1. A startup notices increasing sales but cash shortages. Which financial statement explains
where cash went?
a) Income statement
b) Balance sheet
c) Statement of retained earnings
d) Statement of cash flows
The statement of cash flows categorizes cash inflows and outflows from operations, investing,
and financing activities.
2. After a price hike, a coffee shop sells fewer lattes but total revenue rises. This indicates
demand is:
a) Elastic
b) Inelastic
c) Unitary
d) Perfectly elastic
When demand is inelastic (<1 elasticity), price increase raises total revenue because quantity
falls proportionally less.
3. A factory trains workers to do multiple assembly line jobs. This is an example of:
a) Specialization
b) Autonomy
c) Job rotation
d) Division of labor
Job rotation moves employees between tasks to reduce boredom and increase flexibility.
4. A company’s revenue is 500,000, 𝐶𝑂𝐺𝑆200,000, operating
expenses 150,000. 𝐺𝑟𝑜𝑠𝑠𝑝𝑟𝑜𝑓𝑖𝑡𝑖𝑠: 𝑎)150,000
b) 300,000 ∗ 𝑐)350,000
d) 500,000 ∗ 𝐺𝑟𝑜𝑠𝑠𝑝𝑟𝑜𝑓𝑖𝑡 = 𝑅𝑒𝑣𝑒𝑛𝑢𝑒–𝐶𝑂𝐺𝑆 =500,000 – 200,000 =300,000.
,5. A manager uses a balanced scorecard to track performance. Which perspective includes
employee training metrics?
a) Financial
b) Customer
c) Learning and growth
d) Internal processes
The learning and growth perspective measures employee capabilities, systems, and
organizational climate for improvement.
6. A firm sells premium products at high prices to signal quality. This is:
a) Penetration pricing
b) Prestige pricing
c) Loss leader
d) Price skimming
Prestige pricing uses high prices to create a perception of superior quality or exclusivity.
7. Two competing airlines secretly agree to fix ticket prices. This violates:
a) Consumer protection laws
b) Environmental regulations
c) Antitrust laws
d) Labor laws
Antitrust laws (e.g., Sherman Act) prohibit collusion like price-fixing because it harms market
competition.
8. A project has NPV = $0. The IRR is most likely:
a) Less than cost of capital
b) Equal to cost of capital
c) Greater than cost of capital
d) Irrelevant
*When NPV = 0, the internal rate of return exactly equals the discount rate (cost of capital).*
9. A restaurant sees long lines at lunch but empty seats at 3 PM. Which pricing strategy smooths
demand?
a) Premium pricing
,b) Off-peak discounts
c) Skimming
d) Bundling
Off-peak discounts encourage customers to shift demand to slower periods, improving capacity
utilization.
10. An employee stays late unpaid because she loves the work. This motivation aligns with:
a) Expectancy theory
b) Self-determination theory (intrinsic motivation)
c) Equity theory
d) Reinforcement theory
Self-determination theory highlights intrinsic motivators like autonomy, competence, and
relatedness.
11. A company has current assets 80𝑘, 𝑐𝑢𝑟𝑟𝑒𝑛𝑡𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠40k,
inventory 20𝑘. 𝑄𝑢𝑖𝑐𝑘𝑟𝑎𝑡𝑖𝑜𝑖𝑠: 𝑎)1.0𝑏) ∗ 1.5 ∗ 𝑐)2.0𝑑)2.5 ∗ 𝑄𝑢𝑖𝑐𝑘𝑟𝑎𝑡𝑖𝑜 =
(𝐶𝑢𝑟𝑟𝑒𝑛𝑡𝑎𝑠𝑠𝑒𝑡𝑠–𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦)/𝐶𝑢𝑟𝑟𝑒𝑛𝑡𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = (80k – 20𝑘)/40k = 1.5.*
12. A car manufacturer buys a tire company. This is an example of:
a) Horizontal integration
b) Vertical integration (backward)
c) Conglomerate merger
d) Market extension
Backward vertical integration occurs when a firm acquires a supplier (tires for cars).
13. A leader lets the team make decisions within broad boundaries. This style is:
a) Autocratic
b) Laissez-faire
c) Transactional
d) Bureaucratic
Laissez-faire leadership provides minimal direction and allows teams to self-manage.
14. GDP increased by 3% but real GDP per capita fell. This implies:
a) Deflation
, b) Population grew faster than GDP
c) Exports dropped
d) Government spending fell
Real GDP per capita = Real GDP / Population. If population growth exceeds GDP growth, per
capita output declines.
15. A company uses a “pull” production system. Inventory is triggered by:
a) Sales forecast
b) Customer demand
c) Production schedule
d) Minimum order quantity
Pull systems (e.g., Just-in-Time) produce only when a downstream customer signals need.
16. A bond with 5% coupon rate sells for less than face value when market interest rates:
a) Drop to 4%
b) Rise to 6%
c) Stay at 5%
d) Are variable
Bond prices move inversely to interest rates. If market rate > coupon, bond sells at a discount.
17. A brand splits its market into segments based on lifestyle and values. This is:
a) Geographic segmentation
b) Psychographic segmentation
c) Demographic segmentation
d) Behavioral segmentation
Psychographic segmentation divides consumers by psychological traits, values, interests, and
lifestyles.
