Free BA1 – Fundamentals of Business Economics Practice Test Question

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  There will be a shortage of housing supply in Lingford.
  

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  A 'black market' may develop in housing, meaning the maximum price is ignored.
  

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  There will be a surplus of housing supply in Lingford.
  

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  Landowners will continue to build residential properties at the same rate as before the maximum price was implemented.
  

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  It is not likely that the maximum house price will need some sort of reform in the near future.
  
  

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  It has a profit of £100,000
  

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  It has international operations
  

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  It uses the Alternative Investment Market
  

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  It has issued new shares to members of the public
  

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  It is a medium-sized business
  
  
  

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  Use Pearson's coefficient to accurately draw a line of best fit
  

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  Draw a line of best fit by eye and estimate how much of a correlation there is between store sales and population
  

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  Rearrange the data points on the scatter diagram so that it shows any correlation more clearly
  

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  Use the diagram to interpret that two of the stores with the highest sales are in areas with a medium-sized population

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  Use the diagram to interpret that the store with the lowest sales was in an area with a population of 5000
  
  
  

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  Savings
  

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  Exports
  

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  Government expenditure
  

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  Investment
  

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  Imports
  

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  Taxation
  
  
  

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  A reduction in distribution costs as a result of economies of scale
  

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  A reduction in the number of staff needed to perform certain roles within the company
  

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  The company will not be able to buy in bulk at a discount in the future
  

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  The company will not be able to maximise efficiency due to rapid business growth
  

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  It will not experience the benefits of economies of scale
  
  
  

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  Take out the loan without any guarantee or security so as to see whether interest rates lower in the near future
  

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  Take out an interest rate guarantee and wait until the economic situation becomes clearer before taking out a Forward Rate Agreement
  

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  Take out a Forward Rate Agreement to fix the interest rate repayable on the £2 million loan
  

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  Take out an interest rate option and wait to buy an interest rate future until the economic situation becomes clearer
  

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  Buy an interest rate future in order to fix the interest rate repayable on the £2 million loan
  
  
  

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  Lease cereal-producing equipment at a fixed price for the next six months
  

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  Lease a small factory at a fixed price in order to increase production capacity
  

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  Construct a new factory, increasing both staff within the business and the company's production capacity
  

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  Invest in research and development so as to perfect the cereal-making process and maintain the company's position as a market leader
  

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  Build a long-term marketing strategy involving social media to boost product awareness and hence sales
  
  
  

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  Devaluate the exchange rate in order to increase exports.
  

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  Increase the money supply in order to stimulate domestic consumption.
  

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  Appreciate the exchange rate in order to reduce imports.
  

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  Reduce the interest rate in order to stimulate investment.
  

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  Introduce tariffs on imported goods in order to favour domestic producers.
  
  
  

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  The high interest rate means that it is more expensive to borrow to invest
  

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  Many customers have decided to save rather than invest due to the high interest rate
  

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  The high interest rate means customers are less confident about investing
  

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  The high interest rate has caused prices to rise, meaning customers have not got enough disposable cash to make investments
  

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  The high interest rate has resulted in customers' purchasing power decreasing
  
  
  

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  Social factors
  

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  Tech nological factors
  

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  Legal factors

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  Environmental factors
  

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  Political factors
  

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  Economic factors
  
  
  

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  A fall in interest rates in that country
  

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  An inflation rate below that of the country's trading partners
  

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  A fall in that country's imports
  

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  A fall in the export of capital from that country
  
  
  

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  An increase in the quantity demanded of good A
  

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  A rightward shift in the demand curve for good A
  

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  A leftward shift in the demand curve for good B
  

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  A leftward shift in the demand curve for good A
  
  
  

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  Because the price of a product falls as more is supplied to the market the curve is not a straight line
  

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  Price elasticity of demand for the product = 1 at the highest point of the curve
  

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  If price of the product rose the curve would pivot upwards
  

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  The curve would be a horizontal straight line if demand for the product were perfectly price elastic
  
  
  

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  (i) and (ii) only
  

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  (ii) and (iv) only
  

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  (iii) and (iv) only
  

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  (i), (iii) and (iv) only
  
  
  

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  Supply-side policies are part of aggregate demand management policies.
  

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  Fiscal policy cannot be used as a part of supply-side policy
  

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  Supply-side economists always reject the use of policy to expand demand
  

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  Supply-side policies are used to improve the economy's efficiency and competitiveness
  
  
  

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  Marginal revenue is zero
  

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  Marginal revenue equals marginal cost
  

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  Price equals marginal revenue
  

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  Total cost equals total revenue
  
  
  

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  + $l8m
  

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  + $12.5m
  

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  + S3m
  

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  + $0-6m
  
  
  

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  The industry regulator
  

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  A firm selling equipment to the energy provider
  

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  Customers of the energy provider
  

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  The government
  
  
  

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  Price elastic demand, price inelastic supply
  

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  Price inelastic demand, price elastic supply
  

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  Price elastic demand, price elastic supply
  

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  Price inelastic demand, price inelastic supply
  
  
  

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  (1)only
  

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  (3) only
  

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  (1)and
  

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  (1),(2)and(3)