new gross profit per unit?

    • £5
    • £4
    • £1
    • £8

  14. A business gains a competitive advantage through quality. Which strategy is most consistent with this?

    • Promoting a guarantee that competitors cannot match at the same cost
    • Removing inspection to speed up production as much as the factory can manage
    • Copying the cheapest rival's products without making any changes at all
    • Lowering standards so that more products can be made each day at the factory

  15. Which is an example of a non-price competitive advantage gained through quality?

    • A lower price than any rival in the market at all times for each product line
    • A decision to stop offering support to customers after they have bought goods
    • A reputation for reliable products that encourages customers to return
    • A reduction in the number of products sold in each market the business serves

  16. A business reduces its rejects from 5% to 2% of 10,000 units, with a cost of £6 per rejected unit. What is the saving?

    • £600
    • £1,800
    • £300
    • £3,000

  17. Why might a business with a strong quality reputation be able to charge a higher price?

    • Customers are willing to pay more for products they trust to perform well
    • Customers only notice price when the quality of the goods is poor and unreliable
    • Customers prefer to pay the highest price in every market that they choose to enter
    • Customers are forced to pay more because there are few other sellers in the market

  18. Which of these best describes controlling costs through quality?

    • Increasing the number of products made so that the fixed costs are spread more widely
    • Cutting staff training so that workers spend less time on each product they make
    • Preventing defects so that less money is spent on materials, labour and returns
    • Choosing suppliers only on the basis of their lowest price per unit of material

  19. Evaluate whether a small business should invest in quality to gain a competitive advantage. Which point is most relevant?

    • The gain is unimportant because small businesses can never compete on quality
    • The gain depends on whether customers value reliability enough to pay for it
    • The gain depends only on how many staff the business employs in total
    • The gain is certain because quality always wins against larger rivals in every market

  20. Explain how a business can use quality to reduce the risk of losing customers.

    • Customers are unable to switch to a rival once they have bought a product from the business
    • Reliable products mean fewer complaints, so customers are less likely to switch to a rival
    • Quality means the business never needs to listen to customer feedback again in the future
    • Customers remain loyal regardless of the quality of the products they receive from the firm

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