Grade 10 Business Studies โ€“ Production (12 Lessons) Quiz

1. What is production in a business context?

Advertising a product on the radio
Paying taxes to the government
Selling goods to customers
Using resources to create goods and services
Explanation:

Production is the process of transforming inputs (land, labour, capital, entrepreneurship) into goods and services for use or sale.

2. Which of the following is NOT a factor of production?

Land
Marketing
Capital
Labour
Explanation:

Factors of production are land, labour, capital and entrepreneurship. Marketing is a business function, not a basic production factor.

3. Which activity is an example of primary production?

Farming tea on a Kenyan farm
Running a retail shop
Operating a bank
Manufacturing soap in a factory
Explanation:

Primary production involves extraction or harvesting of natural resources, such as farming, fishing or mining.

4. Which activity best illustrates the secondary sector of the economy?

Collecting raw timber from a forest
Building a house
Teaching at a school
Selling vegetables at a market
Explanation:

The secondary sector transforms raw materials into finished goods or constructed outputs, for example construction and manufacturing.

5. Which of these is an example of a tertiary (service) activity?

Banking services
Tea planting
Brick manufacturing
Cattle rearing
Explanation:

The tertiary sector provides services rather than producing tangible goods, examples include banking, education and transport.

6. A business that relies mainly on many workers and little machinery is described as:

Automated
Labour-intensive
High-tech
Capital-intensive
Explanation:

Labour-intensive production relies on human workers more than machines; capital-intensive uses more machinery and equipment.

7. How does division of labour increase productivity?

Workers specialise in a few tasks and become faster
It raises the taxes the firm pays
Workers have to travel more between tasks
It increases the amount of raw materials used
Explanation:

Division of labour assigns specific tasks to workers so they become skilled and quicker at those tasks, raising output per worker.

8. What is the break-even point for a business?

When total revenue equals total cost
When fixed costs are zero
When profit equals total revenue
When sales are at their highest
Explanation:

The break-even point is where a firm's income just covers all costs, so profit is zero.

9. What are economies of scale?

Greater waste as output rises
Smaller firms having lower costs than large ones
Higher taxes when a firm grows
Lower average costs as production increases
Explanation:

Economies of scale occur when increasing production spreads fixed costs over more units, reducing average cost per unit.

10. What does the Just-in-Time (JIT) inventory system aim to do?

Increase the number of warehouses
Buy raw materials from as many suppliers as possible
Receive materials only when they are needed to reduce stock
Store large amounts of inventory to avoid shortages
Explanation:

JIT reduces holding costs and waste by scheduling supplies to arrive exactly when required in production.

11. What is the main purpose of quality control in production?

To raise the price of raw materials
To increase the number of suppliers
To ensure the finished goods meet set standards
To delay product delivery to customers
Explanation:

Quality control inspects products to detect defects and ensure they meet the required specifications before sale.

12. Which statement best describes lean production?

A system that increases inventory levels
A strategy to reduce product quality to save costs
A way to hire more workers regardless of need
A method that eliminates waste and improves efficiency
Explanation:

Lean production focuses on removing non-value activities (waste) to make production faster and cheaper without reducing quality.

13. Which of the following is a capital good?

A sewing machine used in a Nairobi tailoring shop
Fresh maize for household consumption
A sales clerk's weekly wage
A customer's purchased shirt
Explanation:

Capital goods are tools or equipment used to produce other goods and services, such as machines and buildings.

14. Which cost is an example of a fixed cost for a business?

Electricity used by a machine depending on hours run
Commission paid on each sale
Cost of raw materials used in production
Monthly rent for the factory building
Explanation:

Fixed costs do not change with output level in the short run; rent remains the same whether production is high or low.

15. Which of the following is a variable cost?

Depreciation on factory machinery
Cost of raw materials
Monthly office rent
Business licence fee paid yearly
Explanation:

Variable costs change with the level of production; more output requires more raw materials, increasing cost.

16. How is productivity commonly measured in production?

Output per worker in a given time period
Amount spent on advertising
Number of managers in the firm
Total number of products in the country
Explanation:

Productivity often measures the amount produced per worker (or per hour) to assess efficiency.

17. Which action is most likely to increase labour productivity in a Kenyan factory?

Hiring only unskilled workers to cut costs
Providing worker training and better tools
Increasing taxes on company profits
Reducing worker breaks to zero
Explanation:

Training and improved tools enhance workers' skills and efficiency, raising output per worker.

18. Which plant layout groups similar machines or functions together?

Product (flow) layout
Fixed-position layout
Process (functional) layout
Retail layout
Explanation:

A process layout places similar machines together (e.g., all lathes in one area) and is useful for varied products and job production.

19. What does outsourcing mean for a business?

Keeping all production activities inside the firm
Hiring only temporary staff from a single agency
Selling the company to a foreign investor
Contracting outside firms to carry out certain business activities
Explanation:

Outsourcing is delegating tasks (like cleaning, IT, or payroll) to external specialists to save cost or gain expertise.

20. A factory has fixed costs of Ksh 1,000. Each unit sells for Ksh 50 and variable cost per unit is Ksh 30. How many units must be sold to break even?

20 units
25 units
50 units
100 units
Explanation:

Break-even units = Fixed costs รท (Price โˆ’ Variable cost) = 1000 รท (50 โˆ’ 30) = 1000 รท 20 = 50 units.

21. What is depreciation in relation to fixed assets?

A fall in the value of a fixed asset over time due to use
A rise in the number of workers
A method of increasing raw material supplies
An increase in sales revenue
Explanation:

Depreciation allocates the cost of a fixed asset over its useful life as it loses value from wear and tear.

22. Which example best describes job production?

Producing thousands of identical pens on an assembly line
Making one custom-made wedding cake for a customer
Operating a supermarket with many different products
Bottling a popular soft drink in bulk
Explanation:

Job production produces customised, one-off items to meet a specific customer's requirements.

23. Which activity describes quality control rather than quality assurance?

Inspecting finished shirts and removing defective ones
Setting company-wide quality standards
Designing systems to prevent defects during production
Training workers in quality procedures before production
Explanation:

Quality control involves checking finished products for defects; quality assurance focuses on preventing defects through systems and processes.

24. What is meant by the supply chain of a product?

Only the factory where the product is made
All organisations and processes involved in producing and delivering a product
The list of customers who bought the product
The advertising campaign for the product
Explanation:

The supply chain includes suppliers, manufacturers, transporters, warehouses and retailers that move a product from raw material to consumer.

25. Which practice helps reduce the environmental impact of production?

Discharging factory waste into rivers to save costs
Using renewable energy and recycling waste
Increasing use of single-use plastics for packaging
Importing more raw materials from far away
Explanation:

Using renewable energy and recycling reduces pollution and resource depletion, helping production become more sustainable.