Edexcel GCSE: Business Studies Quiz- II

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  • 1/19 Questions

    Gail uses the internet to gather other information. This approach is an example of which type of market research? Select one answer.

    • Focus group
    • Primary research
    • Secondary research
    • Segmentation
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About This Quiz

This Edexcel GCSE Business Studies Quiz-II assesses understanding of long-term finance, business objectives, marketing mix, market research, and management functions. It is designed to enhance learners' knowledge in managing and expanding a business effectively.

Edexcel GCSE: Business Studies Quiz- II - Quiz

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  • 2. 

    Identify two examples of market knowledge that Gail might gain through direct customer contact. Select two answers.

    • How much profit is made by her competitors

    • Customer spending habits

    • What rate of interest will be charged by banks

    • Latest fashions trends that customers like

    • The location of other retailers

    Correct Answer(s)
    A. Customer spending habits
    A. Latest fashions trends that customers like
    Explanation
    Through direct customer contact, Gail can gain market knowledge about customer spending habits, which can help her understand the purchasing patterns and preferences of her target customers. This information can guide her in making strategic decisions related to pricing, promotions, and product offerings. Additionally, direct customer contact can provide Gail with insights into the latest fashion trends that customers like. This knowledge can help her stay updated with the evolving preferences of her target market and make informed decisions regarding product assortment and inventory management.

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  • 3. 

    Scenario 2 – a UK manufacturing business decides to buy its raw materials from a German company and not from its usual UK supplier. Which stakeholder groups are most likely to be in conflict with each other as a result of this decision? Select one answer.

    • Shareholders and local residents

    • Customers and competitors

    • Suppliers and managers

    • Shareholders and managers

    Correct Answer
    A. Suppliers and managers
    Explanation
    Suppliers and managers are most likely to be in conflict with each other as a result of this decision. Suppliers may feel threatened by the loss of business and potential decrease in revenue, while managers may be focused on cost savings and efficiency. This conflict arises from the decision to switch suppliers from a local UK supplier to a German company, which can disrupt existing relationships and impact the financial interests of both parties.

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  • 4. 

    Which two of the following are possible objectives for someone setting up business as a sole trader? Select two answers.

    • To allow other people to make all decisions

    • To benefit from limited liability

    • To gain financial support from shareholders

    • To take all the profits

    • To have full control of the decisions

    Correct Answer(s)
    A. To take all the profits
    A. To have full control of the decisions
    Explanation
    The two possible objectives for someone setting up a business as a sole trader are to take all the profits and to have full control of the decisions. As a sole trader, the individual is the sole owner and has complete control over the business operations and decision-making process. Additionally, they are entitled to keep all the profits generated by the business.

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  • 5. 

    Oil is the main raw material used by the business. What would be the most likely effect on the business of an increase in the cost of oil? Select one answer.  

    • Interest rates will increase

    • Variable costs will increase

    • Revenue will increase

    • Profits will increase

    Correct Answer
    A. Variable costs will increase
    Explanation
    An increase in the cost of oil would lead to an increase in variable costs for the business. Oil is the main raw material used by the business, so if the cost of oil goes up, the cost of producing goods or services will also increase. This would result in higher variable costs for the business, as they would need to spend more on oil to maintain their production levels.

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  • 6. 

    For each of the scenarios below, identify the two stakeholder groups that are most likely to be in conflict as a result of the decision. Scenario 1 – a business decides that it will increase the wages of its lowest paid workers from £6.70 an hour to £7.50. Which stakeholder groups are most likely to be in conflict with each other as a result of this decision? Select one answer.

    • Shareholders and workers

    • Shareholders and local residents

    • Customers and competitors

    • Suppliers and local residents

    Correct Answer
    A. Shareholders and workers
    Explanation
    When a business raises wages from £6.70 to £7.50 per hour, workers benefit from better pay, improving their morale and standard of living. However, this increases the company's operating costs, which may reduce profits. Shareholders, who are primarily interested in profit and return on investment, may oppose higher costs. This creates a potential conflict between shareholders and workers over how company funds should be allocated.

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  • 7. 

    In July 2012 Stateside imported 300 baseball caps from America. Each cap cost Michael $5.00. The July exchange rate was $1.60 to £1. What was the cost, in pounds (£), to Stateside of this order? Select one answer

    • £306.60

    • £937.50

    • £1 100.00

    • £1 500.00

    Correct Answer
    A. £937.50
    Explanation
    Stateside imported 300 baseball caps from America at a cost of $5.00 per cap. To find the cost in pounds, we need to convert the total cost from dollars to pounds. The exchange rate in July 2012 was $1.60 to £1. So, the total cost in dollars is 300 caps * $5.00 per cap = $1500.00. To convert this to pounds, we divide $1500.00 by $1.60 per £1, which gives us £937.50. Therefore, the cost to Stateside of this order is £937.50.

