Lesson 3.2.2

3.2.2 Understanding management decision making Quiz: AQA Business, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.2.2, Understanding management decision making: 20 multiple choice questions for the AQA Business (7132), Unit 2: Managers, leadership and decision making, written with Revision Ninja.

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The 20 questions

  1. What is the expected value of a project with a 0.6 chance of a 250,000 payoff and a 0.4 chance of a 0 payoff?

    • 150,000
    • 100,000
    • 250,000
    • 400,000

  2. A project costs 30,000 and has an expected gross return of 55,000. What is the expected net gain?

    • 85,000
    • 25,000
    • 55,000
    • 30,000

  3. A business has a 0.2 probability of earning a 500,000 gain. What is the expected value of this outcome?

    • 20,000
    • 100,000
    • 2,500,000
    • 500,000

  4. In a decision tree diagram, which shape represents a chance node?

    • Rectangle
    • Square
    • Triangle
    • Circle

  5. Which term describes making business decisions based on manager experience rather than data?

    • Intuitive decision making
    • Scientific decision making
    • Tactical decision making
    • Strategic decision making

  6. A firm spends £100,000 buying a van instead of repaying an 8% loan. What is the annual opportunity cost?

    • £108,000 outlay
    • £100,000 spent
    • £8,000 loan balance
    • £8,000 interest forgone

  7. A decision in which the probabilities of outcomes are known is best described as one involving:

    • Certainty
    • Uncertainty
    • Ambiguity
    • Risk

  8. A business refuses to sell a profitable product that harms the environment. Which influence is most evident?

    • Resource constraints
    • Ethics
    • Liquidity
    • Competition

  9. An option costing £40,000 has a 0.7 probability of a £100,000 outcome. What is the expected net gain?

    • £100,000
    • £30,000
    • £70,000
    • £40,000

  10. A decision has three outcomes: 0.2 chance of 300,000, 0.5 chance of 100,000, and 0.3 chance of -50,000. What is the expected value?

    • 95,000
    • 110,000
    • 85,000
    • 150,000

  11. What is a key advantage of scientific decision making over intuitive decision making?

    • Eliminates all risk
    • Based on data
    • Guarantees success
    • Requires no time

  12. A business chooses Project A (£40,000 net gain) over Project B (£35,000 net gain). What is the opportunity cost?

    • £40,000
    • £5,000
    • £35,000
    • £75,000

  13. Why might a business reject a project with a positive expected value?

    • Capital constraints
    • High initial profit
    • Negative net gain
    • Zero risk

  14. A project has a 0.75 chance of a 100,000 gain and a 0.25 chance of a 60,000 loss. What is its expected value?

    • 60,000
    • 75,000
    • 40,000
    • 85,000

  15. What does expected value represent in decision tree analysis?

    • Guaranteed profit return
    • Maximum potential profit
    • Lowest possible loss
    • Weighted average outcome

  16. A project has high expected value but requires large upfront expenditure. Which factor limits its implementation?

    • Business mission
    • Brand equity
    • Financial resources
    • Market demand

  17. A decision tree shows an option with a 0.5 chance of 200,000 and 0.5 chance of 40,000. What is its expected value?

    • 120,000
    • 80,000
    • 160,000
    • 240,000

  18. Which decision-making influence is most closely linked to a business's long-term purpose?

    • Liquidity
    • Mission
    • Staff turnover
    • Interest rates

  19. When selecting high-reward business strategies, what trade-off do managers usually make?

    • Higher risk level
    • Guaranteed profit return
    • Lower risk level
    • Zero opportunity cost

  20. Why does relying solely on intuition increase financial risk in decision making?

    • Requires heavy investment
    • Prevents quick action
    • Takes too long
    • Ignores outcome probabilities

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