Edexcel GCSE: Business Studies Quiz- III

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Quizzes Created: 12 | Total Attempts: 17,881
Questions: 20 | Attempts: 473

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Edexcel GCSE: Business Studies Quiz- III - Quiz

20 questions = 40 marks


Questions and Answers
  • 1. 

    Businesses supply goods and services to consumers. Which of the following is an example of a service? Select one answer:

    • A.

      A magazine

    • B.

      An MP3 player

    • C.

      A train journey

    • D.

      A bottle of water

    Correct Answer
    C. A train journey
    Explanation
    A train journey is an example of a service because it is an intangible offering provided by a business to consumers. Unlike physical goods, a train journey cannot be held or possessed, but it is an experience or action that is provided to fulfill a specific need or desire of the consumer.

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  • 2. 

    Which two of the following are examples of commodities which might be used by a bakery? Select two answers:

    • A.

      Wheat used in producing bread

    • B.

      Rent of premises

    • C.

      Electricity used by ovens

    • D.

      Sugar used to produce biscuits

    • E.

      Wages paid to workers

    Correct Answer(s)
    A. Wheat used in producing bread
    D. Sugar used to produce biscuits
    Explanation
    The bakery uses wheat to produce bread and sugar to produce biscuits. These two items are examples of commodities that are directly used in the production process of bakery products. The rent of premises, electricity used by ovens, and wages paid to workers are not commodities but rather expenses or costs associated with running the bakery.

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  • 3. 

    Which three of the following are possible advantages to an individual of starting a business as a franchise rather than as a sole trader? Select three answers:

    • A.

      The franchisor pays the franchisee to set up the business

    • B.

      Franchises pay lower rates of Value Added Tax than sole traders

    • C.

      A franchise is likely to be an established business

    • D.

      The franchisee has complete freedom to make their own decisions

    • E.

      The franchisor provides continued help and support

    • F.

      The franchisee can benefit from national advertising of the franchise

    Correct Answer(s)
    C. A franchise is likely to be an established business
    E. The franchisor provides continued help and support
    F. The franchisee can benefit from national advertising of the franchise
    Explanation
    Starting a business as a franchise rather than as a sole trader can have several advantages for an individual. Firstly, a franchise is likely to be an established business, which means that it already has a recognized brand, customer base, and proven business model. This can reduce the risks and uncertainties associated with starting a business from scratch. Secondly, the franchisor provides continued help and support to the franchisee, which can include training, marketing assistance, and ongoing guidance. This support can help the franchisee navigate challenges and increase their chances of success. Lastly, the franchisee can benefit from national advertising of the franchise, which can help attract customers and increase brand awareness.

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  • 4. 

    Using the chart, calculate the net cash flow for April to October. Select one answer:

    • A.

      –£3 000

    • B.

      £10 000

    • C.

      £19 000

    • D.

      £23 000

    Correct Answer
    C. £19 000
    Explanation
    To calculate the net cash flow for April to October, we need to add up the cash flows for each month. Looking at the chart, we can see that the cash flows for each month are as follows: April: £5,000, May: £7,000, June: £8,000, July: £6,000, August: £4,000, September: £2,000, October: -£3,000. Adding these values together, we get £19,000. Therefore, the net cash flow for April to October is £19,000.

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  • 5. 

    Monthly sales at PrintZone remained unchanged from April to October. Given this fact, which two of the following are possible reasons for the worsening in cash flow position of the business during this time? Select two answers:

    • A.

      Increased spending on stocks of ink cartridges and printers by PrintZone

    • B.

      Change in the interest rate on PrintZone’s bank loan from 5% to 4%

    • C.

      Monthly rent on PrintZone’s premises changing from £700 to £650

    • D.

      More favourable trade credit terms provided by suppliers to PrintZone

    • E.

      PrintZone’s monthly advertising costs changing from £800 to £1400

    Correct Answer(s)
    A. Increased spending on stocks of ink cartridges and printers by PrintZone
    E. PrintZone’s monthly advertising costs changing from £800 to £1400
    Explanation
    The worsening in cash flow position of the business during this time could be due to the increased spending on stocks of ink cartridges and printers by PrintZone, as this would result in higher expenses and potentially lower cash reserves. Additionally, the increase in PrintZone's monthly advertising costs from £800 to £1400 could also contribute to the worsening cash flow position, as it would mean higher expenses and potentially lower profits.

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  • 6. 

