Production and Operations Management: Test 2 - Question Bank

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Question Bank - Business Studies

Production and Operations Management: Test 2

Q1. Which of the following is NOT a sign that labour shortages are hitting a company. (Select one answer) (a) The need to outsource part of its production. (b) A lack of accurate records as to staff training. (c) The introduction of university place sponsorship. (d) An increase in basic rates of pay for current employees.

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Q2. External economies of scale are (Select one answer) (a) savings that are made possible by outside agencies. (b) savings that can be made in distribution and selling. (c) savings that are available to a firm as a result of the concentration of an industry in a region. (d) savings that can be made in export markets only.

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Q3. All of the following are justifications for holding large stocks of raw materials, except (Select one answer) (a) the seasonal supply of materials such as coffee beans or even garden peas. (b) in anticipation of a future shortage and rapid rise in price. (c) large quantities are available on the market. (d) to take advantage of significant bulk buying reductions.

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Q4. Which of the following are NOT a benefit thought to accompany the introduction of technology. (Select one answer) (a) Improved efficiency and reductions in waste. (b) Increased strains in industrial relations. (c) The introduction of new and better products. (d) Advances in communication.

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Q5. The opportunity cost to a business of an investment is (Select one answer) (a) the amount of capital that has to be borrowed to be able to make the investment. (b) the cost of all the fixed assets that are to be purchased. (c) the next best investment now foregone. (d) the amount by which the project will have risen due to inflation, on a monthly basis.

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Q6. When a firm in the secondary sector of the economy takes over a related business in the tertiary sector, this is an example of (Select one answer) (a) horizontal integration. (b) backward integration. (c) Forward vertical integration. (d) Forward horizontal integration

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Q7. A bank takes over a fishing company, a steel works, a vegetable processing firm and an airline. This is an example of (Select one answer) (a) forward integration (b) a firm becoming a conglomerate. (c) horizontal integration. (d) company mergers.

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Q8. Cell production is the modern production method where (Select one answer) (a) buildings are made from prefabricated units, or cells. (b) production is done in small rooms. (c) the output from the Prison Service factories. (d) production on assembly lines is managed and run by groups of workers who are responsible for the quality of their work.

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Q9. The long-run for a company is when (Select one answer) (a) the scale of production itself, and thus capacity can be increased. (b) 5 years (c) the time it takes to buy and install new plant. (d) the time interval between the payment of a firms fixed costs.

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Q10. In the interests of efficiency and obtaining more economies of scale, two firms agree to join together and become one. This is an example of a (Select one answer) (a) hostile take-over (b) hostile merger. (c) friendly merger. (d) friendly take-over.

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Q11. A firm can be considered to be efficient when it (Select one answer) (a) is producing its product or service at the lowest possible average cost. (b) is fully utilising its capacity. (c) has minimised the amount of waste that it produces. (d) employs the maximum number of workers.

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Q12. The short-run for a company is (Select one answer) (a) one month, being the payment base for salaries. (b) the period where output can only be changed by altering the utilisation of existing plant and equipment. (c) the time it takes to terminate staff. (d) when it is working on a short-time basis.

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