Business General Knowledge Quiz
Questions: 16 · 10 minutes
1. A wholesaler's sales remain stable, but its average inventory rises sharply. What is the most likely effect on inventory turnover?
Turnover falls, with more cash likely tied up in stock
Turnover stays unchanged because sales are stable
Turnover rises because more stock is available
Turnover becomes identical to the gross profit margin
2. A business owns an empty storefront. It can either open a café there or lease the space for $30,000 per year. If it opens the café, what is the clearest opportunity cost?
The $30,000 in rental income it gives up
The café's total annual sales
The original purchase price of the storefront
The café's wages and ingredient expenses
3. Consumer prices rise by 5% over a year while an employee's nominal wage remains unchanged. What generally happens to that employee's purchasing power?
It rises by 5%
It stays exactly the same
It falls because the unchanged wage buys fewer goods and services
It doubles because nominal income is fixed
4. A profitable consulting firm cannot pay suppliers on time because several clients have delayed paying their invoices. What problem is the firm experiencing?
A decline in market share
Negative gross profit
Excess production capacity
A cash-flow shortage
5. Which equation is the foundation of a balance sheet?
Cash = Revenue + Liabilities
Revenue = Assets − Expenses
Assets = Liabilities + Owner's Equity
Profit = Assets − Owner's Equity
6. Which example best demonstrates the difference between a stakeholder and a shareholder?
An employee is affected by company decisions without owning shares
A founder owns 60% of the company's ordinary shares
An investor buys shares through a stock exchange
A pension fund owns shares and receives dividends
7. A manufacturer negotiates lower material prices because it now purchases much larger quantities. This saving is an example of what?
Price discrimination
Economies of scale
Market cannibalization
Diminishing demand
8. A product has fixed costs of $60,000 and a contribution margin of $15 per unit. How many units must be sold to break even?
4,000 units
3,000 units
4,500 units
900 units
9. A packaging company groups customers according to their environmental values and willingness to pay for sustainable materials. Which type of segmentation is it using?
Geographic segmentation
Psychographic segmentation
Demographic segmentation
Behavioral segmentation based only on purchase frequency
10. Demand for a product is price elastic. If the business raises its price, what will generally happen, assuming other factors remain unchanged?
Quantity demanded will not change, so total revenue will rise
Quantity demanded will fall proportionally more than price rises, so total revenue will fall
Quantity demanded will rise because the product appears more valuable
Quantity demanded will fall proportionally less than price rises, so total revenue must fall
11. A company develops a patented production process that lowers unit costs and is difficult for competitors to imitate. What has it most directly created?
A short-term cash-flow deficit
A cost-based competitive advantage
A wider span of control
A perfectly competitive market
12. In a SWOT analysis, how would a company usually classify its highly trained and experienced workforce?
As an opportunity
As an external constraint
As a threat
As a strength
13. A retailer earns $120,000 in sales revenue and records $70,000 in cost of goods sold. What is its gross profit?
$190,000
$120,000
$70,000
$50,000
14. Which move is the clearest example of related diversification?
A coffee chain cuts prices to sell more of its existing drinks in existing stores
A coffee chain acquires a construction equipment manufacturer
A coffee chain acquires a tea brand that can use similar retail and distribution capabilities
A coffee chain opens its existing store format in another city
15. Which feature of a corporation most directly limits an ordinary shareholder's potential loss to the amount invested?
Centralized management
Economies of scale
Limited liability
Market segmentation
16. A product sells for $80 per unit and has variable costs of $50 per unit. What is its contribution margin per unit?
$130
$50
$80
$30