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

  1. Which of these is classified as an internal economy of scale?

    • Local skilled labour
    • Industry networks
    • Bulk buying
    • Shared infrastructure

  2. Which of these represents an external economy of scale for a business?

    • Proprietary machinery
    • In-house training
    • Managerial hierarchy
    • Skilled labour pool

  3. What is a primary benefit of achieving increased market power over suppliers?

    • Reduced order volumes
    • Lower input prices
    • Higher tax rates
    • Slower delivery times

  4. What do diseconomies of scale typically result in for a growing business?

    • Rising unit costs
    • Zero marginal costs
    • Falling fixed costs
    • Constant returns

  5. What condition causes a rapidly growing business to experience overtrading?

    • Stretched working capital
    • Surplus inventory levels
    • Excess cash reserves
    • Zero customer debt

  6. Which internal communication problem frequently arises from rapid organisational growth?

    • Distorted messages
    • Perfect clarity
    • Instantaneous feedback
    • Eliminated bureaucracy

  7. Which strategy directly helps a firm achieve its objective of increased brand recognition?

    • Staff downsizing
    • Asset liquidation
    • Debt restructuring
    • National advertising

  8. 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

  9. 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

  10. Which financial problem occurs when a firm reports rising profit but falling cash balances?

    • Overtrading
    • Deflation
    • Insolvency
    • Liquidation

  11. Which objective of business growth is most directly linked to reducing average unit costs?

    • Economies of scale
    • Financial gearing
    • Market saturation
    • Brand dilution

  12. What problem occurs when a business grows so large that average costs begin to rise?

    • Diseconomies of scale
    • Economies of scale
    • Horizontal integration
    • Overtrading

  13. Which integration issue often reduces short-term profitability after a fast takeover?

    • Economies of scale
    • Market saturation
    • Cultural clashes
    • Overtrading

  14. Which operational problem arising from rapid growth is most likely to harm customer service?

    • Organic growth
    • Poor internal communication
    • Overtrading
    • Market power

  15. What primary risk does a business face when expanding into unfamiliar international markets?

    • Forward integration
    • Cultural differences
    • Overtrading
    • Economies of scale

  16. Which action best helps a rapidly growing business avoid the problem of overtrading?

    • Managing cash flow
    • Increasing advertising
    • Horizontal integration
    • Cutting prices

  17. 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

  18. Which growth objective often conflicts directly with short-term profit maximisation?

    • Cutting overheads
    • Reducing unit costs
    • Increasing market share
    • Improving liquidity

  19. What term describes a rise in average costs as a business expands its output?

    • Organic growth
    • Overtrading
    • Economies of scale
    • Diseconomies of scale

  20. Which benefit is directly achieved when a business gains a larger market share?

    • Greater market power
    • Cost synergies
    • Reduced gearing
    • Overtrading

All Pearson Edexcel Business quizzes