Business Environment: practice questions

6 questions · 12 marks · free, no account · Read the notes first

1. Question 1Multiple choice · 1 mark

   Which of the following is NOT a characteristic of the Hong Kong economy?

   A

   A simple and low tax system

   B

   The rule of law

   C

   Free flow of capital

   D

   Low land costs and rents

2. Question 2Multiple choice · 1 mark

   A company finds that more and more customers in Hong Kong prefer to pay with their mobile phones. Which factor affecting business decisions does this show?

   A

   Physical factor

   B

   Legal factor

   C

   Technological factor

   D

   Political factor

3. Question 3Multiple choice · 1 mark

   Which of the following is a feature of a limited company but NOT of a partnership?

   A

   Owners share the profits.

   B

   It is a separate legal entity.

   C

   It can have more than one owner.

   D

   Owners can contribute capital.

4. Question 4Multiple choice · 1 mark

   A company uses recycled packaging and reduces its carbon emissions. Which stakeholder benefits most directly?

   A

   The community

   B

   Creditors

   C

   Competitors

   D

   Suppliers

5. Question 54 marks

   A Hong Kong bakery plans to open a branch in Shenzhen. Explain TWO factors affecting business decisions that it should consider.

   Show worked solution

   Any TWO (2 marks each: 1 for the factor, 1 for applying it):

   • Economic factor: the income level and spending of consumers in Shenzhen affect how much they will pay for its products. (2)
   • Social and cultural factor: local tastes may differ, so the bakery may need to change its products. (2)
   • Legal factor: it must follow Mainland laws on food safety, business registration and labour. (2)
   • Physical factor: the location of the shop affects customer flow and the cost of transporting ingredients. (2)
   • Political factor: policies supporting the Greater Bay Area may make it easier to set up the branch. (2)
6. Question 64 marks

   Peter runs a sole proprietorship. He plans to invite two friends to form a partnership. Explain ONE advantage and ONE disadvantage of this change to Peter.

   Show worked solution

   Advantage (any one, 2 marks):

   • More capital can be raised from the partners' contributions for expansion.
   • Partners bring different skills and experience, allowing better division of work.
   • Business risks and workload are shared.

   Disadvantage (any one, 2 marks):

   • Peter still has unlimited liability, and is also liable for debts arising from his partners' decisions.
   • Profits must be shared.
   • Decisions may be slower, and disagreements may arise among partners.