Total marks: 60 · Duration: 1 hour 15 minutes
Instructions to candidates
- This paper has 60 questions. Answer ALL questions.
- Each question is worth ONE mark.
- For each question there are four options, A, B, C and D. Choose the ONE you think is correct. In the January 2027 sitting, Paper 01 is taken online, so you select your answer on screen.
- The questions follow the syllabus spread for Paper 01: 20 items on each content profile — Organisational Principles (1–20), Production, Marketing and Logistics (21–40), and Finance, Government and Technology (41–60).
- All amounts are in dollars. A silent, non-programmable calculator may be used.
Paper
Organisational Principles (Items 1–20)
1. A farmer grows sweet potatoes on a field instead of cabbages. The cabbages he could have grown on that field are his
A) variable cost
B) profit margin
C) fixed cost
D) opportunity cost
2. The reward for the factor of production enterprise is
A) interest
B) rent
C) profit
D) wages
3. An economy in which resources are mainly privately owned and allocated by the price mechanism is
A) a command economy
B) a traditional economy
C) a planned economy
D) a free enterprise economy
4. Under partnership law, where the partners have made no agreement about profits, the profits are shared
A) as the senior partner decides
B) equally among the partners
C) in the ratio of the capital each invested
D) according to the hours each partner works
5. A business owned by the state and run by a board appointed by the government to provide a public service is
A) a public corporation
B) a co-operative
C) a franchise
D) a public limited company
6. A local businessperson pays a fee to use the name, menu and methods of an international fast-food chain. This arrangement is
A) a franchise
B) a partnership
C) a joint venture
D) a merger
7. Which feature distinguishes a public limited company from a private limited company?
A) It is owned by shareholders
B) Its shares can be offered for sale to the general public
C) Its shareholders have limited liability
D) It has a separate legal identity from its owners
8. Which stakeholder is MOST concerned with a firm's ability to repay a loan on time?
A) The firm's employees
B) The local community
C) The firm's customers
D) The bank that made the loan
9. A diagram showing the chain of command and the relationships between positions in a business is
A) a flow chart
B) a Gantt chart
C) an organisational chart
D) a pie chart
10. A company's legal adviser gives specialist advice to managers but has no authority over production workers. This is
A) an informal relationship
B) a staff relationship
C) a line relationship
D) a lateral relationship
11. Which of the following is a NON-financial incentive for workers?
A) Sharing a part of the profits with staff
B) Paying an end-of-year bonus
C) Paying commission on each sale made
D) Giving a worker more responsibility and a wider range of tasks
12. Which method is MOST suitable for sending detailed monthly sales figures to 30 branch managers?
A) A separate face-to-face meeting with each manager
B) An email with the figures attached as a spreadsheet
C) A telephone call to each manager
D) A notice on the head-office notice board
13. A manager uses technical terms that the workers do not understand. This barrier to communication is
A) feedback
B) lateral communication
C) jargon
D) the grapevine
14. Which characteristic is MOST important for an entrepreneur?
A) A willingness to take calculated risks
B) A dependence on others to make decisions
C) A preference for a guaranteed weekly wage
D) A reluctance to try new ideas
15. A bakery locates close to its customers rather than close to its suppliers MAINLY because its products
A) need large supplies of water to produce
B) are mainly sold overseas
C) are perishable and must be delivered fresh
D) use heavy raw materials that are costly to move
16. In a SWOT analysis, the opening of a large competitor next door to a small shop is
A) a strength
B) an opportunity
C) a weakness
D) a threat
17. A hotel trains and employs young people from the surrounding community. This is an example of
A) monopoly power
B) vertical integration
C) corporate social responsibility
D) diversification
18. The right to make decisions and to give orders to others is
A) delegation
B) authority
C) accountability
D) responsibility
19. Comparing actual results with targets and taking action to correct any differences is the management function of
A) organising
B) planning
C) controlling
D) staffing
20. Three partners invest $40 000, $35 000 and $25 000 and share profits in the ratio of their capital. Profit for the year is $18 000. How much does the partner who invested $35 000 receive?
A) $6 000
B) $4 500
C) $7 200
D) $6 300
Production, Marketing and Logistics (Items 21–40)
21. A commercial bank lending money to businesses is engaged in
A) tertiary production
B) primary production
C) secondary production
D) extractive production
22. A bakery makes 200 loaves of white bread, then changes its mixture and makes 150 wholewheat loaves. This method of production is
A) flow production
B) job production
C) batch production
D) craft production
23. A factory with 25 workers produced 5 000 units a week. After training, the same 25 workers produced 6 000 units a week. By how much did output per worker rise?
A) 40 units per worker
B) 240 units per worker
C) 20 units per worker
D) 1 000 units per worker
24. A large supermarket chain obtains lower prices from suppliers because it buys in very large quantities. This is
A) a purchasing (bulk-buying) economy of scale
B) a technical economy of scale
C) a diseconomy of scale
D) a financial economy of scale
25. A firm has fixed costs of $12 000. It sells its product for $25 per unit, and the variable cost is $10 per unit. What is its break-even output?
A) 480 units
B) 1 200 units
C) 800 units
D) 343 units
26. A business has fixed costs of $4 000 a month and a variable cost of $6 per unit. What is the total cost of producing 500 units in a month?
