A-Level Business 2026 — Complete Revision
Notes & Prac ce Ques ons Prepare
1. What is the main purpose of business activity?
A. To eliminate competition
B. To combine resources to produce goods or services
C. To prevent consumers from making choices
D. To guarantee high profits
Answer: B
Rationale: Businesses combine factors of production such as land, labour, capital and enterprise
to produce goods or services that satisfy consumer wants.
2. Which factor of production refers to human effort used in production?
A. Land
B. Capital
C. Labour
D. Enterprise
Answer: C
Rationale: Labour refers to the physical and mental effort contributed by people to the
production process.
3. What is meant by opportunity cost?
A. The total financial cost of a decision
B. The next-best alternative forgone when making a choice
C. The amount spent on advertising
D. The cost of producing one additional unit
Answer: B
Rationale: Opportunity cost is the value of the next-best alternative that is sacrificed when a
decision is made.
,4. Which stakeholder group is most directly interested in receiving dividends?
A. Customers
B. Employees
C. Shareholders
D. Suppliers
Answer: C
Rationale: Shareholders provide equity finance and may receive dividends from distributable
profits.
5. Which of the following is an internal stakeholder?
A. Government
B. Employee
C. Customer
D. Local community
Answer: B
Rationale: Employees are internal stakeholders because they work within the organisation and
are directly affected by its decisions.
6. What is the primary objective of most private-sector businesses?
A. Maximising tax revenue
B. Maximising profit
C. Eliminating risk
D. Reducing consumer choice
Answer: B
Rationale: Profit maximisation is a common objective of private-sector businesses, although
businesses may also pursue growth, survival and other objectives.
7. Which objective is particularly important for a newly established business?
,A. Survival
B. Dividend maximisation
C. Market exit
D. Reducing sales
Answer: A
Rationale: New businesses often prioritise survival because they face uncertainty, limited
resources and strong competition.
8. What is meant by a business stakeholder?
A. Only the owners of a business
B. Anyone with an interest in or affected by the business
C. Only government organisations
D. Only customers
Answer: B
Rationale: Stakeholders are individuals or groups who have an interest in a business or can be
affected by its activities.
9. Which stakeholder is most likely to be concerned about job security?
A. Employees
B. Competitors
C. Customers
D. Suppliers
Answer: A
Rationale: Employees depend on the organisation for employment and income, making job
security an important concern.
10. Why might stakeholder objectives conflict?
A. All stakeholders have identical interests
B. Resources are unlimited
C. Different stakeholders want different outcomes
D. Businesses have no financial objectives
, Answer: C
Rationale: Stakeholders may have competing interests; for example, employees may want higher
wages while shareholders may prefer higher profits.
Section 2: Business Ownership & Organisation
11. Which feature is associated with a sole trader?
A. Unlimited shareholders
B. Separate legal personality
C. Single ownership
D. Mandatory public share trading
Answer: C
Rationale: A sole trader is owned and normally controlled by one individual.
12. What is a major disadvantage of being a sole trader?
A. Limited control
B. Unlimited liability
C. Mandatory publication of accounts
D. Lack of flexibility
Answer: B
Rationale: A sole trader generally has unlimited liability, meaning personal assets may be at risk
if the business cannot meet its debts.
13. What is limited liability?
A. Owners cannot make profits
B. Owners' losses are generally limited to the amount invested
C. Businesses cannot borrow money
D. Employees are liable for all debts
Answer: B
Notes & Prac ce Ques ons Prepare
1. What is the main purpose of business activity?
A. To eliminate competition
B. To combine resources to produce goods or services
C. To prevent consumers from making choices
D. To guarantee high profits
Answer: B
Rationale: Businesses combine factors of production such as land, labour, capital and enterprise
to produce goods or services that satisfy consumer wants.
2. Which factor of production refers to human effort used in production?
A. Land
B. Capital
C. Labour
D. Enterprise
Answer: C
Rationale: Labour refers to the physical and mental effort contributed by people to the
production process.
3. What is meant by opportunity cost?
A. The total financial cost of a decision
B. The next-best alternative forgone when making a choice
C. The amount spent on advertising
D. The cost of producing one additional unit
Answer: B
Rationale: Opportunity cost is the value of the next-best alternative that is sacrificed when a
decision is made.
,4. Which stakeholder group is most directly interested in receiving dividends?
A. Customers
B. Employees
C. Shareholders
D. Suppliers
Answer: C
Rationale: Shareholders provide equity finance and may receive dividends from distributable
profits.
5. Which of the following is an internal stakeholder?
A. Government
B. Employee
C. Customer
D. Local community
Answer: B
Rationale: Employees are internal stakeholders because they work within the organisation and
are directly affected by its decisions.
6. What is the primary objective of most private-sector businesses?
A. Maximising tax revenue
B. Maximising profit
C. Eliminating risk
D. Reducing consumer choice
Answer: B
Rationale: Profit maximisation is a common objective of private-sector businesses, although
businesses may also pursue growth, survival and other objectives.
7. Which objective is particularly important for a newly established business?
,A. Survival
B. Dividend maximisation
C. Market exit
D. Reducing sales
Answer: A
Rationale: New businesses often prioritise survival because they face uncertainty, limited
resources and strong competition.
8. What is meant by a business stakeholder?
A. Only the owners of a business
B. Anyone with an interest in or affected by the business
C. Only government organisations
D. Only customers
Answer: B
Rationale: Stakeholders are individuals or groups who have an interest in a business or can be
affected by its activities.
9. Which stakeholder is most likely to be concerned about job security?
A. Employees
B. Competitors
C. Customers
D. Suppliers
Answer: A
Rationale: Employees depend on the organisation for employment and income, making job
security an important concern.
10. Why might stakeholder objectives conflict?
A. All stakeholders have identical interests
B. Resources are unlimited
C. Different stakeholders want different outcomes
D. Businesses have no financial objectives
, Answer: C
Rationale: Stakeholders may have competing interests; for example, employees may want higher
wages while shareholders may prefer higher profits.
Section 2: Business Ownership & Organisation
11. Which feature is associated with a sole trader?
A. Unlimited shareholders
B. Separate legal personality
C. Single ownership
D. Mandatory public share trading
Answer: C
Rationale: A sole trader is owned and normally controlled by one individual.
12. What is a major disadvantage of being a sole trader?
A. Limited control
B. Unlimited liability
C. Mandatory publication of accounts
D. Lack of flexibility
Answer: B
Rationale: A sole trader generally has unlimited liability, meaning personal assets may be at risk
if the business cannot meet its debts.
13. What is limited liability?
A. Owners cannot make profits
B. Owners' losses are generally limited to the amount invested
C. Businesses cannot borrow money
D. Employees are liable for all debts
Answer: B
