Lesson 3.1.2

3.1.2 How businesses grow Quiz: Pearson Edexcel Economics, Unit 3

20 questions

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Lesson 3.1.2, How businesses grow: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 3: Theme 3: Business behaviour and the labour market, written with Revision Ninja.

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The 20 questions

  1. What stage of production does a firm target during forward vertical integration?

    • At same stage
    • Earlier in supply
    • In unrelated markets
    • Nearer final consumers

  2. Horizontal integration occurs when a firm merges with another at which stage?

    • The same stage
    • An unrelated industry
    • An earlier stage
    • A later stage

  3. Conglomerate integration involves merging with a firm operating in which area?

    • A later stage
    • An earlier stage
    • The same stage
    • An unrelated industry

  4. Which method of expansion represents organic growth for a firm?

    • Backward integration
    • Horizontal merger
    • Internal expansion
    • External takeover

  5. Which factor acts as a direct constraint on business growth?

    • Lower taxation
    • Lack of finance
    • Higher demand
    • Economies of scale

  6. A car manufacturer buys a tyre supplier. Which type of integration is this?

    • Conglomerate
    • Horizontal
    • Backward vertical
    • Forward vertical

  7. A clothing manufacturer buys a retail chain. Which type of integration is this?

    • Horizontal
    • Backward vertical
    • Forward vertical
    • Conglomerate

  8. Which primary benefit do two merging rival coffee chains achieve?

    • Risk diversification
    • Lower tax burden
    • Secured raw materials
    • Higher market share

  9. Which factor is a major risk or disadvantage of horizontal integration?

    • Loss of supply
    • Culture clashes
    • Unsecured buyers
    • Lacking market power

  10. What is the main advantage of conglomerate integration for a firm?

    • Spreading risk
    • Lower market share
    • Monopoly regulation
    • Cost duplication

  11. What is a key advantage of organic growth over external growth?

    • Eliminated competition
    • Preserved culture
    • Rapid expansion
    • Instant market share

  12. A bakery buys its wheat supplier. What is the main benefit?

    • Higher retail prices
    • Secured raw materials
    • Risk diversification
    • More store locations

  13. Why does limited access to finance constrain business expansion?

    • Reduces product demand
    • Forces company demergers
    • Limits capital investment
    • Increases regulation

  14. Why does selling a niche product constrain business growth?

    • High tax rates
    • Lack of suppliers
    • Strict government quotas
    • Small market size

  15. What is the main concern when oligopolistic firms integrate horizontally?

    • Reduced market competition
    • Increased business risk
    • Lower market share
    • Higher supply costs

  16. What is a primary reason a government regulator might block a proposed merger?

    • Reduced competition
    • Higher productivity
    • Increased organic growth
    • Lower average costs

  17. What is a major advantage of organic growth compared to inorganic growth?

    • Lower risk
    • Immediate diversification
    • Faster expansion
    • Rapid market access

  18. What can cause a firm's average costs to rise as it expands through vertical integration?

    • Increased consumer demand
    • Diseconomies of scale
    • Economies of scale
    • Predatory pricing

  19. Which source of finance is most commonly used by small businesses undergoing organic growth?

    • Share issues
    • Retained profits
    • Bank bailouts
    • Corporate bonds

  20. What is a key motive for a firm undertaking conglomerate integration?

    • Backward integration
    • Monopsony power
    • Greater scale economies
    • Risk diversification

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