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  • 8. 

    Which two of the following are subject to legislation to protect workers from discrimination? Select two answers.

    • Qualifications

    • Age

    • Ability

    • Race

    • Skill

    Correct Answer(s)
    A. Age
    A. Race
    Explanation
    Age and race are subject to legislation to protect workers from discrimination. Laws such as the Age Discrimination in Employment Act (ADEA) and Title VII of the Civil Rights Act prohibit discrimination based on age and race respectively. These laws aim to ensure that individuals are not unfairly treated or denied opportunities in the workplace based on these protected characteristics.

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  • 9. 

    Which one of the following is an example of long-term finance for a sole trader? Select one answer.

    • Share capital

    • Overdraft

    • Bank loan

    • Trade credit

    Correct Answer
    A. Bank loan
    Explanation
    A bank loan is an example of long-term finance for a sole trader because it involves borrowing a specific amount of money from a bank and repaying it over an extended period of time, usually with interest. Unlike an overdraft or trade credit, which are typically short-term financing options, a bank loan provides the sole trader with a larger sum of money that can be used for long-term investments or business expansion. Share capital, on the other hand, refers to funds raised by issuing shares to investors, which is not a form of borrowing and therefore not considered long-term finance.

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  • 10. 

    Which one of the following is the best definition of a stakeholder? Select one answer.

    • The shareholders of a limited company who receive dividend payments

    • Any individual or group with an interest in the success of a business

    • Anyone who works within a business

    • A person or group that is able to influence the decisions of a business

    Correct Answer
    A. Any individual or group with an interest in the success of a business
    Explanation
    A stakeholder is defined as any individual or group with an interest in the success of a business. This includes not only shareholders, but also employees, customers, suppliers, and the local community. Stakeholders have the ability to influence the decisions and outcomes of a business, making their interests and opinions important to consider in strategic planning and decision-making processes.

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  • 11. 

    Michael wants to add more value to the products he sells. Which three of the following might be sources of added value for a business such as Stateside? Select three answers.

    • Total revenue less total costs of the business

    • Only UK retailer selling official US baseball team kit

    • Ensuring high quality products

    • Using more short-term sources of finance

    • Creating a well-known brand name

    • Operating as a private limited company

    Correct Answer(s)
    A. Only UK retailer selling official US baseball team kit
    A. Ensuring high quality products
    A. Creating a well-known brand name
    Explanation
    The three sources of added value for a business such as Stateside could be:
    1. Only UK retailer selling official US baseball team kit: This uniqueness and exclusivity of selling official US baseball team kits can attract customers and create a competitive advantage.
    2. Ensuring high quality products: Providing products of superior quality can differentiate the business from competitors and enhance customer satisfaction.
    3. Creating a well-known brand name: Building a strong brand reputation can increase customer loyalty, trust, and willingness to pay a premium for the products.

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  • 12. 

    KooKoo is a successful cafe and employs five people. The owner of KooKoo wants to expand the business. He believes that changing the elements of the marketing mix will help achieve this expansion. Which three of the following are examples of changes to the marketing mix that the owner of KooKoo might make? Select three answers.

    • Introducing new items for sale

    • Employing one additional worker

    • Conducting primary market research in the area

    • Offering a ‘buy one get one free’ offer on drinks

    • Charging lower prices than the main local competitor

    • Producing a yearly cash flow forecast

    Correct Answer(s)
    A. Introducing new items for sale
    A. Offering a ‘buy one get one free’ offer on drinks
    A. Charging lower prices than the main local competitor
    Explanation
    The owner of KooKoo might introduce new items for sale to attract more customers and increase sales. Offering a 'buy one get one free' offer on drinks can also be an effective strategy to attract customers and encourage them to try the cafe's offerings. Charging lower prices than the main local competitor can help KooKoo gain a competitive advantage and attract price-sensitive customers. These changes to the marketing mix can help KooKoo expand its business by increasing customer base and sales.

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  • 13. 

    Which of the following is NOT a primary function of management?

