Edexcel Business Economics Unit 2b Practice Test

49 Questions

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Economics Quizzes & Trivia

Welcome to the Edexcel Business Economics Unit 2B Practice Test. In Economics, we believe that we always have limited resources, to service our unlimited wants. In business, this is always the case, and as a result, decision-making is key. The quiz below tests on different aspects of the subject.


Questions and Answers
  • 1. 
     In 2011 the combined market share of Tesco, ASDA, Sainsbury's and Morrisons supermarkets was 75%. This is best described as:
    • A. 

      A monopoly

    • B. 

      An oligopoly

    • C. 

      Monopolistically competitive

    • D. 

      Perfectly competitive

  • 2. 
    Lloyds TSB Bank plc advises its business customers to prepare a contingency plan. Which one of the following is most likely to reduce uncertainty for a business?
    • A. 

      Market research

    • B. 

      Government intervention

    • C. 

      Macroeconomic change

    • D. 

      Exchange rate movements

  • 3. 
    Amazon, iTunes and Argos are all online retailers that stock a wide range of products. An increase in online retailing has led to a decrease in
    • A. 

      The number of consumers

    • B. 

      Choice of products

    • C. 

      Prices of products

    • D. 

      Consumer knowledge

  • 4. 
    British Airways (BA) advertises using media such as TV and national newspapers. This policy helps to spread some of BA's fixed costs. This is best described as
    • A. 

      Purchasing economies of scale

    • B. 

      Diseconomies of scale

    • C. 

      Managerial economies of scale

    • D. 

      Marketing economies of scale

  • 5. 
    In March 2011, the retailer Poundland reported a record annual turnover of £642m which was a 26% rise on 2010 – at a time when consumers’ real incomes were falling. This suggests that Poundland sells
    • A. 

      Luxury goods

    • B. 

      Normal goods

    • C. 

      Complementary goods

    • D. 

      Inferior goods

  • 6. 
    Siemens AG had a turnover of nearly £60 billion in 2011. Siemens’ operations are based on an empowerment culture called People Excellence. Greater empowerment is most likely to result in
    • A. 

      Closer supervision of the workforce

    • B. 

      Less worker participation in decision making

    • C. 

      Increases in productivity

    • D. 

      Less delegation of tasks

  • 7. 
    In 2009, the UK home DIY (Do-It-Yourself) market was dominated by businesses such as Homebase, B&Q and Focus who between them had over 50% of the total market. This market is best described as
    • A. 

      An oligopoly

    • B. 

      A monopoly

    • C. 

      Monopolistically competitive

    • D. 

      Perfectly competitive

  • 8. 
    Nissan Motor Manufacturing UK Limited uses Just in Time (JIT) stock management in its plant near Sunderland.   Just in Time (JIT) stock management is most likely to result in
    • A. 

      A decreased need for employee training

    • B. 

      Increased product defects

    • C. 

      Increased average costs

    • D. 

      A reduction in capital tied up in stock

  • 9. 
    In 2009, a number of policies were introduced in order to stimulate aggregate demand within the UK economy.   Which one of the following policies is least likely to increase aggregate demand?
    • A. 

      An increase in government spending on public services

    • B. 

      An increase in interest rates

    • C. 

      A reduction in income tax

    • D. 

      A reduction in corporation tax

  • 10. 
    In August 2009, the exchange rate of pound sterling (£) against the US dollar ($) was £1= $1.70. By January 2010, it had depreciated to £1= $1.60.   This will result in
    • A. 

      US dollars becoming cheaper in terms of pound sterling

    • B. 

      UK imports from the USA becoming cheaper

    • C. 

      US dollars becoming dearer in terms of pound sterling

    • D. 

      UK exports to the USA becoming dearer

  • 11. 
     In 2007, the food retailers in the Co-operative Group (Co-op) became one single business with its headquarters in Manchester.   Having a centralised organisational structure is least likely to lead to
    • A. 

