Economic aspects of herbal cosmetics MCQs With Answer

Economic aspects of herbal cosmetics MCQs With Answer

This quiz set is designed for M.Pharm students studying the economic dimensions of herbal cosmetics (MPG 204T). It provides 20 focused multiple-choice questions that probe cost structures, supply-chain risks, certification and regulatory expenses, pricing strategies, feasibility and financial metrics, and sustainable sourcing considerations pertinent to herbal cosmetic products. Each question reflects real-world decisions—raw material sourcing, standardization, extraction technology, certification, marketing, and export documentation—and aims to strengthen analytical ability needed for project work, product development, and commercialization. Use these MCQs to test conceptual understanding and prepare for examinations or industry-facing feasibility analyses.

Q1. Which cost component typically represents the largest portion of cost of goods sold (COGS) for many herbal cosmetic formulations?

• Packaging materials
• Marketing and promotion
• Raw herbal materials and actives
• Sales commission

Correct Answer: Raw herbal materials and actives

Q2. What does GACP stand for, a guideline frequently used to assure consistent quality of plant-derived raw materials?

• General Agreement on Commodity Production
• Good Agricultural and Collection Practices
• Guidelines for Analytical Cosmetic Processes
• Global Association of Cosmetic Producers

Correct Answer: Good Agricultural and Collection Practices

Q3. Which certification specifically targets natural and organic cosmetics standards commonly recognized in European markets?

• ISO 9001
• COSMOS
• GMP
• CE Mark

Correct Answer: COSMOS

Q4. Economies of scale primarily reduce which of the following in manufacturing herbal cosmetics?

• Fixed cost per unit
• Raw material price volatility
• Regulatory approval time
• Marketing effectiveness

Correct Answer: Fixed cost per unit

Q5. Break-even analysis in a herbal cosmetics project is mainly used to determine:

• The maximum price the market will accept
• The volume at which total revenue equals total cost
• The environmental impact of production
• The required quality control tests

Correct Answer: The volume at which total revenue equals total cost

Q6. Which factor most commonly causes seasonal variability and supply risk for botanical raw materials?

• Patent expiration
• Seasonal harvesting and climatic variation
• Consumer preference shifts
• Online distribution channels

Correct Answer: Seasonal harvesting and climatic variation

Q7. Which extraction technology often requires higher initial capital but yields extracts with low solvent residues and good stability?

• Hydrodistillation
• Cold maceration
• Supercritical CO2 extraction
• Steam filtration

Correct Answer: Supercritical CO2 extraction

Q8. Adopting “green” extraction technologies in herbal cosmetics production typically results in which economic trade-off?

• Lower capital expenditure but much higher solvent costs
• Higher initial capital expenditure but lower long-term operating and disposal costs
• Immediate reduction of regulatory inspections
• Higher labor costs but lower raw material needs

Correct Answer: Higher initial capital expenditure but lower long-term operating and disposal costs

Q9. Demand for premium branded herbal cosmetics is generally characterized by which price elasticity compared with commodity herbal extracts?

• More elastic than commodity extracts
• Equally elastic as commodity extracts
• Relatively inelastic compared with commodity extracts
• Perfectly elastic

Correct Answer: Relatively inelastic compared with commodity extracts

Q10. Which certificate is commonly required by importing authorities or distributors to show a cosmetic product may be sold legally in the exporting country?

• Good Agricultural and Collection Practices certificate
• Certificate of Free Sale (CFS)
• PCT international patent filing
• Hazardous Waste Manifest

Correct Answer: Certificate of Free Sale (CFS)

Q11. Which cost is directly associated with ensuring batch-to-batch standardization of herbal active ingredients?

• Analytical testing and stability studies
• Retail shelf display fees
• General office utilities
• Trademark registration fees

Correct Answer: Analytical testing and stability studies

Q12. In valuation of a herbal cosmetics company, which intangible asset often contributes most to premium pricing and brand loyalty?

• Factory land
• Trademark and brand reputation
• Raw material inventory
• Packaging machinery

Correct Answer: Trademark and brand reputation

Q13. Compliance with Access and Benefit-Sharing provisions (e.g., Nagoya Protocol) primarily affects which economic aspect of herbal cosmetic production?

• Short-term manufacturing yields
• Costs and contractual arrangements for sourcing genetic resources and benefit-sharing with local communities
• Packaging regulatory requirements
• Direct consumer marketing budgets

Correct Answer: Costs and contractual arrangements for sourcing genetic resources and benefit-sharing with local communities

Q14. Life cycle assessment (LCA) applied to a herbal cosmetic product helps managers evaluate:

• The chemical structure of actives
• The environmental impact across raw material sourcing, production, distribution and disposal
• The brand’s social media strategy
• The clinical efficacy magnitude

Correct Answer: The environmental impact across raw material sourcing, production, distribution and disposal

Q15. Using a contract manufacturer for an herbal cosmetics line primarily provides which economic advantage?

• Complete control over raw material cultivation
• Lower initial capital investment and faster time-to-market
• Guaranteed exclusive ingredient supply
• Exemption from regulatory compliance

Correct Answer: Lower initial capital investment and faster time-to-market

Q16. Sensitivity analysis in a feasibility study for a new herbal cosmetic product is used to:

• Determine the biological activity of an extract
• Assess how changes in key variables (price, costs, volume) affect project outcomes like NPV
• Replace the need for market research
• Decide on final packaging color

Correct Answer: Assess how changes in key variables (price, costs, volume) affect project outcomes like NPV

Q17. Which pricing strategy is most appropriate if a company wants to quickly capture market share for a new, mass-market herbal cream?

• Price skimming (high initial price)
• Penetration pricing (low initial price)
• Prestige pricing
• Cost-plus pricing at premium margin

Correct Answer: Penetration pricing (low initial price)

Q18. Before placing a cosmetic product on the EU market, companies must complete which regulatory step related to product information?

• Obtain FDA approval
• Notification through the Cosmetic Products Notification Portal (CPNP)
• Register a clinical trial with EMA
• File a food additive dossier

Correct Answer: Notification through the Cosmetic Products Notification Portal (CPNP)

Q19. Poor batch-to-batch consistency in herbal cosmetics most directly increases which business risk?

• Lower raw material procurement costs
• Higher rates of product returns, recalls and reputation damage
• Reduced need for quality control
• Faster regulatory approvals

Correct Answer: Higher rates of product returns, recalls and reputation damage

Q20. Which financial metric expresses profitability relative to the amount of capital invested in a herbal cosmetics project?

• Current ratio
• Inventory turnover
• Return on Investment (ROI)
• Days Sales Outstanding (DSO)

Correct Answer: Return on Investment (ROI)

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