    Which two of the following are the most likely ways that PrintZone Ltd could improve its cash flow position? Select two answers:

    • A.

      Use a mind map to improve financial planning

    • B.

      Carry out quantitative market research

    • C.

      Increase revenue by improving sales

    • D.

      Negotiate lower prices with suppliers

    • E.

      Employ two more full-time members of staff

    Correct Answer(s)
    C. Increase revenue by improving sales
    D. Negotiate lower prices with suppliers
    Explanation
    PrintZone Ltd could improve its cash flow position by increasing revenue through improving sales. This could be achieved by implementing effective marketing strategies, targeting new customer segments, or improving customer retention. Additionally, negotiating lower prices with suppliers could help reduce costs and improve the company's cash flow position. By securing better pricing terms, PrintZone Ltd can increase its profit margin and have more cash available for other business needs.

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  • 7. 

    Lisa Gallagher believes there is a growing market for gardening services as people do not have enough time to maintain their gardens. She has conducted some market research to find out if her business idea will work and has prepared the following summary of her findings. Would you consider hiring Lisa? Number of responses Yes 134 No 66 Lisa used the questionnaire (see Table 1) to estimate the number of potential customers for her business. This approach is an example of which type of market research? Select one answer:

    • A.

      Market mapping

    • B.

      Secondary

    • C.

      Qualitative

    • D.

      Primary

    Correct Answer
    D. Primary
    Explanation
    The correct answer is primary research. Primary research refers to the collection of original data directly from the source, in this case, from potential customers through the questionnaire. Lisa conducted her own research to gather information specifically for her business idea, making it primary research. This is different from secondary research, which involves using existing data and sources.

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  • 8. 

    Table 2 What is the most important factor in the decision to choose a gardening service? Number of responses as a percentage Price of the service 12% Quality of the work 41% Advertisement in the local paper 16% Customer service 20% Whether the business is local 11% According to Table 2, which element of the marketing mix should Lisa focus on in her business? Select one answer:

    • A.

      Place

    • B.

      Price

    • C.

      Product

    • D.

      Promotion

    Correct Answer
    C. Product
    Explanation
    Based on the given table, the most important factor in the decision to choose a gardening service is the quality of the work, which accounts for 41% of the responses. Therefore, Lisa should focus on improving the quality of her gardening service in order to attract more customers.

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  • 9. 

    Table 3 shows details of the 200 households which indicated they were interested in using Lisa’s business. Type of household Percentage Single - no children 7% Single - with children 11% Single - pensioner 28% Couple - no children 9% Couple - with children 31% Figure 1 Lisa aims to provide three levels of service for local people: Service 1 – cutting lawns and generally tidying garden areas = 49% chose Service 2 – planting and maintaining new planted areas = 29% chose Service 3 – garden redesign, including planning, preparation and all planting = 10% chose 12% chose a combination of the three types Study Table 3 and Figure 1. According to this information, what three conclusions can Lisa draw from the data? Select three answers:   Couple - pensioner 14

    • A.

      100% more single pensioners than pensioner couples are interested in Lisa’s business

    • B.

      Lisa should not offer Services 2 or 3 as there is no demand

    • C.

      Her main two market segments are couples with children and single pensioners

    • D.

      More than half of people prefer something other than Service 1

    • E.

      Couples with children are more likely to use Service 1

    • F.

      30% more couples with children than single pensioners are interested in Lisa’s business

    Correct Answer(s)
    A. 100% more single pensioners than pensioner couples are interested in Lisa’s business
    C. Her main two market segments are couples with children and single pensioners
    D. More than half of people prefer something other than Service 1
    Explanation
    From the data provided in Table 3 and Figure 1, Lisa can draw the following conclusions:
    1. There is 100% more single pensioners than pensioner couples who are interested in Lisa's business.
    2. Her main two market segments are couples with children and single pensioners.
    3. More than half of the people prefer something other than Service 1.

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  • 10. 

    Which two of the following are strategies which Lisa might use to help her business achieve high levels of added value? Select two answers:

    • A.

      Ensure a profit is made on every job completed

    • B.

      Introduce a loyalty scheme to give regular customers price discounts

    • C.

      Visit every customer 48 hours after work completed to take feedback

    • D.

      Develop a strong brand awareness in the local area

    • E.

