Cambridge International AS and A Level Business

3  Size of business
Multiple-choice questions
1 Which one of the following are commonly used to measure business size?

(i) number of employees

(ii) capital employed

(iii) sales turnover

(iv) market capitalisation

a (i) and (ii) only

b (i) and (iii) only

c all of them

d (i), (iii) and (iv) only

2 Market capitalisation is defined as:

a the total value of market sales made by a business in a given time

period

b the total value of all long-term finance invested in the business

c the total value of a company’s issued shares

d the difference between a firm’s revenue and costs

3 Governments in most countries are keen to encourage the development

of small business units. This may be explained by all of the following
except:

a many jobs are created by small firms

b small firms are often dynamic

c small firms create competition

d small firms are less likely to become insolvent

4 Which one of the following best explains why there might be a conflict
between short-term profit and business growth.

a small firms typically have little security to offer banks in exchange for loans

b small firms do not have a separate legal identity

c small firms are typically unprofitable

d small firms face higher rates of corporation tax

5 Which one of the following is not considered to be an advantage of small businesses?

a can adapt quickly to meet changing customer needs

b can employ specialist professional managers

c can offer personal services to customers

d can be managed and controlled by the owner(s)

© Cambridge University Press 2014  Cambridge International AS and A Level Business Multiple-choice questions – Chapter 3 1
Cambridge International AS and A Level Business

 6 Which one of the following is not considered to be an advantage

of large businesses?

a benefits from the cost reductions associated with

large-scale production

b workers less likely to feel alienated

c may be diversified in several markets

d can access more forms of finance

 7 Aldi, a German supermarket chain, has pursued a policy of growth through

opening new stores in towns and cities where it previously had none.
This is an example of:

a external growth

b vertical expansion

c integration

d internal growth

 8 One of the advantages of a business remaining small is:

a small businesses are able to raise capital more easily than larger businesses

b small businesses will have lower average costs than large businesses due
to economies of scale

c it can be easier for a small business to adapt to market changes than

a large business

d the owner of a small business is often a specialist manager

 9 One of the claimed strengths of family businesses is:

a the family members are likely to be trained in specialist business functions

b it is always easy to find good managers to replace those who are retiring

c the family members tend to be committed to the success of the business

d the family will have sufficient finance to pay for the expansion plans
of the business

10 Which one of the following is a most likely weakness of family businesses?

a They are often operated informally so can lack clear aims and objectives.

b The family members do not care about the success of the business.

c There is never any transfer of knowledge or experience between generations.

d Younger members of the family do not want to take over the family business as they
do not share pride in it.

© Cambridge University Press 2014  Cambridge International AS and A Level Business Multiple-choice questions – Chapter 3 2