Business Studies: The Purpose Of Business Activity Quiz #3
The purpose of business activity
Questions and Answers
- 1.
Which of these is the best definition of the ‘economic problem’?
- A.
People do not have enough money.
- B.
There are not enough resources to satisfy people’s unlimited wants.
- C.
There are not enough wants for the unlimited resources to satisfy.
- D.
There are too many factors of production.
Correct Answer
B. There are not enough resources to satisfy people’s unlimited wants.Explanation
The best definition of the 'economic problem' is that there are not enough resources to satisfy people's unlimited wants. This means that there is scarcity in the economy, as the available resources are limited while people's desires and demands for goods and services are unlimited. This scarcity creates the need for individuals, businesses, and governments to make choices and allocate resources efficiently in order to satisfy the most pressing needs and wants.Rate this question:
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- 2.
Which of the following is NOT a factor of production?
- A.
Oil reserves
- B.
Factory buildings
- C.
Skilled labour
- D.
Music CDs
Correct Answer
D. Music CDsExplanation
Music CDs are not considered a factor of production because they are not used in the production process to create goods or services. Factors of production typically include resources such as land, labor, capital, and entrepreneurship. While music CDs may be a product that is created using factors of production, they themselves are not a factor that contributes to the production process.Rate this question:
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- 3.
If I buy a book for $10 then the opportunity cost is:
- A.
Everything else I could have bought with the $10
- B.
$10
- C.
He benefit lost from not being able to consume the next best option
- D.
The benefit gained from buying the book.
Correct Answer
C. He benefit lost from not being able to consume the next best optionExplanation
The opportunity cost refers to the benefit that is lost from not being able to consume the next best option. In this case, if I choose to buy a book for $10, the opportunity cost would be the benefit that I would have gained from purchasing something else with that $10. This means that by buying the book, I am forgoing the opportunity to consume the next best alternative that I could have purchased with the same amount of money.Rate this question:
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- 4.
Making choices is necessary in all economic systems because:
- A.
There are so many products that we cannot use them all at once
- B.
The government has so much money that it does not know what to do with it
- C.
There are so many resources compared to people’s needs that we have to choose which ones not to use
- D.
There are so many wants compared to scarce resources that we have to decide what to produce.
Correct Answer
D. There are so many wants compared to scarce resources that we have to decide what to produce.Explanation
In all economic systems, choices need to be made because there are limited resources to fulfill unlimited wants and needs. This scarcity of resources forces us to decide what to produce and allocate those resources efficiently. Therefore, the statement "there are so many wants compared to scarce resources that we have to decide what to produce" accurately explains the necessity of making choices in economic systems.Rate this question:
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- 5.
Division of labour can be defined as:
- A.
Workers specialise on just one task and become more efficient at it.
- B.
Workers become specialist in all jobs.
- C.
All firms only have one worker so jobs are divided between the firms.
- D.
No workers are employed as machines always do all the work.
Correct Answer
A. Workers specialise on just one task and become more efficient at it.Explanation
Division of labor refers to the practice of assigning specific tasks or roles to individual workers based on their skills and abilities. By focusing on one task, workers can become more proficient and efficient in their specialized area. This allows for increased productivity and output, as workers can develop expertise and streamline their processes. This concept is commonly used in various industries to optimize workflow and maximize efficiency.Rate this question:
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- 6.
One of the drawbacks to division of labour is that:
- A.
Output and efficiency falls
- B.
Workers spend time on training to do several different jobs
- C.
Workers can become bored through only concentrating on one job
- D.
No machinery is used and this slows down production.
Correct Answer
C. Workers can become bored through only concentrating on one jobExplanation
One of the drawbacks to division of labour is that workers can become bored through only concentrating on one job. This is because when workers are assigned to perform the same task repeatedly, it can lead to monotony and lack of variety in their work. This can result in decreased job satisfaction and motivation, which may ultimately affect their productivity and overall efficiency.Rate this question:
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- 7.
The best definition of a business organisation is:
- A.
Any organisation owned by the government
- B.
