📈 Business Environment

1. In the DIKW hierarchy used in data science, which level consists of raw, unprocessed facts such as individual sales amounts and invoice numbers?

1. Information, the level above data
2. Knowledge, the level above information
3. Data, the base of the hierarchy
4. Wisdom, the top of the hierarchy

In the DIKW hierarchy, data are raw facts without context and form the base level. Information is data that have been organised and given context, knowledge is understanding gained by analysing information and applying experience, and wisdom is the judgement on how best to act on that knowledge. Individual sales amounts and invoice numbers are therefore data, not yet information.

2. Which statement best describes supervised machine learning?

1. A model learns from labelled examples whose outcomes are already known
2. A model groups unlabelled records into clusters by hidden similarities
3. A model improves by receiving rewards and penalties for its own actions
4. A model applies fixed if-then rules written in advance by programmers

Supervised learning trains a model on labelled data, meaning inputs paired with known outputs, so that it can predict the output for new inputs, for example classifying invoices as normal or suspicious. Grouping unlabelled records is unsupervised learning, learning from rewards and penalties is reinforcement learning, and fixed if-then rules describe a rule-based system that does not learn from data.

3. In big data, the characteristic called veracity refers to:

1. the very large quantity of data that must be stored
2. the speed at which new data is generated and processed
3. the range of formats such as text, images and tables
4. the accuracy and trustworthiness of the data collected

Veracity concerns the quality, accuracy and reliability of data, which matters because poor-quality data leads to poor decisions. The quantity of data is volume, the speed of generation and processing is velocity, and the range of formats is variety. Value, the fifth characteristic, is the usefulness of the data to the organisation.

4. Which of the following does NOT describe a cloud computing service model?

1. Virtual servers, storage and networks rented from a vendor on demand
2. Cloud infrastructure operated for the exclusive use of one organisation
3. Ready-to-use application software supplied by a vendor over the internet
4. A vendor-managed platform on which customers build their own applications

The three service models describe what the provider delivers: virtual servers, storage and networks rented on demand are Infrastructure as a Service (IaaS), a vendor-managed platform for building applications is Platform as a Service (PaaS), and ready-to-use software supplied over the internet is Software as a Service (SaaS). Cloud infrastructure operated for the exclusive use of one organisation is a private cloud, which is a deployment model describing who uses and hosts the cloud; the other deployment models are public, hybrid and community clouds.

5. Najd Logistics Company analyses purchase histories that carry no predefined categories and lets an algorithm group its customers into segments with similar buying behaviour. This is an example of:

1. supervised machine learning
2. reinforcement learning with rewards
3. unsupervised machine learning
4. rule-based automation of decisions

The data carry no labels or predefined categories, and the algorithm finds structure by itself, which is the definition of unsupervised learning; customer segmentation by clustering is a typical use. Supervised learning needs labelled examples with known outcomes, reinforcement learning relies on rewards and penalties from an environment, and rule-based automation applies rules fixed in advance by people.

6. Which level of the DIKW hierarchy is illustrated when a finance director draws on accumulated experience to decide on the most appropriate course of action?

1. Wisdom, using knowledge with sound judgement
2. Data, facts recorded without context
3. Information, data organised with context
4. Knowledge, understanding built from information

Wisdom is the top level of the DIKW hierarchy: it applies knowledge and experience with judgement to decide what to do, as the finance director does here. Data are raw facts without context, information is data organised with context, and knowledge is the understanding that results from analysing information; none of these three by itself includes the judgement on the best action.

7. Deep learning is best described as:

1. a form of robotic process automation that copies screen actions
2. a statistical method of sampling large populations of records
3. a storage system that holds unstructured data in many formats
4. a type of machine learning built on multi-layered neural networks

Deep learning is a branch of machine learning that uses artificial neural networks with many layers to learn complex patterns, for example in image, speech or text recognition. Copying screen actions is robotic process automation, sampling populations is a statistical audit technique, and storing unstructured data in many formats describes a data lake or NoSQL store, not a learning method.

