The Purpose & Nature of Businesses Practice Questions

Which one of the following is an example of capital as a factor of production for a bakery?

• A The bank loan used to buy flour and sugar
• B The farmland on which the wheat is grown
• C The ovens and mixing machines used to bake the bread
• D The bakers who make the bread each morning

Explain the meaning of the term 'opportunity cost'. Use an example in your answer.

Identify two factors of production, other than capital, that a business needs.

Which one of the following is an example of the factor of production capital?

• A A delivery van owned by the business
• B A field used by the business to grow wheat
• C The owner who comes up with the business idea
• D The workers who pack the customers' orders

Identify two reasons why a person may decide to start a business.

Explain one reason why a business may need to change the products it sells over time.

State and explain two characteristics that an entrepreneur needs in order to set up a successful business.

Which one of the following is an example of a want rather than a need?

• A Bread
• B Drinking water
• C A sports car
• D A winter coat

Explain the meaning of the term 'service' using an example.

Enterprise is one of the four factors of production.

Identify two factors of production other than enterprise.

State and explain two ways a business may need to change because customers expect it to be more environmentally friendly.

Nadia has £9 000 of savings to put into her new pet-grooming business. She uses the money to buy a van instead of fitting out a second grooming room.

Which one of the following is the opportunity cost of Nadia's decision?

• A The £9 000 taken out of her savings
• B The second grooming room that was not fitted out
• C The chance that the van breaks down
• D The revenue earned from grooming pets

Explain one reason why labour is an important factor of production for a hairdressing salon.

State and explain two reasons why a business owner should consider opportunity cost when making a decision.

Which one of the following is an example of land as a factor of production?

• A A bakery's ovens
• B A farmer's field
• C A shop assistant
• D An owner's idea for a new product

Explain the meaning of the term 'need' using an example.

Identify one type of business that operates in the primary sector and one type of business that operates in the tertiary sector.

State and explain two rewards an entrepreneur may gain from setting up their own business.

Which one of the following is an objective of an entrepreneur?

• A Being hard working
• B Being innovative
• C To have flexible working hours
• D Being organised

Explain the meaning of the term 'entrepreneur' using an example.

Identify two characteristics of an entrepreneur, other than being hard working.

State and explain two objectives an entrepreneur may have when deciding to set up their own business.

Which one of the following is an example of a technological change that a business may have to respond to?

• A A fall in Gross Domestic Product (GDP)
• B A rise in the national minimum wage
• C An increase in customers paying for products using m-commerce
• D Customers asking for less plastic packaging

Explain the meaning of the term 'm-commerce' using an example.

Explain one reason why a business may need to respond to its customers' environmental expectations.

State and explain two ways in which a change in technology could affect a business.

Which one of the following is a role of an entrepreneur?

A Becoming a sole trader
B Going to university
C Making business decisions
D Receiving personal satisfaction

Identify two risks an entrepreneur takes when starting a business.

Explain one way an entrepreneur organises resources when setting up a business.