BA1 Fundamentals of Business Economics Questions and Answers

The World Bank

The International Monetary Fund

The G8 Group

The World Trade Organization

Higher capital adequacy ratios for commercial banks

A reduction in the required liquidity ratio for commercial banks

The merging of retail and investment banking

The purchase of bank shares by the government

An increase in exports.

A rise in imports.

More domestic companies invest abroad.

Outward financial flows.

A fashion producer in Country A exporting garments to Country

A food company in Country B exporting condiments to Country A

An automobile producer in Country A importing car parts from suppliers in Country B

A pharmaceutical company in Country A that pays a license to a patent holder in Country B

Prices will have to increase due to increased inflationary pressures

Sales will increase as consumers have stable incomes in the short term.

The cost of financing projects through loans will increase

The cost of holding stock will reduce

An insurance company based in Country E opens a sales office in Country F in order to service the local market

A music production company based in Country C signs a contract with an artist's management company based in Country D.

A retailer based in Country G uses an online retail platform in order to sell goods to customers in Country H.

A chain of restaurants based in Country B signs a franchise agreement with a company that intends to open restaurants in Country A.

A bank overdraft

A bill of exchange

A mortgage

Issuing shares

A leasing arrangement

Larger companies may gain greater market share through advertising

Larger companies may spread their fixed research and development costs over a larger amount of output

Larger companies may more easily access public subsidies

Larger companies may obtain lower interest rates on their loans.

Larger companies may purchase inputs in bulk at lower unit prices

Larger companies may benefit from greater customer loyalty

To fulfil its institutional mission in a cost-effective manner

To provide services to its users

To pay dividends to its shareholders

To provide advice and guidance to its clients

Requiring managers to uphold detailed disclosure and reporting practices

Introducing bonuses related to the profit performance of the business.

Implementing a 'top-down' decision-making process.

Implementing a share distribution scheme.

Requiring managers to take into account the interests of external stakeholders.

There are few barriers to entry into the industry.

Many firms in the industry have unused production capacity.

Most firms in the industry have high stock levels of finished goods.

Newly employed workers in the industry require high levels of initial training.

To ensure that managers have attractive compensation packages

To implement clear career progression routes for employees

To ensure that customers' needs are addressed

To ensure that a company is run in a legal and ethical manner

To implement incentives for managers to pursue long term financial sustainability

To increase transparency in company reporting

(1)only

(3) only

(1)and

(1),(2)and(3)

Big data analysis requires companies to invest in specialist data analytic skills

Big data can sometimes be harvested from electronic devices such as smart meters and GPS systems

Big data is such a large volume that it cannot be analysed through spreadsheets

Big data is purposefully collected from carefully designed samples through surveys and interviews

2,3 and 4

1, 3 and 4

1, 2 and 4

1, 2 and 3

Import prices must be falling

The volume of goods exported must be falling

Aggregate demand is falling

The difference between government spending and tax revenue is growing

It has a profit of £100,000

It has international operations

It uses the Alternative Investment Market

It has issued new shares to members of the public

It is a medium-sized business

£20 million

£40 million

£80 million

£400 million

The cost of a flight will increase by $40.7 when an additional passenger is added to the flight.

The regression model makes accurate predictions for this commercial airline, therefore it will provide good forecasts for other commercial airlines.

The positive intercept in the model indicates a positive relationship between the cost of a flight and the number of passengers.

If each pair of data points is plotted on a graph with Y on the vertical axis and X on the horizontal axis, there will be a downward sloping line.

An increase in rent for the premises in which the store is located

A decrease in sales at these stores

An increase in footfall at these stores

A decrease in rent for the premises in which the store is located

A lack of investment from businesses in the long-term

Some investment in the short-term due to high interest rates

Other countries responding to Vencia's 'dirty floating' in a protectionist manner

The Bank of Vencia buying treasury bonds to loosen its monetary policy

The government of Vencia increasing its VAT and basic rate of income tax further

Rises until it reaches sales of £900,000 or less on the x axis, then declines

Rises until it reaches halfway between sales of £700,000 and £900,000 on the x axis, then declines

Rises until it reaches 43 stores on they axis, then declines

Rises until it reaches 43 stores on the x axis, then declines

(1)and(3)

(3) and (4)

(1)and(2)

(2) and (4)

To provide care for those who are terminally ill

To maintain a reasonable profit which can then be given as dividends to shareholders

To use the funding provided by government to further the primary cause of the organisation

To offer bonuses to the managing director of the organisation when a certain number of sales is reached in a year

To encourage members of the public to invest in the organisation through buying shares

Variety

Volume

Velocity

Verification

£390,000

£400,000

£410,000

News media

Online surveys for customers

Employment briefings

Trade journals

Legal information

Produce more candlesticks

Create more ornate candlesticks which have a higher cost per product

Run an expensive ad campaign in an interior design magazine

Increase the price of candle sticks

The bank offering cheap loans to large companies

The local government runs a scheme which allows business to get rid of their rubbish without charge

