Lesson 3.2.1
3.2.1 Objectives and problems of growth Quiz: Pearson Edexcel Business, Unit 3
20 questions
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Lesson 3.2.1, Objectives and problems of growth: 20 multiple choice questions for the Pearson Edexcel Business (9BS0), Unit 3: Business decisions and strategy, written with Revision Ninja.
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The 20 questions
-
Which of these is classified as an internal economy of scale?
- Local skilled labour
- Industry networks
- Bulk buying
- Shared infrastructure
-
Which of these represents an external economy of scale for a business?
- Proprietary machinery
- In-house training
- Managerial hierarchy
- Skilled labour pool
-
What is a primary benefit of achieving increased market power over suppliers?
- Reduced order volumes
- Lower input prices
- Higher tax rates
- Slower delivery times
-
What do diseconomies of scale typically result in for a growing business?
- Rising unit costs
- Zero marginal costs
- Falling fixed costs
- Constant returns
-
What condition causes a rapidly growing business to experience overtrading?
- Stretched working capital
- Surplus inventory levels
- Excess cash reserves
- Zero customer debt
-
Which internal communication problem frequently arises from rapid organisational growth?
- Distorted messages
- Perfect clarity
- Instantaneous feedback
- Eliminated bureaucracy
-
Which strategy directly helps a firm achieve its objective of increased brand recognition?
- Staff downsizing
- Asset liquidation
- Debt restructuring
- National advertising
-
A firm has unit costs of 10 pounds at an output of 1,000 units and 8 pounds at 5,000 units because of bulk buying. Total cost at 5,000 units is:
- 8,000 pounds
- 40,000 pounds
- 50,000 pounds
- 10,000 pounds
-
If total costs rise to 260,000 pounds while output doubles to 20,000 units, what is the new average cost?
- 13 pounds
- 10 pounds
- 20 pounds
- 26 pounds
-
Which financial problem occurs when a firm reports rising profit but falling cash balances?
- Overtrading
- Deflation
- Insolvency
- Liquidation
-
Which objective of business growth is most directly linked to reducing average unit costs?
- Economies of scale
- Financial gearing
- Market saturation
- Brand dilution
-
What problem occurs when a business grows so large that average costs begin to rise?
- Diseconomies of scale
- Economies of scale
- Horizontal integration
- Overtrading
-
Which integration issue often reduces short-term profitability after a fast takeover?
- Economies of scale
- Market saturation
- Cultural clashes
- Overtrading
-
Which operational problem arising from rapid growth is most likely to harm customer service?
- Organic growth
- Poor internal communication
- Overtrading
- Market power
-
What primary risk does a business face when expanding into unfamiliar international markets?
- Forward integration
- Cultural differences
- Overtrading
- Economies of scale
-
Which action best helps a rapidly growing business avoid the problem of overtrading?
- Managing cash flow
- Increasing advertising
- Horizontal integration
- Cutting prices
-
A firm with 5 million pounds of sales and an operating profit margin of 8% makes what operating profit?
- 40,000 pounds
- 4 million pounds
- 80,000 pounds
- 400,000 pounds
-
Which growth objective often conflicts directly with short-term profit maximisation?
- Cutting overheads
- Reducing unit costs
- Increasing market share
- Improving liquidity
-
What term describes a rise in average costs as a business expands its output?
- Organic growth
- Overtrading
- Economies of scale
- Diseconomies of scale
-
Which benefit is directly achieved when a business gains a larger market share?
- Greater market power
- Cost synergies
- Reduced gearing
- Overtrading
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