Sample Quizzes For Preparation: External Influences On Business Activity: Political And Legal
1. What is privatisation?
A. Transfer of private firms into public ownership
B. Transfer of state-owned enterprises into private ownership
C. Government subsidy to private firms
D. Regulation of business activities by the state
2. Which of the following is an advantage of privatisation?
A. Increased government interference in business decisions
B. Higher subsidies to loss-making enterprises
C. Greater efficiency and productivity
D. Guaranteed universal service provision
3. Which is a potential disadvantage of privatisation?
A. Government receives one-time revenue from asset sales
B. Loss of long-term government revenue streams
C. Greater innovation due to competition
D. Reduction in bureaucracy
4. What is nationalisation?
A. Government selling assets to private investors
B. Government taking control of private enterprises
C. Firms expanding into foreign markets
D. Consumers becoming shareholders in firms
5. Which of the following is an advantage of nationalisation?
A. Risk of corruption and mismanagement
B. Short-term profit focus
C. Employment security in strategic industries
D. Increased foreign ownership
6. Which is a disadvantage of nationalisation?
A. Government ensures universal service provision
B. Potential inefficiency due to lack of competition
C. Protection of national interests
D. Long-term infrastructure investment
7. Which of the following is most likely a reason for privatisation?
A. To reduce government deficit
B. To increase government interference in business
C. To ensure non-profitable services continue
D. To discourage foreign investment
8. Which of the following is a reason for nationalisation?
A. To maximise shareholder returns
B. To protect failing but essential industries
C. To reduce government spending
D. To attract multinational corporations
9. Which of the following services is most commonly nationalised?
A. Luxury fashion retail
B. Oil and gas industries
C. Video streaming platforms
D. Fast food chains
10. Which is an example of government control through law?
A. Granting monopolies to private firms
B. Banning misleading advertising
C. Allowing unlimited working hours
D. Subsidising gambling businesses
11. Which law ensures employees are not discriminated against in hiring?
A. Competition law
B. Employment protection law
C. Consumer rights law
D. Environmental protection law
12. What is the purpose of minimum wage legislation?
A. To reduce foreign competition
B. To protect low-paid workers from exploitation
C. To increase profits for businesses
D. To subsidise large corporations
13. Which is an example of regulating marketing behaviour?
A. Tax incentives for exporters
B. Banning tobacco advertising
C. Increasing income tax rates
D. Encouraging monopoly pricing
14. Which of the following is controlled by competition laws?
A. Mergers and acquisitions
B. Wage levels
C. Employment contracts
D. Health and safety standards
15. What is a potential risk of privatisation in natural monopolies?
A. Increased innovation
B. Lower prices
C. Exploitation of consumers by private monopolies
D. Increased government subsidies
16. Which of the following is most likely to be influenced by zoning laws?
A. Where businesses can locate
B. The type of goods a firm produces
C. Minimum wage levels
D. Trade union rights
17. Which of the following is a political factor affecting business?
A. Technological changes
B. Political stability or instability
C. Employee motivation
D. Marketing mix decisions
18. Which of the following is a legal factor affecting business?
A. Exchange rate fluctuations
B. Health and safety regulations
C. Inflation rate
D. Natural disasters
19. A government nationalises an airline to prevent collapse. This is an example of:
A. Correcting market failure
B. Reducing bureaucracy
C. Attracting foreign ownership
D. Encouraging competition
20. Which of the following is a disadvantage of privatisation for workers?
A. Increased job security
B. Reduced political interference
C. Potential job losses due to cost-cutting
D. Access to new training opportunities
21. Which factor most discourages foreign investment?
A. Deregulation policies
B. Political instability
C. Reduction in corporate tax rates
D. Privatisation programmes
22. Which of the following industries is usually unsuitable for privatisation without regulation?
A. Airline industry
B. Water supply
C. Supermarkets
D. IT consultancy
23. Which of the following is an example of government regulating conditions of work?
A. Tax holidays for exporters
B. Limiting maximum weekly working hours
C. Controlling foreign exchange rates
D. Subsidising large corporations
24. Which of the following represents the loss of long-term government revenue in privatisation?
A. Loss of future profit streams from formerly state-owned firms
B. Cost savings from reduced bureaucracy
C. Increased tax revenues from competition
D. Reduced political interference
25. Which of the following is a disadvantage of nationalisation for taxpayers?
A. Firms prioritising public interest over profit