A university discovers a new algorithm which makes manufacturing 3x faster

A new highway is built from a large port into a manufacturing town

the amount required to eliminate consumer demand for the product

the excess profits earned by the industry

the costs of clearing up previous pollution caused

the difference between the private and social costs of production

Different stakeholders have different objectives

The various stakeholders have differing degrees of influence

Stakeholder conflict only occurs in not-for -profit organizations

Stakeholders with high interest sometimes have limited influence

Prevent mergers between large companies

Restrict anti-competitive behavior by firms

Limit the ability of firms to secure long run excess profits

Enforce competition by breaking up large firms

MC=MR

Price elasticity of demand is less than 1

Point of greatest excess of total revenue over total costs

Total cost curve has the same slope as the total revenue curve

Higher price, more sold, fall in revenues of cheese makers

Higher price, less sold, fall in revenues of cheese makers

Higher price, more sold, rise in revenues of cheese makers

Higher price, less sold, rise in revenues of cheese makers

Price will stay high as farmers restrict supply to make extra profits

Price will fall because the high price in 201X gave an incentive to farmers to plant more and flood the market with extra supply

Price will fall as consumers find cheaper substitutes to the high-priced crop

Price will rise further as buyers stockpile the new harvest to avoid suffering higher prices for a second year

Both demand and supply tend to be price inelastic

Large shifts in demand combined with supply that is price inelastic

Large supply shifts under the impact of unstable weather conditions

Both demand and supply tend to be price elastic

Access to cheaper sources of supply in emerging economies

Increased competition on world markets for manufactured goods

Decreased international transportation and communications costs

The ability to shift production to low cost locations

A fall in the price of margarine

A fall in the cost of vegetable oils

A successful advertising campaign by butter producers

A fall in the price of bread

The merger between Mercedes and Chrysler in the car industry

A car manufacturer taking over an engine factory

The Ford car company producing refrigerators

A car manufacturer investing in a chain of car showrooms and dealers

the gains from the division of labor are exhausted

all available economies of scale have been exhausted

the market for the firm's product becomes saturated

difficulties in managing a large firm lead to rising long run average costs

Agricultural products have low price elasticities of supply

Output is affected by non-controllable factors such as climate

Supply decisions are based on the prices of the present time period

Markets have a low price elasticity of demand

Pollution resulting from a production process

Firms training workers who then move to other employers

Some consumers being unable to afford goods because prices have been driven up by the demand from other consumers

Road congestion caused by rush hour traffic on the roads

Decreasing returns to scale

High transport costs

Low barriers to entry

Product differentiation

To plan the orderly decline of industries that have lost comparative advantage

To prevent dumping

To protect infant and strategic industries

To prevent completely the country's citizens consuming an imported demerit good

Interest payments on financial assets held overseas.

Exports of manufactured goods.

Outflows of capital.

Expenditure by visiting foreign tourists.

Money be ignored because reaching the goals of the organization is all that matters

There is no need for the organization to be efficient

There is a trade off between financial and non-financial goals

Money limits how far the organization can achieve its goals

High power, low interest

High power, high interest

Low power, high interest

Low power, low interest

Higher profit margins due to a reduction in transport costs.

Economies of scale as it gained access to a larger market.

Lower input costs as imports from other member states would become cheaper.

Reduced costs as a result of access to a wider supply of factors of production.

Redundancies in shipbuilding caused by competition from abroad.

Falling employment in manufacturing industry resulting from a decline in consumer incomes.

Unemployment in coal mining caused by the advent of new energy sources.

Above average unemployment rates among low skilled workers.

An increase in the prices of products due to inflation.

A reduction in the disincentive to work and effort.

A more progressive taxation system.

A shift in the burden of taxation towards lower income groups.

It is a private sector organization

It pursues social goals

It is a not-for-profit organization

It is responsible to its shareholders

Interest payments on financial assets held overseas.

Exports of manufactured goods.

Outflows of capital.

Expenditure by visiting foreign tourists.

An increase in transfer payments

A reduction in rates of personal income tax

An increase in business profits

A rise in the rates of personal income tax

An expansionary fiscal policy

The central bank cutting interest rates

Retraining schemes for redundant workers

A regulation extending employment rights for newly-hired workers

A reduction in the rate of income tax

A rise in value added tax

An increase in the world price of oil

A rise in interest rates

Recession

Depression

Recovery

Boom

the short run Phillips curve is steeper that the long run Phillips curve.

nominal wages rise faster the prices in the long run.

governments cannot reduce unemployment below this level.

there is no trade-off between inflation and unemployment in the long run.

some industries retain significant monopoly power

the number of new producers entering the industry must be controlled

these privatized industries produce public goods

government regulations make monopolies in the private sector illegal.

Lender of the last resort

Banker to the commercial banks

The conduct of fiscal policy

Regulation of the banking system

(i) and (ii) only

(ii) and (iv) only

(iii) and (iv) only

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

It is the price at which Marginal Revenue is zero

At this price, the price elasticity of demand will be unity (i.e. equal to 1)

This price will ensure the promoter covers the cost of the concert

This is the price which maximizes the revenue the promoter earns from the concert

A debenture

A commercial bill

Ordinary shares

Overdraft

Taxes on the consumption of the product

Subsidies to the producers

The auctioning of pollution permits

Legal controls to limit pollution levels

Assist national governments with a budget deficit

Assist national governments to repay their National Debts

Finance specific development projects in Third World countries

Help member countries with temporary balance of payments deficits

Treasury bills

Equities

Treasury bonds

Mortgages

The structure and functions of the Board of a firm

The systems by which companies are directed and controlled

The composition and duties of the management of a company

The financial and non-financial performance of a company