What this practice covers
These questions are drawn from past CIE 0264 Business papers and filtered to business activity. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on business activity, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Defining factors of production by listing land, labour, capital and enterprise. The list is examples, not a definition, and the specimen mark scheme refuses it.
- Calling the finished product capital. Capital is what the business produces with.
- Treating the owner as labour, or treating employees as enterprise.
- Saying added value is profit. Added value ignores wages, rent and every other cost that is not a bought-in material.
- Working out added value from total costs instead of from the cost of bought-in materials.
- Saying a business can raise added value by raising the price, without saying what happens to the number of customers.
- Giving opportunity cost as the money spent rather than the alternative given up.
- Listing several alternatives as the opportunity cost. It is only the next best one.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Business activity revision notes.