A unit that buys products from other firms and sells them to consumers for a profit
- C.
An organisation that produces only those goods and services that satisfy people’s basic needs
- D.
A unit that combines the factors of production to make products that satisfy people’s wants.
Correct Answer
D. A unit that combines the factors of production to make products that satisfy people’s wants.Explanation
A business organization is defined as a unit that combines the factors of production (such as labor, capital, and resources) to create products or services that fulfill people's desires or wants. This definition emphasizes the core purpose of a business, which is to meet consumer demands and generate profit by effectively utilizing resources. It does not limit the ownership to the government or restrict the goods and services to only basic needs, making it a comprehensive and accurate definition of a business organization.Rate this question:
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- 8.
All of the following are common business objectives (aims) except:
- A.
To grow
- B.
To pay taxes
- C.
To survive
- D.
To make profits
Correct Answer
B. To pay taxesExplanation
The given answer, "to pay taxes," is the correct answer because paying taxes is not considered a common business objective or aim. While businesses are required to pay taxes as a legal obligation, it is not a primary objective or aim of a business. Common business objectives typically include growing the business, ensuring survival, and making profits. Paying taxes is a necessary part of operating a business, but it is not a specific aim or objective that businesses strive to achieve.Rate this question:
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- 9.
Which of the following is NOT one of the benefits of business growth?
- A.
Sales will increase.
- B.
Market share will probably rise.
- C.
The business will probably become more secure and employ more people.
- D.
Management will have less work to do.
Correct Answer
D. Management will have less work to do.Explanation
The correct answer is "Management will have less work to do." This is because business growth usually leads to an increase in responsibilities and workload for management. As a business expands, there are more tasks to oversee, more employees to manage, and more challenges to address. Therefore, it is unlikely that management will have less work to do as a result of business growth.Rate this question:
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- 10.
Which stakeholders in a business (groups with a direct interest in the business) are paid a salary by the business and lead and direct it?
- A.
The government
- B.
The workers
- C.
The consumers
- D.
The managers
Correct Answer
D. The managersExplanation
The correct answer is the managers. Managers in a business are typically paid a salary by the business and are responsible for leading and directing it. They play a crucial role in making decisions, setting goals, and overseeing the operations of the business. While other stakeholders such as the government, workers, and consumers may have indirect interests in the business, it is the managers who are directly paid by the business and have the authority to lead and direct its activities.Rate this question:
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- 11.
Which stakeholders pay money to the business and expect a reliable product in return?
- A.
The government
- B.
The workers
- C.
The consumers
- D.
The managers
Correct Answer
C. The consumersExplanation
Consumers pay money to the business and expect a reliable product in return. They are the individuals or organizations who purchase goods or services from the business. Consumers play a crucial role in the success of any business as they provide the revenue necessary for its operation. In exchange for their payment, consumers have the expectation that the product they receive will meet their needs and be of high quality. Meeting these expectations is essential for businesses to maintain customer satisfaction and loyalty.Rate this question:
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- 12.
The main objective of a newly formed business is most likely to be:
- A.
Survival
- B.
Maximum profit
- C.
Rapid growth
- D.
Providing a service to the community
Correct Answer
A. SurvivalExplanation
The main objective of a newly formed business is likely to be survival because in the early stages, the business needs to establish itself, build a customer base, and generate enough revenue to cover its expenses. Survival is crucial for a new business to overcome the challenges and uncertainties it faces, such as competition, market fluctuations, and financial constraints. Once the business establishes a stable foundation and survives the initial hurdles, it can then focus on maximizing profits, achieving rapid growth, and providing services to the community.Rate this question:
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- 13.
A business decides 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
Correct Answer
C. Owners and the communityExplanation
Increasing output of a profitable product from a polluting factory is likely to cause conflict between the owners and the community. The owners, who prioritize profit, may be unwilling to invest in more environmentally friendly practices, which can harm the community's well-being and quality of life. The community, on the other hand, will be concerned about the negative impacts of pollution on their health and the environment. This conflict arises due to differing priorities and interests between the owners and the community.Rate this question:
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