Lesson 1.5.5

1.5.5 Business choices and opportunity cost Quiz: Pearson Edexcel Business, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 1.5.5, Business choices and opportunity cost: 20 multiple choice questions for the Pearson Edexcel Business (9BS0), Unit 1: Marketing and people, written with Revision Ninja.

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The 20 questions

  1. What is meant by the term opportunity cost?

    • Next best alternative
    • Total money spent
    • Future expected profit
    • Fixed operational cost

  2. A firm invests £100,000 in a factory instead of shares yielding 6%. What is the opportunity cost?

    • 6% share return
    • £100,000 factory cost
    • Expected factory profit
    • Zero financial cost

  3. What occurs when a business gives up one benefit to gain another?

    • Economy of scale
    • Capital loss
    • Market failure
    • A trade-off

  4. An entrepreneur leaves a £40,000 job to start a business. What is the opportunity cost?

    • Zero cost
    • Startup capital
    • £40,000 salary
    • Business profit

  5. What is giving up one benefit to gain another alternative benefit called?

    • Opportunity cost
    • Sunk cost
    • Trade-off
    • Fixed cost

  6. Choosing between a low-cost supplier and a high-quality supplier represents what decision?

    • Economies of scale
    • Trade-off
    • Synergy
    • Market segment

  7. Using shop space for production rather than storage represents which cost concept?

    • Fixed cost
    • Variable cost
    • Opportunity cost
    • Direct cost

  8. What does opportunity cost measure when choosing between business options?

    • Expected future profit
    • Total production cost
    • Next best alternative
    • Retained earnings

  9. An owner works unpaid in their business. What term describes the lost external wages?

    • Capital expenditure
    • Marginal cost
    • Overheads
    • Opportunity cost

  10. Spending a budget on TV advertising instead of online ads creates what type of decision?

    • Horizontal integration
    • Break-even point
    • Trade-off
    • Franchise agreement

  11. What is the opportunity cost of holding cash instead of investing it?

    • Cash flow forecast
    • Foregone interest return
    • Bank transaction fee
    • Total capital expenditure

  12. A machine is used for Product A instead of Product B. What is foregone?

    • Output of B
    • Total overheads
    • Fixed assets
    • Variable costs

  13. When choosing between two options with limited capital, what concept helps compare benefits lost?

    • Historical cost
    • Opportunity cost
    • Depreciation rate
    • Tax liability

  14. Why is opportunity cost higher in a rapidly growing market?

    • Lower interest rates
    • Better alternatives exist
    • Declining sales volume
    • Decreased competition

  15. Expanding overseas reduces focus on the domestic market. What does this demonstrate?

    • Trade-off
    • Monopoly
    • Diversification
    • Delegation

  16. Opportunity cost measures the value of how many foregone alternatives?

    • All possible alternatives
    • Average variable costs
    • Total business costs
    • Single best alternative

  17. A machine can produce 500 X or 300 Y. What is the opportunity cost of 500 X?

    • 500 X units
    • 300 Y units
    • 200 Y units
    • 800 total units

  18. Choosing between major strategic investments creates a high opportunity cost due to what factor?

    • Sunk production expenditure
    • Decreased tax liability
    • Foregone alternative returns
    • Fixed sales revenue

  19. What term describes the cost of the next best alternative foregone?

    • Opportunity cost
    • Trade-off
    • Sunk cost
    • Fixed cost

  20. A firm keeps a warehouse rather than renting it for £12,000 annually. What is the opportunity cost?

    • Zero cost
    • £12,000 rental income
    • £12,000 storage cost
    • Warehouse value

All Pearson Edexcel Business quizzes