The Multiple Choice Questions Blog

Electromac operates Just in time (JIT) in all its Staffordshire assembly plants.

This is most likely to result in …..?

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This multiple-choice question is suitable for Business Studies KS4 & KS5 classes

The answer is 2

1. Not correct – there will be an increase in the number of deliveries as inventory is ordered in smaller quantities as and when needed.
2. Correct – Definition of JIT e.g. inventory system that does away with the need to hold large quantities of raw materials OR Buffer stocks are a supply of inputs held as a reserve to safeguard against unforeseen shortages or demands. This results in Electromac only holding just enough components for the current production. The need for buffer stocks is reduced because supplies are delivered as needed.
3. Not correct – re-order quantities will be reduced as smaller amounts will be ordered each time that are specific to each job.
4. Not correct – JIT results in a decrease in average costs as less capital is tied up in inventory and warehousing.

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In 2021 Electromac, Staffordshire’s largest sportswear group, announced its profits would be 22% lower than forecast.

Which one of the following is the most likely reason for the drop in profit?

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This multiple-choice question is suitable for Business Studies KS4 & KS5 classes

The answer is 2

1. Not correct – profits would have increased rather than decreased as workers were more efficient in making sportswear resulting in lower costs and potentially an increase in profits.
2. Correct – Definition of profits e.g. total revenue – total costs OR projected sales e.g. the number of products a firm expects to sell over a given time period. Sales forecasts can be affected by many factors such as external influences and so Electromacs’ projected sales may have been overestimated. If this is the case then the revenue received by Electromac will be less than predicted, which would mean that the actual profit would then be less than the predicted profit.
3. Not correct – Minimising total costs would have led to an increase in profits as profit is TR-TC.
4. Not correct – If there had been a reduction in competition, Electromac would have increased sales and therefore profit as there would be less choice for customers.

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In September 2021, Electromac launched three new PearPhones with features such as fingerprint registration technology, better cameras, and a range of seasonal colours.

The main reason for Electromac to launch new PearPhones is to ……?

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This multiple-choice question is suitable for Business Studies KS4 & KS5 classes

The answer is 2

1. Not correct – these PearPhones has more features and comes in a range of colours that may mean Electromac will
   require more suppliers.
2. Correct – Definition of product portfolio e.g. the range of products or services offered by a business. The new PearPhones are different from the existing models on the market/possible extension strategy. Which increases the total number of products available and is more likely to appeal to a wider range of Customers.
3. Not correct – Electromac will have to increase rather than decrease its advertising budget in order to promote the new and wider range of PearPhones.
4. Not correct – income elasticity of demand is affected by external factors such as the state of the economy and not by decisions that Electromac might make about its product range.

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