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BA1 – Fundamentals of Business Economics

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Showing 7–9 of 20 questions

Question 7

Golden Crisp Cereals has calculated that its demand price elasticity is -1.4. It wants to expand in order to produce more cereal and hence increase its sales.

Which of the following are ways in which Golden Crisp Cereals could expand in the short run? Select ALL that apply.

Select all that apply, then click Submit answer.

  • ○

    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
Question 8

Which TWO of the following policy actions might be available to a government that wishes to reduce a deficit in the balance of payments?

Select all that apply, then click Submit answer.

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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.
Question 9

The interest rate at TrowBank is currently running at 7%. The number of customers borrowing to invest has fallen drastically.

Which of the following explains why this is the case? Select ALL that apply.

Select all that apply, then click Submit answer.

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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