- A
Microsoft 365 E5
Why wrong: Microsoft 365 E5 includes all required services but is more expensive than necessary. While it would work, E3 is the minimum sufficient option.
- B
Microsoft 365 E3
Microsoft 365 E3 includes Exchange Online, SharePoint Online, Teams, and Microsoft Entra ID P1. It has no user limit, making it the correct choice for 500 users.
- C
Microsoft 365 Business Basic
Why wrong: Microsoft 365 Business Basic does not include Entra ID P1; it only includes the basic identity features. It also lacks some desktop apps.
- D
Microsoft 365 Business Premium
Why wrong: Microsoft 365 Business Premium includes all required services but is limited to 300 users. With 500 users, this plan cannot be used.
Question 794 of 985
Best Microsoft 365 Plan for 500 Users with Entra ID P1
This MS-900 practice question tests your understanding of describe microsoft 365 pricing, licensing, and support. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A company has 500 users and is considering moving to Microsoft 365. They need to ensure that all users have access to Exchange Online, SharePoint Online, and Teams, and they want to use Microsoft Entra ID P1 for identity management. Which Microsoft 365 subscription should they choose?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Microsoft 365 E3
Microsoft 365 E3 includes Exchange Online, SharePoint Online, Teams, and Microsoft Entra ID P1, meeting all stated requirements. Unlike Business Premium, E3 has no user limit, making it suitable for 500 users.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Microsoft 365 E5
Why it's wrong here
Microsoft 365 E5 includes all required services but is more expensive than necessary. While it would work, E3 is the minimum sufficient option.
- ✓
Microsoft 365 E3
Why this is correct
Microsoft 365 E3 includes Exchange Online, SharePoint Online, Teams, and Microsoft Entra ID P1. It has no user limit, making it the correct choice for 500 users.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Microsoft 365 Business Basic
Why it's wrong here
Microsoft 365 Business Basic does not include Entra ID P1; it only includes the basic identity features. It also lacks some desktop apps.
- ✗
Microsoft 365 Business Premium
Why it's wrong here
Microsoft 365 Business Premium includes all required services but is limited to 300 users. With 500 users, this plan cannot be used.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Candidates often overlook the 300-user limit on Microsoft 365 Business plans and assume Business Premium is sufficient for any organization size. In this scenario, the company has 500 users, so an Enterprise plan (E3) is required.
Detailed technical explanation
How to think about this question
Microsoft Entra ID P1 provides features such as Conditional Access, self-service password reset, and dynamic groups, which are essential for modern identity management. In Microsoft 365 Business Premium, Entra ID P1 is bundled, whereas in E3 it requires an additional license (e.g., Enterprise Mobility + Security E3). The 500-user scenario fits within the Business Premium licensing model, which supports up to 300 users per tenant, but the question does not enforce this limit, making Business Premium the most cost-effective option with all required services.
KKey Concepts to Remember
- Read the scenario before looking for a memorised answer.
- Find the constraint that changes the correct option.
- Eliminate answers that are true in general but not in this case.
TExam Day Tips
- Watch for words such as best, first, most likely and least administrative effort.
- Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A company's IT admin needs to give a contractor read-only access to production logs without sharing account credentials. Using role-based access control (RBAC) and temporary scoped permissions — not a permanent shared password — is the correct pattern. Questions like this test whether you can apply least-privilege access across cloud identity services.
What to study next
Got this wrong? Here's your next step.
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FAQ
Questions learners often ask
What does this MS-900 question test?
Describe Microsoft 365 pricing, licensing, and support — This question tests Describe Microsoft 365 pricing, licensing, and support — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Microsoft 365 E3 — Microsoft 365 E3 includes Exchange Online, SharePoint Online, Teams, and Microsoft Entra ID P1, meeting all stated requirements. Unlike Business Premium, E3 has no user limit, making it suitable for 500 users.
What should I do if I get this MS-900 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
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Last reviewed: Jun 24, 2026
This MS-900 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the MS-900 exam.
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