8. In a blockchain network, a consensus mechanism is:

1. a password policy that restricts who can read the ledger
2. a rule set that lets the nodes agree on which new block is valid
3. an audit opinion confirming the ledger is free of misstatement
4. a backup procedure that copies the ledger to one central server

A consensus mechanism, such as proof of work or proof of stake, is the protocol by which the distributed nodes agree on which transactions and blocks are valid, without relying on a central authority. A password policy is an access control, an audit opinion is a professional assurance report, and copying the ledger to one central server is a backup that contradicts the distributed design.

9. Which of the following is NOT a preventive security control?

1. Multifactor authentication at system login
2. Encryption of data stored on company servers
3. Weekly review of logs to spot unusual logins
4. Firewall rules that block unauthorised traffic

Reviewing logs after the events have occurred is a detective control: it identifies incidents but does not stop them. Multifactor authentication, encryption and firewall rules are preventive controls because they reduce the chance that an unauthorised person gains access or reads the data; restoring systems from backup is an example of a corrective control.

10. Al-Waha Furnishings finds that its sales files are encrypted and a message demands payment in cryptocurrency before they are released. Which pair correctly names the threat and the CIA triad principle most directly affected?

1. Ransomware attack; availability
2. Phishing attack; confidentiality
3. Denial-of-service attack; integrity
4. Brute-force attack; confidentiality

Ransomware encrypts the victim's files and demands payment for the key, so authorised users lose access to their data: availability is the principle most directly affected. Phishing uses deceptive messages to obtain credentials, a denial-of-service attack floods a system with requests and also targets availability rather than integrity, and a brute-force attack guesses passwords repeatedly.

11. Under the shared responsibility model for an IaaS arrangement, which task normally remains with the customer rather than the cloud provider?

1. Maintaining the physical data centre building and its power supply
2. Securing the physical servers, storage devices and network cabling
3. Operating the virtualisation layer that hosts the customer's machines
4. Patching and securing the operating systems of its own virtual machines

In IaaS the provider is responsible for the physical facilities, the hardware and the virtualisation layer, while the customer remains responsible for what it installs on top, including the operating system, its patches, applications, data and user access. The three infrastructure tasks listed belong to the provider.

12. Which of the following is NOT a feature of a public blockchain network?

1. Participants may join without permission from an owner
2. A single administrator approves every transaction
3. Transactions are validated through a consensus mechanism
4. Many independent nodes each hold a copy of the ledger

A public blockchain is open and decentralised: anyone can join, the nodes validate transactions through a consensus mechanism, and each holds a copy of the distributed ledger. Approval of every transaction by a single administrator is the opposite of this design and is closer to a centralised database or a tightly controlled private network.

13. In a blockchain environment, a smart contract is:

1. a legal agreement that the parties sign with electronic signatures
2. a contract template kept in a cloud folder and edited by authorised staff
3. code on the ledger that runs by itself when agreed conditions are met
4. an insurance policy that covers losses from cyber attacks on the network

A smart contract is a program stored on the blockchain that executes automatically when predefined conditions are met, for example releasing a payment when goods are recorded as delivered. Its outcome is only as sound as its code. An electronically signed agreement is an ordinary contract, a template in a cloud folder is a document, and cyber insurance is an unrelated risk-transfer product.

14. Under the COBIT framework for IT governance, which statement correctly distinguishes governance from management?

1. The board evaluates, directs and monitors; managers plan, build and run
2. Both are performed by the same IT department with no board role
3. Governance is the daily running of systems; management is annual reporting
4. Governance concerns software alone; management concerns hardware alone

COBIT treats governance as distinct from management. Governance, normally the responsibility of the board of directors, evaluates stakeholder needs, sets direction and monitors performance, while management, led by executive management, plans, builds, runs and monitors activities in line with the direction set by the governance body. Treating both as one IT department process ignores the board role, and splitting them by software versus hardware or by daily running versus annual reporting is not how COBIT draws the line.