      Compare the prices of Lisa’s competitors every month

    Correct Answer(s)
    B. Introduce a loyalty scheme to give regular customers price discounts
    C. Visit every customer 48 hours after work completed to take feedback
    Explanation
    Lisa can achieve high levels of added value by introducing a loyalty scheme to give regular customers price discounts. This will incentivize customers to continue using her services and build customer loyalty. Additionally, by visiting every customer 48 hours after work completed to take feedback, Lisa can gather valuable information about customer satisfaction and make improvements to her business based on their feedback. These strategies will help Lisa differentiate her business and provide added value to her customers.

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  • 11. 

    Identify three conclusions that can be drawn from the chart. Select three answers:

    • A.

      Actual total costs increased by 40% between April and May

    • B.

      Actual profit was higher than forecast profit in May

    • C.

      Actual revenue fell by more than 10% between June and July

    • D.

      The fall in profit between June and July was most likely caused by a fall in sales

    • E.

      The forecast profit for the period April to July was £24 000

    • F.

      Revenue forecast for May was inaccurate

    Correct Answer(s)
    C. Actual revenue fell by more than 10% between June and July
    D. The fall in profit between June and July was most likely caused by a fall in sales
    E. The forecast profit for the period April to July was £24 000
    Explanation
    Three conclusions that can be drawn from the chart are: actual revenue fell by more than 10% between June and July, the fall in profit between June and July was most likely caused by a fall in sales, and the forecast profit for the period April to July was £24,000.

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  • 12. 

    Which of the following would best explain the lower revenue in July compared to the forecast figure? Select one answer:

    • A.

      Improvement in the business cycle

    • B.

      An increase in interest rates

    • C.

      Less competition in the market

    • D.

      Increased promotion by Timbles

    Correct Answer
    B. An increase in interest rates
    Explanation
    An increase in interest rates can lead to lower revenue in July compared to the forecast figure because it can discourage consumer spending and borrowing. Higher interest rates make it more expensive for consumers to take out loans or use credit cards, which can reduce their purchasing power. This can result in decreased sales and revenue for businesses, as consumers may choose to save their money or reduce their spending.

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  • 13. 

    Timbles decided to increase its prices by 10% but sales stayed the same. Which two of the following are possible effects of the decision by Timbles to increase the price it charges for its product? Select two answers:

    • A.

      Increased customer satisfaction

    • B.

      Increased total revenue

    • C.

      Higher fixed costs

    • D.

      Increased interest payments

    • E.

      Higher profit for every product sold

    Correct Answer(s)
    B. Increased total revenue
    E. Higher profit for every product sold
    Explanation
    When Timbles increases the price of its product, it can potentially lead to an increase in total revenue because the higher price per product can offset any decrease in sales volume. Additionally, higher prices can result in higher profit for every product sold, as long as the increase in price is greater than the increase in costs. Therefore, the two possible effects of Timbles' decision to increase prices are increased total revenue and higher profit for every product sold.

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  • 14. 

    A business has the following cost and revenue information during one month: Costs: • £10 000 - raw materials imported from the USA • £ 7 000 - raw materials from the UK • £11 000 - fixed costs Revenue: • £39 000 In this month the exchange rate between the pound and the dollar was £1 = $1.50 What profit/loss does the business make in this month? Select one answer:

    • A.

      £11 000

    • B.

      £28 000

    • C.

      £29 000

    • D.

      £67 000

    Correct Answer
    A. £11 000
    Explanation
    The business makes a profit of £11,000 in this month. To calculate the profit, we need to subtract the total costs from the revenue. The total costs include the cost of raw materials imported from the USA (£10,000), the cost of raw materials from the UK (£7,000), and the fixed costs (£11,000), which sum up to £28,000. Subtracting this from the revenue of £39,000 gives us a profit of £11,000.

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  • 15. 

    A business has the following cost and revenue information during one month: Costs: • £10 000 - raw materials imported from the USA • £ 7 000 - raw materials from the UK • £11 000 - fixed costs Revenue: • £39 000 In this month the exchange rate between the pound and the dollar was £1 = $1.50 In the next month the business imports the same amount of raw materials from the USA. The exchange rate has changed to £1 = $1.60. Assuming all other data remains the same, what effect does this change have on the profit level? Select one answer: The profit level will

    • A.

      Decrease by £1 350

    • B.

      Remain the same

    • C.

      Increase by £625

    • D.

