That's the stupidest way possible to conduct a selection exam. Either no-one can beat the dragon, and everyone fails; or there's at least one, or a small group, that can, and then what? Everyone pass? Or only those who kill the dragon? If the overpowered MC does it alone in 10 sec, everyone else fails? Or everyone pass, including those that would have failed the normal 1 on 1 assessment?
Why am I questionning this middle schooler's idea of a story anyway?