15. Compared with a public blockchain, a private (permissioned) blockchain typically:

1. lets any anonymous user join and validate transactions freely
2. is shared among several organisations with no single owner
3. removes the need for a consensus mechanism between its nodes
4. limits participation to approved parties under the owner's control

A private blockchain is operated by one organisation, which decides who may join, read and validate, so participation is limited to approved parties. Open participation describes a public network, shared governance among several organisations describes a consortium network, and private networks still use some form of agreement between validating nodes, so a consensus mechanism is not removed.

16. Al-Waha Furnishings subscribes to an accounting application hosted by a vendor and used through a web browser. The vendor manages the servers, operating system and application software; Al-Waha manages its own data and user access. This arrangement is an example of:

1. Platform as a Service (PaaS)
2. Software as a Service (SaaS)
3. Infrastructure as a Service (IaaS)
4. a hybrid cloud deployment model

In SaaS the vendor manages the whole stack, from servers to the finished application, and the customer only uses the software and manages its data and access. In PaaS the customer deploys its own applications on the vendor's platform, in IaaS it rents virtual infrastructure and manages the operating system, and a hybrid cloud is a deployment model that combines private and public clouds, which the facts do not describe.

17. Which of the following statements best expresses the law of demand?

1. A higher price shifts the demand curve for the good to the left
2. A higher price reduces the quantity demanded of the good
3. A higher price reduces the quantity supplied of the good
4. A higher income reduces the quantity demanded of the good

The law of demand states that, other things being equal, a higher price lowers the quantity demanded, which is a movement along the demand curve. A price change does not shift the demand curve, since shifts come from other factors such as income or tastes. Falling quantity supplied belongs to the opposite relationship of supply, and a link between income and quantity demanded depends on whether the good is normal or inferior, so it is not the law of demand.

18. In economics, the opportunity cost of a decision is:

1. the monetary price paid to obtain the resource used
2. the sum of the explicit costs recorded in the accounts
3. the value of the next-best alternative that is forgone
4. the extra cost of producing one more unit of output

Opportunity cost is the value of the best alternative given up when a choice is made, and it includes implicit as well as explicit costs. The money price paid and the explicit costs recorded in the accounts leave out forgone alternatives such as the owner's own time or capital. The extra cost of one more unit of output is marginal cost, a different concept.

19. In a competitive market, when the price is set above the equilibrium price, the result is:

1. a surplus, which puts downward pressure on the price
2. a shortage, which puts upward pressure on the price
3. a surplus, which puts upward pressure on the price
4. a shortage, which puts downward pressure on the price

Above the equilibrium price, the quantity supplied exceeds the quantity demanded, so a surplus appears and sellers cut the price toward equilibrium. A shortage arises only below the equilibrium price. A surplus cannot push the price up, and a shortage cannot push it down, so the mixed combinations are wrong.

20. Al-Waha Furnishings operates in the competitive market for wooden chairs. A new cutting machine, available to every producer, lowers the cost of making chairs, while consumer incomes and tastes stay the same. In the market for chairs, the equilibrium price and quantity change as follows:

1. price rises, quantity falls: the supply curve shifts to the left
2. price rises, quantity rises: the demand curve shifts to the right
3. price falls, quantity falls: the demand curve shifts to the left
4. price falls, quantity rises: the supply curve shifts to the right

A cost-reducing technology available to every producer shifts the market supply curve to the right. With demand unchanged, the new equilibrium has a lower price and a higher quantity. A leftward supply shift would follow a cost increase. Demand does not shift here, because incomes and tastes are unchanged, so the two combinations built on a demand shift are wrong.

21. Company X, a seller of printers, records the following data for one product: - price rises from SAR 20 to SAR 25; - quantity demanded falls from 800 to 640 units. Using percentage changes calculated on the initial values, the price elasticity of demand (absolute value) is:

1. 0.20
2. 0.25
3. 0.80
4. 1.25

The price rises by 25% (5 / 20) and the quantity demanded falls by 20% (160 / 800), so the absolute elasticity is 20% / 25% = 0.80 and demand is inelastic. A value of 0.20 uses the quantity change alone and 0.25 uses the price change alone. A value of 1.25 inverts the ratio, or equally uses the final values as the base (160 / 640 divided by 5 / 25).

