36 exam-style questions on What is a business? — topic 1.1 of Introduction to business management in the IB Business Management syllabus — with answers and explanations. Samples below; the full set is free with an account.
A family bakery uses flour, industrial ovens and five employees, while the owner organises these resources and bears the financial risk. The owner's role represents which factor of production?
Answer: Enterprise
Enterprise is the factor that combines land, labour and capital and accepts the risk of production; here the flour is land (natural resource), the ovens are capital and the employees are labour.
Assembling imported electronic components into finished laptops is an example of business activity in which sector of the economy?
Answer: Secondary
The secondary sector transforms raw materials and components into manufactured goods; assembly and construction both belong here.
Which business function is chiefly responsible for preparing budgets and monitoring the organisation's cash flow?
Answer: Finance and accounts
Finance and accounts manages the organisation's money, including budgeting, record-keeping and cash-flow control; the other functions rely on it for funding.
A jeweller buys gold and gemstones for $400 and sells the finished ring for $1 500. The $1 100 difference is best described as:
Answer: Added value
Added value is the selling price minus the cost of bought-in materials. It is not profit, because other costs such as wages and rent have not yet been deducted.
After being made redundant, Amira starts a cleaning business because she cannot find other employment. Her motive for becoming an entrepreneur is best described as:
Answer: A push factor, as she is driven by necessity
Push factors force people into entrepreneurship out of necessity, such as redundancy or lack of jobs; pull factors attract people through opportunities like profit or independence.
A profitable new business with a full order book still cannot pay its suppliers on time this month. Which common start-up problem does this illustrate?
Answer: Poor cash flow management
A business can be profitable on paper yet run out of cash if money flows out before customer payments arrive; cash-flow problems are a leading cause of start-up failure.
That was 6 of 36 What is a business? questions.
Practise all 36 freeStateAO1 · 2 marks
One word or one short sentence. No explanation, no working: the mark is for the fact itself.
DefineAO1 · 2 marks
Give the precise meaning — one sentence, the key terms in it, no example needed unless asked.
DistinguishAO2 · 4–6 marks
Make the difference clear for BOTH terms — a definition of one of them is only half an answer.
36 What is a business? questions — free with an account. Spaced repetition, streaks and full exam simulations included.
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