Review Questions

1. What money do shareholders lose if a limited company has to stop trading?

A. The value of shares at that moment
B. The full amount necessary to pay off the company’s debts
C. The amount they invested in the business
D. Their dividend for the coming year

2. An economic system where directives to the economic questions are given by the
government is:
A. Market economy
B. Command economy
C. Mixed economy
D. Free economy

3. Which of the following countries has the highest degree of economic freedom?
A. Arstotzka
B. Krakozhia
C. Australia
D. Wakanda

4. The best definition of a sole trader is:

A. The business only employs one person
B. The business is owned by one person
C. The firm has a single customer
D. There is a single firm in the industry

5. Textile manufacturing is a labour-intensive process, because:

A. Labour cost in manufacturing textiles is expensive
B. A higher proportion of resources are in the form of human labour
C. No capital equipment (e.g. machineries) is used in the production
D. It is impossible to use technology in manufacturing textiles
6. One of the benefits for a business of having clear objectives is:
A. All customers know what the business is trying to achieve
B. The managers will have a sense of direction when taking decisions
C. The business will always make a profit
D. There will be no arguments between the managers about the objectives of the business

7. One of the advantages of a sole trader is that:

A. Owners have limited liability
B. Shares can be sold to raise capital
C. Decisions and responsibilities can be shared
D. The owner has complete control

8. Which one of the following is not likely to be a common business objective:

A. To make more profits
B. To provide a service to the community
C. To pay as much tax as possible
D. To increase market share

9. One of the disadvantages of a sole trader is that:

A. Capital is limited
B. Decisions take too long to make
C. No profit motive
D. The owners may disagree

10. A business might have growth as one of its objectives because:

A. It will be able to benefit from diseconomies of scale
B. It will be more likely to increase its market share
C. Shareholders always prefer growth to increased profits
D. All businesses have to grow in order to survive
11. One of the advantages of a partnership is:
A. All partners always have limited liability
B. Shares can be sold on the Stock Exchange
C. The business survives the death of the partners
D. The business has access to more capital than a sole trader

12. Most businesses are likely to put survival as their main objective when:
A. Competition is becoming weaker
B. The economy is becoming weaker
C. The government is planning to increase grants to existing businesses
D. Consumers are increasing their demand for most products

13. Which of the following is not a feature of a private limited company?

A. Shares can be issued to raise capital
B. Shares can be bought and sold on the Stock Exchange
C. All owners of the business have limited liability
D. The business continues after the death of the shareholders

14. Which one of the following statements is accurate:

A. Stakeholders are people who are interested in business
B. Stakeholder groups have a direct interest in the business and its decisions
C. The shareholders of a limited company are the only stakeholder groups that matter
D. Shareholders of a limited company are not a stakeholder group

15. Which of the following best applies to a public limited company?

A. Owned by the government and is in the public sector
B. Owned by shareholders who can sell their shares in the Stock Exchange
C. Quick and easy to set up
D. Its accounts can be kept secret
16. The following documents have to be submitted to Registrar of Companies when requesting
a Certificate of Incorporation, except:
A. Articles of Association
B. Memorandum of Association
C. Business Plan
D. Personal Diary

17. Social enterprises are likely to have which combination of objectives?

A. Maximum returns for owners an increased market share
B. Community service, profits and protection of the environment
C. Survival and increased share price
D. Increased profits for owners and protection of the community

18. The main reason why owners of many private limited companies convert into public limited
companies is because:
A. Want to remain in the private sector
B. Want to gain the benefits of limited liability
C. Want to keep annual accounts secret
D. Want to raise additional capital to expand the business

19. Which of the following is a public limited company?

A. Golem
B. Goyim
C. Google
D. Goolag

20. The main objective of a newly formed business is most likely to be:
A. Survival
B. Maximum profit
C. Rapid expansion
D. Providing services to the community
21. The process when a private-owned company is taken over by the government is called:
A. Privatisation
B. Publicisation
C. Nationalisation
D. Governmentisation

22. All of the following are advantages of public corporations, except:

A. In cases where monopolies are likely to occur, public corporations will be best for
consumers
B. In declining industries, public corporations, with government subsidies, would attempt to
avoid job losses
C. By aiming to maximise profits public corporations will always make money for the
government
D. A public corporation television service could make non-profitable programmes

23. Which one of the following stakeholder groups is most likely to be against the new shopping
centre?
A. Central government
B. Suppliers of goods to the retail industry
C. Shoppers
D. Local primary schools

24. All of the following are advantages of a joint venture, except:

A. The costs of a new project can be split between the companies involved
B. Manufacturing costs will be divided between the firms in the venture
C. Joint ventures between firms in different countries can create new market opportunities
D. Management of the joint venture will never lead to disagreements

25. Which one of the following stakeholder groups is most likely to be in favour of a new
shopping centre?
A. Owners of existing town centre shops
B. Families with small children
C. Environmental groups who want less car use
D. Trade unions
26. A public limited company ‘goes public’ by issuing shares for the first time through an IPO
which stands for:
A. Instant Project Offering
B. Initial Public Offering
C. Individual Particular Offering
D. Initiation of Popular Offering

27. One of the advantages to a business of selling a franchise license is:

A. The business can expand more quickly
B. The franchisor owns all of the shops
C. The businesses buying the franchises are certain to be successful
D. The products sold in each shop will be different

28. A Stock Exchange lists shares issued by:

A. Partnerships
B. An unincorporated businesses
C. Public limited companies
D. Private limited companies

29. Your business has applied for a bank loan to buy new computers. A bank manager is most
likely to ask the following questions, except:
A. How big is the loan needed?
B. Can I see your business plan?
C. How many loans have you already obtained?
D. How big are those computers?

30. Which of the following is an example of conglomeration?

A. Mazda merges with Suzuki
B. Furniture making business buys out a wood-processing plant
C. Eva Air takes over a food catering service
D. A bank and an IT firm work together in developing a new payment system
31. In a vertical integration, an educational institution is likely to merge with:
A. Another educational institution
B. A car showroom
C. An extracurricular course organisation
D. A textbook publisher

32. A firm is officially able to sell shares once it receives a:

A. Certificate of Graduation
B. Certificate of Incorporation
C. Certificate of Authorisation
D. Certificate of Appreciation

33. Which of the following occupations is included in the quaternary sector of industry?
A. Painters, sculptors, etc.
B. ICT researchers
C. Authors of fictions
D. Online transportation drivers

34. A firm’s objective to survive is most likely during a period of:

A. Economic boom
B. Increasing revenues
C. Uncontrollable pandemic
D. Raising purchasing power

35. The managers of a business decide to increase output of a profitable product from a
polluting factory. This decision is most likely to cause conflict between which groups of
stakeholders?
A. Workers and owners
B. Government and the community
C. Owners and the community
D. Managers and the owners