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Question Bank - Business Studies

Business Objectives and Strategy: Test 2

Q1. Limited liability when applied to an incorporated firm means that

(Select one answer)

(a) * it only has to pay 50% of its bills.
(b) * the shareholders and the directors share the responsibility to pay any debts the firm may have.
(c) * the firm is liability limited to the fully paid-up share capital of the firm.
(d) * the firm is only partially responsible for the safety and reliability of its product.

Source: bized

Q2. What do we mean by the term 'unfair competition'?

(Select one answer)

(a) * A market in which there exists output that exceeds current market demand.
(b) * A market in which participants have an opportunity to earn very high profits.
(c) * The market demand for a products exceeds its current levels of production.
(d) * The management tool used to look at internal and external factors affecting the business.

Source: bized

Q3. Which type of market competition is characterised by many firms differentiating a similar product.

(Select one answer)

(a) * Perfect competition?
(b) * Oligopolistic competition?
(c) * Monopolistic competition?
(d) * A monopolist?

Source: bized

Q4. Skimming pricing is best described as

(Select one answer)

(a) * Keeping prices very low in an attempt to destroy or drive out competitors.
(b) * Setting a high price to yield a high profit margin.
(c) * The price set by the largest company in the market which influences the price other, smaller rivals must follow.
(d) * Setting the price low so as to break into a market.

Source: bized

Q5. All of the following are features of a sole trader, except that

(Select one answer)

(a) * they are very flexible to changes in circumstances or competition.
(b) * they have limited liability for their debts.
(c) * they are very private.
(d) * they are easy to start up.

Source: bized

Q6. All of the following are suitable methods of market research for a new, small firm, except

(Select one answer)

(a) * use of Yellow Pages or local directories.
(b) * market mapping.
(c) * published data in libraries, government publications, or on the Internet.
(d) * regional field surveys and market trials.

Source: bized

Q7. An inventor can take out a patent for

(Select one answer)

(a) * a design for a product such as a bar of soap.
(b) * a brand name.
(c) * a maintenance manual for a machine.
(d) * A new drug which gives protection against malaria.

Source: bized

Q8. All of the following statements are true of a patent, except

(Select one answer)

(a) * A patent gives its holder exclusive rights to make and sell a product for 16 to 20 years.
(b) * A patent is valid in all countries of the World.
(c) * The patent holder has to take firms who seem to copy the patent to court himself, not the police.
(d) * The patent is published, so everybody can find out how it works, and can try to develop a 'legal' copy.

Source: bized

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