      Increase by £1 600

    Correct Answer
    C. Increase by £625
    Explanation
    The change in exchange rate from £1 = $1.50 to £1 = $1.60 means that the business will now have to spend less in pounds to import the same amount of raw materials from the USA. This will result in a decrease in costs, increasing the profit level. The decrease in costs can be calculated by subtracting the difference in the cost of raw materials imported from the USA at the two exchange rates (£10,000 - £7,000 = £3,000) and converting it to dollars using the new exchange rate (£3,000 * $1.60 = $4,800). Converting the $4,800 back to pounds using the original exchange rate (£4,800 / $1.50 = £3,200) gives us the increase in profit (£7,000 - £3,200 = £3,800). This increase in profit is equal to £625, which is the correct answer.

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  • 16. 

    Martin Hudson runs Buckingham Ltd, a business which sells high quality office furniture to other businesses. Martin needs to think creatively about how he can improve his business. He has used lateral thinking techniques to help him do this. Successful entrepreneurs need to think creatively and make connections between ideas. What is the diagram which can be used to record words and ideas connected to a central word or idea? Select one answer:

    • A.

      Spreadsheet

    • B.

      Market map

    • C.

      Scatter diagram

    • D.

      Mindmap

    Correct Answer
    D. Mindmap
    Explanation
    A mindmap is a diagram that can be used to record words and ideas connected to a central word or idea. It is a visual representation that allows for the exploration and organization of thoughts and concepts. This tool is often used by individuals who need to think creatively and make connections between ideas, making it a suitable choice for Martin Hudson to use in improving his business.

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  • 17. 

    Changes in the business cycle can have important impacts on small businesses. Identify three likely effects on a business like Buckingham of a downturn in the business cycle Select three answers:

    • A.

      Higher sales due to rising consumer incomes

    • B.

      Lower fixed costs due to lower interest rates

    • C.

      Less risk of the business becoming insolvent

    • D.

      More difficult to recruit employees

    • E.

      Lower demand due to business closures

    • F.

      Lower prices on goods bought from suppliers

    Correct Answer(s)
    B. Lower fixed costs due to lower interest rates
    E. Lower demand due to business closures
    F. Lower prices on goods bought from suppliers
    Explanation
    A downturn in the business cycle can lead to lower fixed costs due to lower interest rates. This is because during an economic downturn, central banks often lower interest rates to stimulate borrowing and spending, which can result in lower interest payments for businesses.

    Additionally, a downturn in the business cycle can result in lower demand due to business closures. When the economy is struggling, businesses may be forced to close down due to lack of customers or financial difficulties, leading to a decrease in overall demand for goods and services.

    Furthermore, a downturn in the business cycle can lead to lower prices on goods bought from suppliers. As businesses experience a decrease in demand, they may negotiate lower prices with their suppliers in order to reduce costs and maintain profitability.

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  • 18. 

    Martin Hudson runs Buckingham Ltd, a business which sells high quality office furniture to other businesses. Martin needs to think creatively about how he can improve his business. He has used lateral thinking techniques to help him do this.   Which three of the following are taxes which businesses like Buckingham may have to pay? Select three answers:

    • A.

      National Insurance Contributions

    • B.

      Value Added Tax

    • C.

      Business Tax

    • D.

      Minimum Wage

    • E.

      Corporation Tax

    • F.

      Distribution Tax

    Correct Answer(s)
    A. National Insurance Contributions
    B. Value Added Tax
    E. Corporation Tax
    Explanation
    National Insurance Contributions, Value Added Tax, and Corporation Tax are all taxes that businesses like Buckingham Ltd may have to pay. National Insurance Contributions are payments made by both employers and employees to fund state benefits such as the state pension and healthcare. Value Added Tax is a tax on the value added at each stage of production and distribution. Corporation Tax is a tax on the profits of limited companies. These taxes are all relevant to businesses and can have an impact on their financial performance.

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  • 19. 

    Which two of the following are likely to be the most effective methods that Buckingham might use to deliver high levels of customer satisfaction? Select two answers

    • A.

      Securing repeat purchases by customers

    • B.

      Fulfilling customer orders accurately

    • C.

      Setting non-financial objectives

    • D.

      Introduce a 24-hour customer help-line

    • E.

      Advertise on local radio stations

    Correct Answer(s)
    B. Fulfilling customer orders accurately
    D. Introduce a 24-hour customer help-line
    Explanation
    Fulfilling customer orders accurately is likely to be an effective method for delivering high levels of customer satisfaction because it ensures that customers receive exactly what they ordered, leading to a positive experience. Introducing a 24-hour customer help-line is also likely to be effective as it provides round-the-clock support to customers, addressing their concerns and resolving any issues they may have, thereby enhancing their satisfaction.

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