    • Planning 

    • Organizing 

    • Delegating 

    • Procrastinating

    Correct Answer
    A. Procrastinating
    Explanation
    Procrastinating, or delaying tasks and avoiding responsibilities, is detrimental to effective management. The core functions of management include planning (setting goals and strategies), organizing (allocating resources and assigning tasks), staffing (recruiting and training employees), directing (leading and motivating employees), and controlling (monitoring performance and making adjustments).

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  • 14. 
    Which one of the following is an example of calculated risk for the owner of this business? Select one answer. - ProProfs

    Which one of the following is an example of calculated risk for the owner of this business? Select one answer.

    • Revenue increases by 400% between July and December

    • Revenue in July is 30% lower than in December

    • There is a 25% chance of profits falling in the next six months

    • Variable costs increase by 40%

    Correct Answer
    A. There is a 25% chance of profits falling in the next six months
    Explanation
    This answer is an example of a calculated risk because it indicates that there is a possibility of profits falling in the next six months. The owner of the business is aware of this risk and can make strategic decisions or take actions to mitigate the potential negative impact on profits.

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  • 15. 
      Which three of the following are the most likely explanations for the changes in revenue? Select three answers. - ProProfs

      Which three of the following are the most likely explanations for the changes in revenue? Select three answers.

    • An increase in variable costs

    • The product being seasonal

    • A rise in profits

    • A higher level of sales

    • A successful advertising campaign

    • A new competitor entering the market

    Correct Answer(s)
    A. The product being seasonal
    A. A higher level of sales
    A. A successful advertising campaign
    Explanation
    The product being seasonal can be a likely explanation for changes in revenue as it suggests that the demand for the product fluctuates based on the time of the year. A higher level of sales can also be a likely explanation as it indicates that more units of the product are being sold, leading to an increase in revenue. A successful advertising campaign can also be a likely explanation as it suggests that the marketing efforts have been effective in attracting more customers and increasing sales.

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  • 16. 

    Lydia Smith, a sole trader, owns and runs Good Reads, a small bookshop. The business faces stiff competition from rivals such as supermarkets. Profits have been falling and Lydia is looking to improve her business. Which two of the following will Lydia have to pay in the course of running the business? Select two answers.

    • Corporation tax

    • Distribution tax

    • Income tax

    • Labour tax

    • National Insurance

    Correct Answer(s)
    A. Income tax
    A. National Insurance
    Explanation
    As a sole trader, Lydia Smith is personally responsible for the taxes related to her business. Income tax is the tax paid on the profits earned by the business, and National Insurance is the tax paid on the earnings of the employees. Therefore, Lydia will have to pay both income tax and National Insurance in the course of running her business.

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  • 17. 

    In the context of organizational structure, what does the term "span of control" refer to?  

    • The number of hierarchical levels within an organization 

    • The degree of centralization or decentralization in decision-making 

    • The number of subordinates a manager can effectively supervise 

    • The division of labor and specialization within an organization  

    Correct Answer
    A. The number of subordinates a manager can effectively supervise 
    Explanation
    Span of control is a key concept in organizational design that refers to the number of subordinates a manager can effectively and efficiently supervise. It determines the width and complexity of an organization's hierarchy. A wider span of control means a manager oversees more subordinates, leading to a flatter organizational structure, while a narrower span of control results in a taller hierarchy with more levels of management. The optimal span of control depends on various factors, such as the nature of the work, the skills and experience of the subordinates, and the organizational culture.

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  • 18. 

    Lydia Smith, a sole trader, owns and runs Good Reads, a small bookshop. The business faces stiff competition from rivals such as supermarkets. Profits have been falling and Lydia is looking to improve her business. Which two of the following are the most likely methods Lydia could use to help Good Reads compete with its rivals? Select two answers.

    • Charge lower prices than supermarkets

    • Improve the quality of its customer service

    • Provide an online ordering service

    • Open three more stores in local towns

    • Launch a national advertising campaign

    Correct Answer(s)
    A. Improve the quality of its customer service
    A. Provide an online ordering service
    Explanation
    Lydia can improve the quality of customer service to differentiate Good Reads from its rivals and attract more customers. By providing excellent customer service, she can create a positive shopping experience and build customer loyalty. Additionally, offering an online ordering service can help Good Reads reach a wider audience and compete with supermarkets that offer online shopping options. This convenience can attract customers who prefer to shop online and increase sales for the business.

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  • Current Version
  • May 09, 2025
    Quiz Edited by
    ProProfs Editorial Team
  • May 14, 2013
    Quiz Created by
    Leeaaronbaker
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