22. When the demand for a product is price elastic (elasticity above 1 in absolute value), a rise in its price causes total revenue to:

1. fall, because quantity demanded falls by a larger percentage
2. rise, because quantity demanded falls by a smaller percentage
3. rise, because buyers are insensitive to the price change
4. stay unchanged, because the two percentage changes offset

With elastic demand, the percentage fall in quantity demanded exceeds the percentage rise in price, so total revenue (price x quantity) falls. Revenue would rise with a smaller percentage fall in quantity, which describes inelastic demand, where buyers are insensitive to price. Revenue would stay unchanged only when demand is unit elastic, with elasticity equal to 1.

23. Company X sells 1,000 units of a product at SAR 40. It raises the price by 10%, and the price elasticity of demand is -2.5. Assume the percentage change in quantity demanded equals the elasticity multiplied by the percentage change in price. Total revenue after the price rise is:

1. SAR 33,000
2. SAR 39,600
3. SAR 42,900
4. SAR 55,000

The new price is SAR 44 and the quantity falls by 25% (-2.5 x 10%) to 750 units, so revenue is 44 x 750 = SAR 33,000, below the initial SAR 40,000. SAR 39,600 assumes a 10% fall in quantity, ignoring the elasticity. SAR 42,900 treats the elasticity as a 2.5% fall. SAR 55,000 gives the quantity a 25% rise, ignoring the negative sign.

24. Ms Noura's monthly income rises from SAR 8,000 to SAR 9,200. Over the same period, the number of restaurant meals she buys rises from 20 to 26 per month. Using percentage changes calculated on the initial values, her income elasticity of demand for restaurant meals is:

1. 0.50
2. 1.54
3. 2.00
4. 2.30

Income rises by 15% (1,200 / 8,000) and meals rise by 30% (6 / 20), so the income elasticity is 30% / 15% = 2.00, a luxury good with elasticity above 1. A value of 0.50 inverts the ratio. A value of 1.54 uses the final quantity (26) as the base, and 2.30 uses the final income (9,200) as the base.

25. When the price of Brand A tea rises by 15%, the quantity demanded of Brand B tea rises by 6%, other things being equal. The cross elasticity of demand of Brand B with respect to the price of Brand A is:

1. -0.40
2. 0.40
3. 2.50
4. 9.00

Cross elasticity is the percentage change in the quantity demanded of Brand B divided by the percentage change in the price of Brand A: 6% / 15% = +0.40. The positive sign shows that the two brands are substitutes. A value of -0.40 has the wrong sign and would describe complements. A value of 2.50 inverts the ratio, and 9.00 subtracts the percentages instead of dividing them.

26. Which of the following is NOT a variable cost of Al-Waha Furnishings in the short run?

1. Timber purchased to make each table order
2. Piece-rate wages paid to the sanding team
3. Electricity used to run the cutting machines
4. Rent of the factory under a five-year lease

In the short run, a cost is fixed when it does not change with output, and rent under a five-year lease is paid whatever the production level. Timber, piece-rate wages and the electricity used by the machines all rise or fall with the number of units produced, so they are variable costs.

27. Economies of scale exist when:

1. total fixed cost falls as short-run output expands
2. short-run marginal cost falls as output expands
3. long-run average cost falls as the scale of output expands
4. long-run total cost falls as the scale of output expands

Economies of scale are a long-run concept: when all inputs can be varied, a larger scale of output lowers the cost per unit. Total fixed cost does not fall in the short run, since it is constant. A falling short-run marginal cost reflects increasing returns to a variable input, not the scale of the plant. Total cost in the long run rises with output even when the average cost falls.