A) $3 000
B) $10 000
C) $4 000
D) $7 000
27. A system in which every worker is responsible for quality at every stage of production is
A) outsourcing
B) end-of-line inspection
C) total quality management
D) just-in-time stock control
28. A chocolate manufacturer buys a cocoa estate to secure its supply of beans. This is
A) horizontal integration
B) forward vertical integration
C) conglomerate integration
D) backward vertical integration
29. A business uses government census figures to estimate the number of teenagers living in a town. This is
A) secondary (desk) research
B) a consumer panel
C) test marketing
D) primary (field) research
30. A name, symbol or design that identifies a firm's product and sets it apart from competitors is
A) a copyright
B) a brand
C) a patent
D) a jingle
31. Setting a high price for a new, innovative product when it is first launched is
A) psychological pricing
B) price skimming
C) penetration pricing
D) cost-plus pricing
32. A craftsman's cost of making a chair is $120, and he adds a mark-up of 25%. What is his selling price?
A) $150
B) $160
C) $145
D) $96
33. Sales of a product have fallen steadily for several years as customers switch to newer technology. The product is in the
A) decline stage of its life cycle
B) maturity stage of its life cycle
C) growth stage of its life cycle
D) introduction stage of its life cycle
34. A soft-drink company pays to have its name on the shirts of a national football league. This form of promotion is
A) a sales discount
B) personal selling
C) sponsorship
D) direct mail
35. A farmer sells her produce directly to customers at a roadside stall. Which channel of distribution is she using?
A) Producer → retailer → consumer
B) Producer → agent → wholesaler → consumer
C) Producer → wholesaler → retailer → consumer
D) Producer → consumer
36. A large shop that sells a very wide range of goods in separate sections under one roof is
A) a mail-order business
B) a specialty shop
C) a department store
D) a kiosk
37. Which is the MOST suitable way to send urgent medical supplies from Trinidad to Grenada?
A) Air freight
B) A pipeline
C) A cargo barge
D) A container ship
38. What is the MAIN advantage of transporting goods in containers?
A) Shipping documents are no longer required
B) Customs duty does not have to be paid on the goods
C) Goods are protected and can be moved quickly between ships, trains and lorries
D) The cargo does not need to be insured
39. A consumer buys a new kettle that stops working after one week of normal use. Under consumer protection law she is MOST likely entitled to
A) a repair, replacement or refund
B) nothing, because she has already used it
C) a discount on a future purchase
D) a written apology from the shop
40. A business shows advertisements on social media to people who have recently searched for similar products. This is
A) mass marketing
B) targeted digital marketing
C) personal selling
D) trade promotion
Finance, Government and Technology (Items 41–60)
41. Maria deposits $2 000 in an account paying 5% compound interest per year. How much interest has she earned after 2 years?
A) $200
B) $2 205
C) $100
D) $205
42. A facility that allows a current account holder to withdraw more money than is in the account, up to an agreed limit, is
A) a standing order
B) an overdraft
C) hire purchase
D) a direct debit
43. Which of the following is a SHORT-TERM source of finance for a business?
A) Trade credit from suppliers
B) Issuing debentures
C) Issuing new ordinary shares
D) A mortgage on the premises
44. The share of profits paid to the ordinary shareholders of a company is called
A) commission
B) interest
C) a dividend
D) a premium
45. When a customer pays for groceries with a debit card,
A) the bank lends the customer the money for a month
B) the money is taken directly from the customer's bank account
C) the customer pays the shop later by cheque
D) the payment is taken from the shop's own account
46. A business starts the month with $3 500 in cash. It receives $12 000 and pays out $13 200 during the month. What is its closing cash balance?
A) $28 700
B) $2 300
C) −$1 200
D) $4 700
47. Where are the shares of public companies bought and sold?
A) On a stock exchange
B) At an insurance company
C) At the Central Bank
D) At a credit union
48. The principle of utmost good faith requires the person taking out insurance to
A) insure the same item with two companies
B) disclose all relevant facts about the risk
C) make a profit from any claim
D) share the risk with other insurers
49. A shop is insured for $80 000. A fire causes damage worth $12 000. Under the principle of indemnity, how much should the shop receive?
A) $92 000
B) $68 000
C) $80 000
D) $12 000
50. Insurance works because premiums are collected from many people and used to pay the losses of the few who suffer them. This is
A) subrogation
B) proximate cause
C) contribution
D) the pooling of risk
51. Which of the following is a DIRECT tax?
A) Value added tax
B) Income tax
C) Excise duty on alcohol
D) Import duty
52. A general and sustained rise in the level of prices in an economy is
A) recession
B) inflation
C) deflation
D) devaluation
53. A basket of goods cost $500 last year and costs $540 this year. What is the rate of inflation?
A) 7.4%
B) 54%
C) 40%
D) 8%
54. Money sent home by Caribbean nationals working overseas is known as
A) remittances
B) quotas
C) tariffs
D) subsidies
55. A government places a tax on imported chicken to protect local poultry farmers. This is
A) a quota
B) an embargo
C) a subsidy
D) a tariff
56. If US$1 = TT$6.75, how many Trinidad and Tobago dollars will a tourist receive for US$400?
A) TT$2 700
B) TT$270
C) TT$59.26
D) TT$2 970
57. Which of the following is a function of government in a mixed economy?
A) Paying dividends to company shareholders
B) Deciding which crops private farmers grow
C) Providing public goods such as roads and street lighting
D) Setting the wages paid by private firms
58. A country has a GDP of US$4.2 billion and a population of 1.4 million. What is its GDP per head?
A) US$5 600
B) US$300
C) US$3 000
D) US$30 000
59. Which is a DISADVANTAGE to a supermarket of introducing self-service automated checkouts?
A) Customers are served more quickly at busy times
B) Fewer errors are made in totalling bills
C) Labour costs fall in the long run
D) The high initial cost, and the loss of some cashiers' jobs
60. A business stores its customers' card details on a computer. What is the BEST way to protect this data?
A) Print the details and file them in an open office
B) Encrypt the data and allow access only to authorised staff with passwords
C) Store the details on the public pages of the website
D) Email the details to every manager for safekeeping