DSST Business 5 — Questions and Answers
Question 1: Which leadership style involves the leader making decisions without consulting team members?
- Democratic
- Laissez-faire
- Autocratic (Correct answer)
- Transformational
Correct answer: Autocratic
Autocratic (authoritarian) leadership involves a single leader making all decisions without input from group members.
Question 2: In contract law, 'consideration' refers to:
- The time given to review a contract before signing
- The care taken by parties to read contract terms
- Something of value exchanged between the parties (Correct answer)
- The written form required for a contract to be valid
Correct answer: Something of value exchanged between the parties
Consideration is a fundamental element of a valid contract requiring each party to give or promise something of value to the other.
Question 3: What is 'just-in-time' (JIT) inventory management?
- Ordering maximum inventory to prevent stockouts
- Receiving goods only as they are needed in the production process (Correct answer)
- Using computer systems to automate reordering
- Keeping safety stock on hand at all times
Correct answer: Receiving goods only as they are needed in the production process
JIT is an inventory strategy where materials arrive exactly when needed for production, minimizing storage costs and waste.
Question 4: A company's 'return on equity' (ROE) measures:
- How much debt the company uses relative to equity
- The net income generated for each dollar of shareholder equity (Correct answer)
- The percentage of profits paid as dividends
- The growth rate of the company's stock price
Correct answer: The net income generated for each dollar of shareholder equity
ROE is calculated as net income divided by shareholders' equity and indicates how effectively management generates profit from equity financing.
Question 5: Which of the following best describes 'price elasticity of demand'?
- The tendency of prices to rise over time due to inflation
- A measure of how responsive quantity demanded is to a price change (Correct answer)
- The maximum price consumers will pay for a product
- The relationship between a product's quality and its price
Correct answer: A measure of how responsive quantity demanded is to a price change
Price elasticity of demand measures the percentage change in quantity demanded resulting from a one percent change in price.
Question 6: In operations management, a 'critical path' in project scheduling represents:
- Tasks that can be delayed without affecting the project end date
- The sequence of tasks that determines the minimum project duration (Correct answer)
- The most expensive tasks in a project
- The tasks assigned to the most skilled workers
Correct answer: The sequence of tasks that determines the minimum project duration
The critical path is the longest sequence of dependent tasks in a project; any delay on the critical path delays the entire project.
Question 7: What is the primary distinction between 'gross profit' and 'net profit'?
- Gross profit includes taxes while net profit excludes them
- Net profit subtracts only variable costs from revenue
- Gross profit is revenue minus cost of goods sold; net profit also deducts operating and other expenses (Correct answer)
- Gross profit applies to products only; net profit applies to services
Correct answer: Gross profit is revenue minus cost of goods sold; net profit also deducts operating and other expenses
Gross profit is revenue minus cost of goods sold; net profit further deducts all operating expenses, interest, and taxes.
DSST Business 5
Which leadership style involves the leader making decisions without consulting team members?