B. Long-term government subsidies for loss-making industries
C. Greater protection for workers’ rights
D. Reinvestment of profits into public services
26. Which example shows the impact of political change on business?
A. Increase in advertising spending
B. New trade tariffs imposed due to change in government
C. Better product quality due to competition
D. Higher productivity from new technology
27. Which is a potential advantage of privatisation for consumers?
A. Higher prices in monopolistic markets
B. Increased choice and improved service quality
C. Reduced competition among firms
D. Greater government subsidies for goods
28. Which of the following is an impact of strict legal regulations?
A. Reduced compliance costs for businesses
B. Increased costs of training and safety compliance
C. Higher short-term profits for firms
D. Lower product quality for consumers
29. What is the main aim of competition laws?
A. To encourage collusion among firms
B. To protect consumers from anti-competitive behaviour
C. To promote government ownership
D. To raise government revenue
30. Which of the following industries is most likely to be privatised to improve efficiency?
A. Defence
B. Telecommunications
C. Police services
D. National judiciary
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course
Answer key and explanations
1. Correct Answer: B
Explanation: Privatisation means transfer of state-owned enterprises into private ownership. A is nationalisation, C and D are forms of government intervention.
2. Correct Answer: C
Explanation: Privatisation often increases efficiency as private firms are profit-driven. A and B are features of nationalisation. D is a public-sector advantage.
3. Correct Answer: B
Explanation: Governments lose future profits after selling assets. A and C are advantages of privatisation, D is unrelated.
4. Correct Answer: B
Explanation: Nationalisation means government takes over private firms. A is privatisation, C is globalisation, D is shareholding.
5. Correct Answer: C
Explanation: Nationalisation secures jobs in strategic industries. A, B, D are disadvantages of nationalisation.
6. Correct Answer: B
Explanation: A disadvantage is inefficiency due to lack of competition. A, C, D are benefits.
7. Correct Answer: A
Explanation: Governments privatise to reduce deficits. B and C are opposite aims. D is incorrect.
8. Correct Answer: B
Explanation: Governments nationalise to protect failing but essential industries. A, C, D contradict this.
9. Correct Answer: B
Explanation: Oil and gas are commonly nationalised for strategic control. A, C, D are consumer industries.
10. Correct Answer: B
Explanation: Banning misleading ads is legal control. A, C, D are incorrect.
11. Correct Answer: B
Explanation: Employment protection law prevents discrimination. A, C, D cover other aspects.
12. Correct Answer: B
Explanation: Minimum wages protect low-paid workers. A, C, D are not correct.
13. Correct Answer: B
Explanation: Banning tobacco ads is an example of regulating marketing. Others are unrelated.
14. Correct Answer: A
Explanation: Competition laws control mergers and acquisitions. B, C, D relate to employment law.
15. Correct Answer: C
Explanation: Private monopolies may exploit consumers. A and B are benefits. D is a public-sector feature.
16. Correct Answer: A
Explanation: Zoning laws regulate where businesses locate. Other options are not affected by zoning.
17. Correct Answer: B
Explanation: Political stability is a political factor. A, C, D are business/internal factors.
18. Correct Answer: B
Explanation: Health and safety regulations are legal factors. A, C, D are economic or natural.
19. Correct Answer: A
Explanation: Nationalisation here corrects market failure. B, C, D are incorrect.
20. Correct Answer: C
Explanation: Privatisation may lead to layoffs. A, B, D are benefits.
21. Correct Answer: B
Explanation: Political instability discourages foreign investment. A, C, D encourage it.
22. Correct Answer: B
Explanation: Water supply is a natural monopoly and unsuitable for privatisation without regulation. Others are competitive industries.
23. Correct Answer: B
Explanation: Regulating maximum working hours protects conditions of work. A, C, D are not.
24. Correct Answer: A
Explanation: Governments lose profits from previously state-owned firms. B, C, D are advantages.
25. Correct Answer: B
Explanation: Subsidising loss-making firms is a taxpayer burden. A, C, D are advantages.
26. Correct Answer: B
Explanation: Trade tariffs due to political change show political impact. A, C, D are unrelated.
27. Correct Answer: B
Explanation: Privatisation often increases consumer choice and service quality. A, C, D are negatives.
28. Correct Answer: B
Explanation: Legal compliance raises costs. A, C, D are wrong.
29. Correct Answer: B
Explanation: Competition laws aim to protect consumers. A, C, D are incorrect.
30. Correct Answer: B
Explanation: Telecommunications is often privatised. A, C, D are unsuitable for privatisation.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change A2 Level Business Full Scale Course