28. In the long run, a perfectly competitive firm with free entry and exit earns:

1. zero economic profit, because price equals average total cost
2. positive economic profit, because price exceeds marginal cost
3. positive economic profit, because the firm restricts its output
4. negative economic profit, because entry keeps pushing price down

Free entry and exit drive the price to the minimum of average total cost in the long run, so the firm earns only a normal profit (zero economic profit). Positive economic profit would attract new entrants until it disappears; a competitive firm is a price taker that produces where price equals (not exceeds) marginal cost, and it cannot restrict output to raise the price. Losses would cause exit until the price returned to average cost.

29. A market with many sellers of differentiated products, low barriers to entry and some control over price by each seller is described as:

1. a perfectly competitive market
2. a pure monopoly with entry barriers
3. an oligopoly with a few large sellers
4. a monopolistically competitive market

Monopolistic competition combines many sellers and easy entry with product differentiation, which gives each seller some control over its own price. Perfect competition has identical products and price-taking firms. A pure monopoly has a single seller with entry barriers, and an oligopoly has a few large sellers.

30. Which condition holds at the output chosen by a profit-maximising monopolist?

1. price equals marginal cost, as in perfect competition
2. marginal revenue equals marginal cost at that output
3. total revenue reaches its maximum value at that output
4. average total cost reaches its minimum at that output

Every profit-maximising firm produces where marginal revenue equals marginal cost; the monopolist then charges the price read on the demand curve, which is above marginal cost. Setting price equal to marginal cost is the competitive outcome. Maximum total revenue occurs where marginal revenue is zero, and the minimum of average total cost is the efficient scale, not the profit-maximising point.

31. A formal agreement among a few competing producers to fix prices or limit output is known as:

1. a cartel among the producers
2. a merger of the producers
3. a franchise of the producers
4. a conglomerate of the producers

A cartel is a formal agreement among oligopolists to coordinate prices or output so as to act like a single monopolist. A merger combines firms into one legal entity, a franchise licenses a brand to independent operators, and a conglomerate groups firms active in unrelated industries.

32. Nominal GDP is the value of final output measured:

1. at the constant prices of a base year
2. after deducting depreciation of capital
3. at the prices of the year of production
4. after adding net income from abroad

Nominal GDP values the final goods and services produced in a year at that year's own prices, so it moves with both output and prices. Valuation at constant base-year prices defines real GDP, not nominal GDP. Deducting depreciation gives net domestic product, and adding net income from abroad moves from GDP to gross national income.

33. The nominal GDP of an economy is SAR 1,800 billion and its GDP deflator is 90 (base year = 100). Real GDP is:

1. SAR 1,620 billion
2. SAR 1,710 billion
3. SAR 1,800 billion
4. SAR 2,000 billion

Real GDP equals nominal GDP divided by the deflator expressed as a ratio: 1,800 / 0.90 = SAR 2,000 billion, higher than nominal GDP because the price level is below the base year. SAR 1,620 billion multiplies instead of dividing. SAR 1,710 billion subtracts the index number, and SAR 1,800 billion is the unadjusted nominal figure.

34. In a given year, nominal GDP is SAR 2,100 billion and real GDP, at base-year prices, is SAR 2,500 billion. The GDP deflator, to the nearest whole number, is:

1. 19
2. 84
3. 119
4. 400

The GDP deflator is nominal GDP divided by real GDP, multiplied by 100: 2,100 / 2,500 x 100 = 84, which shows prices below the base year. A value of 119 inverts the ratio. A value of 19 is the gap between real and nominal GDP as a percentage of nominal GDP, and 400 is the raw difference in SAR billion.

35. Which of the following is NOT a phase of the business cycle?

1. Expansion, with rising output and employment
2. Peak, where output reaches its cyclical high
3. Trough, where output reaches its cyclical low
4. Devaluation, where the exchange rate is lowered

The business cycle moves through expansion, peak, contraction and trough. Devaluation is an official lowering of a fixed exchange rate, a policy action unrelated to the phases of output. Expansion, peak and trough are phases of the cycle.