Business Legislation and Planning Quiz

Which of the following is a drawback of business planning?

• Easier to gain finance from the bank or other investors

• The plan can become out of date if the business environment changes

• Allows the business to compare actual progress with predictions

• Encourages the entrepreneur to plan before starting up the business

A business sells 1,500,000 units per year at a selling price of £0.50 per unit. It has total fixed costs of £300,000 and total variable costs of £175,000. The profit made is:

• £125,000

• £275,000

• £475,000

• £750,000

Which of the following is an advantage of external growth?

• Growth can be fast

• Easier to manage and control

• Can often be paid for from profits

• Less risk compared to organic growth

The most likely advantage of being a sole trader business is being able to:

• Share decision making

• Raise large amounts of finance

• Keep all profit made

• Receive dividend payments

Which of the following stakeholders may receive more orders if a successful business grows in size?

• Customers

• Local community

• Suppliers

• Owners

Which of the following statements best describes the term diseconomies of scale? The reasons why production costs of an item:

• Fall as a business reduces in size

• Rise as a business expands

• Fall as a business expands

• Rises as a business reduces in size

Which of the following is always an advantage to a manufacturer of growth through outsourcing?

• Communication is easy

• It is cheaper than producing the products internally

• Quality standards will be high

• The risk of investing in new production facilities is avoided

Proximity to the market is an important consideration for which of the following businesses?

• Online travel agent

• Hairdresser

• Car manufacturer

• Website designer

Which of the following organisations is most likely to have profit maximisation as an aim?

• Starbucks

• British Red Cross

• World Wildlife Fund

• WaterAid

A business sells 450,000 units per year. Fixed costs per year are £370,000 and variable costs are £1.20 per unit. The business's total costs are:

• £444,000

• £540,000

• £820,000

• £910,000