18. A project has a payback period of 3 years but negative NPV. The company should:
a) Accept because payback is favorable
b) Reject because NPV is better measure
c) Accept if IRR > 0
d) Recompute payback
where cash went?
a) Income statement
b) Balance sheet
c) Statement of retained earnings
d) Statement of cash flows
The statement of cash flows categorizes cash inflows and outflows from operations, investing,
and financing activities.
2. After a price hike, a coffee shop sells fewer lattes but total revenue rises. This indicates
demand is:
a) Elastic
b) Inelastic
c) Unitary
d) Perfectly elastic
When demand is inelastic (<1 elasticity), price increase raises total revenue because quantity
falls proportionally less.
3. A factory trains workers to do multiple assembly line jobs. This is an example of:
a) Specialization
b) Autonomy
c) Job rotation
d) Division of labor
Job rotation moves employees between tasks to reduce boredom and increase flexibility.
4. A company’s revenue is 500,000, 𝐶𝑂𝐺𝑆200,000, operating
expenses 150,000. 𝐺𝑟𝑜𝑠𝑠𝑝𝑟𝑜𝑓𝑖𝑡𝑖𝑠: 𝑎)150,000
b) 300,000 ∗ 𝑐)350,000
d) 500,000 ∗ 𝐺𝑟𝑜𝑠𝑠𝑝𝑟𝑜𝑓𝑖𝑡 = 𝑅𝑒𝑣𝑒𝑛𝑢𝑒–𝐶𝑂𝐺𝑆 =500,000 – 200,000 =300,000.
,5. A manager uses a balanced scorecard to track performance. Which perspective includes
employee training metrics?
a) Financial
b) Customer
c) Learning and growth
d) Internal processes
The learning and growth perspective measures employee capabilities, systems, and
organizational climate for improvement.
6. A firm sells premium products at high prices to signal quality. This is:
a) Penetration pricing
b) Prestige pricing
c) Loss leader
d) Price skimming
Prestige pricing uses high prices to create a perception of superior quality or exclusivity.
7. Two competing airlines secretly agree to fix ticket prices. This violates:
a) Consumer protection laws
b) Environmental regulations
c) Antitrust laws
d) Labor laws
Antitrust laws (e.g., Sherman Act) prohibit collusion like price-fixing because it harms market
competition.
8. A project has NPV = $0. The IRR is most likely:
a) Less than cost of capital
b) Equal to cost of capital
c) Greater than cost of capital
d) Irrelevant
*When NPV = 0, the internal rate of return exactly equals the discount rate (cost of capital).*
9. A restaurant sees long lines at lunch but empty seats at 3 PM. Which pricing strategy smooths
demand?
a) Premium pricing
,b) Off-peak discounts
c) Skimming
d) Bundling
Off-peak discounts encourage customers to shift demand to slower periods, improving capacity
utilization.
10. An employee stays late unpaid because she loves the work. This motivation aligns with:
a) Expectancy theory
b) Self-determination theory (intrinsic motivation)
c) Equity theory
d) Reinforcement theory
Self-determination theory highlights intrinsic motivators like autonomy, competence, and
relatedness.
11. A company has current assets 80𝑘, 𝑐𝑢𝑟𝑟𝑒𝑛𝑡𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠40k,
inventory 20𝑘. 𝑄𝑢𝑖𝑐𝑘𝑟𝑎𝑡𝑖𝑜𝑖𝑠: 𝑎)1.0𝑏) ∗ 1.5 ∗ 𝑐)2.0𝑑)2.5 ∗ 𝑄𝑢𝑖𝑐𝑘𝑟𝑎𝑡𝑖𝑜 =
(𝐶𝑢𝑟𝑟𝑒𝑛𝑡𝑎𝑠𝑠𝑒𝑡𝑠–𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦)/𝐶𝑢𝑟𝑟𝑒𝑛𝑡𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = (80k – 20𝑘)/40k = 1.5.*
12. A car manufacturer buys a tire company. This is an example of:
a) Horizontal integration
b) Vertical integration (backward)
c) Conglomerate merger
d) Market extension
Backward vertical integration occurs when a firm acquires a supplier (tires for cars).
13. A leader lets the team make decisions within broad boundaries. This style is:
a) Autocratic
b) Laissez-faire
c) Transactional
d) Bureaucratic
Laissez-faire leadership provides minimal direction and allows teams to self-manage.
14. GDP increased by 3% but real GDP per capita fell. This implies:
a) Deflation
, b) Population grew faster than GDP
c) Exports dropped
d) Government spending fell
Real GDP per capita = Real GDP / Population. If population growth exceeds GDP growth, per
capita output declines.
15. A company uses a “pull” production system. Inventory is triggered by:
a) Sales forecast
b) Customer demand
c) Production schedule
d) Minimum order quantity
Pull systems (e.g., Just-in-Time) produce only when a downstream customer signals need.
16. A bond with 5% coupon rate sells for less than face value when market interest rates:
a) Drop to 4%
b) Rise to 6%
c) Stay at 5%
d) Are variable
Bond prices move inversely to interest rates. If market rate > coupon, bond sells at a discount.
17. A brand splits its market into segments based on lifestyle and values. This is:
a) Geographic segmentation
b) Psychographic segmentation
c) Demographic segmentation
d) Behavioral segmentation
Psychographic segmentation divides consumers by psychological traits, values, interests, and
lifestyles.
18. A project has a payback period of 3 years but negative NPV. The company should:
a) Accept because payback is favorable
b) Reject because NPV is better measure
c) Accept if IRR > 0
d) Recompute payback