      Senior managers having greater control over the organisation

    • B. 

      The use of standardised procedures

    • C. 

      Less duplication of functional areas such as purchasing

    • D. 

      Greater empowerment of employees

  • 12. 
    Charles Tyrwhitt is known for its high quality men’s shirt brand in Britain. In 2009, the company had a turnover of £65 million in a profitable niche selling exclusive office wear.   Operating in a niche market is most likely to lead to
    • A. 

      Economies of scale

    • B. 

      Less competition

    • C. 

      Lower prices

    • D. 

      Lower profit margins

  • 13. 
    Which one of the following businesses is most likely to be associated with Structural Unemployment in the UK?
    • A. 

      Food Retailing

    • B. 

      Hairdressing

    • C. 

      Shipbuilding

    • D. 

      Catering

  • 14. 
    Which one of the following is most likely to cause firms like Cadbury to decrease the amount of investment they undertake?
    • A. 

      A fall in business confidence

    • B. 

      A rise in consumer demand

    • C. 

      A fall in interest rates

    • D. 

      A fall in corporation tax

  • 15. 
    Which one of the following is most likely to cause firms like Cadbury to decreasethe amount of investment they undertake? 
    • A. 

      A fall in business confidence

    • B. 

      A rise in consumer demand

    • C. 

      A fall in interest rates

    • D. 

      A fall in corporation tax

  • 16. 
    The ability of a business such as housebuilder Barratt Homes to use its larger sizeto negotiate better terms with its suppliers of raw materials is an example of
    • A. 

      Diseconomies of scale.

    • B. 

      Technical economies of scale.

    • C. 

      Marketing economies of scale.

    • D. 

      Purchasing economies of scale.

  • 17. 
    If an increase in a consumer’s income causes the consumer to decrease thequantity demanded of baked beans, then baked beans might best be described as
    • A. 

      A complementary good.

    • B. 

      An inferior good.

    • C. 

      A normal good.

    • D. 

      A substitute good.

  • 18. 
    Tesco PLC has a flat organisational structure across its stores in the UK. Tescomanagers typically delegate responsibility.The degree of delegation within Tesco is most likely to rise following an increasein 
    • A. 

      Span of control.

    • B. 

      Centralisation.

    • C. 

      Chain of command.

    • D. 

      Capacity utilisation.

  • 19. 
    Lean management at the car manufacturer Jaguar is most likely to lead to
    • A. 

      A rise in stock levels.

    • B. 

      Labour intensity.

    • C. 

      Excess capacity.

    • D. 

      Less wastage.

  • 20. 
    Which of the following is most likely to increase the demand for DVD players?
    • A. 

      A fall in incomes

    • B. 

      A fall in the price of a substitute good

    • C. 

      A fall in the price of a complementary good

    • D. 

      A fall in the population size

  • 21. 
    If there are high barriers to entry in an industry such as banking it is likely that there will be
    • A. 

      Low prices.

    • B. 

      Low costs.

    • C. 

      Low profitability.

    • D. 

      Low competition.

  • 22. 
    During a recession which of the following businesses is least likely to suffer a fall in sales?
    • A. 

      A travel agent

    • B. 

      A car dealership

    • C. 

      A bus company

    • D. 

      A fashionable clothes shop

  • 23. 
    In a perfectly competitive market you would expect to find all of the following except
    • A. 

      Perfect knowledge.

    • B. 

      Many buyers and many sellers.

    • C. 

      No barriers to entry.

    • D. 

      Product differentiation.

  • 24. 
    The boom phase of the economic cycle is most likely to be associated with
    • A. 

      A fall in interest rates.

    • B. 

      A rise in unemployment.

    • C. 

      A rise in inflation.

    • D. 

      A fall in imports.

  • 25. 
    An increase in consumer knowledge is likely to see an increase in all of the following except
    • A. 

      Price.

    • B. 

      Quality of product.

    • C. 

      Standards of service.

    • D. 

      Choice of products.