GCSE Edexcel: Business Studies Quiz- III
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Which one of the following is an example of primary market research? Select one answer:
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Government statistics.
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Newspaper articles.
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Survey of customers.
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Internet research.
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This GCSE EDEXCEL Business Studies Quiz III evaluates understanding of primary market research, key features of enterprise, franchise disadvantages, financial calculations for a business, and effects of exchange rate changes. It is designed to enhance business acumen and decision-making skills.
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- 2.
Which two of the following are key features of enterprise? Select two answers:
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Employing at least one worker.
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Having the right qualifications to run a business.
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Being prepared to take risks.
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Having a willingness to take on new ventures.
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Registering as a private limited company.
Correct Answer(s)
A. Being prepared to take risks.
A. Having a willingness to take on new ventures.Explanation
The key features of enterprise include being prepared to take risks and having a willingness to take on new ventures. These features are essential for any business to succeed and grow. By being prepared to take risks, entrepreneurs are willing to step out of their comfort zones and make bold decisions that can potentially lead to success. Similarly, having a willingness to take on new ventures demonstrates the ability to adapt to changing market conditions and explore new opportunities for growth. These features are crucial for the success and growth of any enterprise.Rate this question:
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- 3.
Identify two possible disadvantages of operating a business as a franchise. Select two answers:
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The cost of the initial investment can be high.
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Franchises have to take out a patent.
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Franchises have to pay a higher rate of Value Added Tax (VAT).
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A lack of freedom for the owner in making decisions.
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It can access help and advice from the franchise owner.
Correct Answer(s)
A. The cost of the initial investment can be high.
A. A lack of freedom for the owner in making decisions.Explanation
Operating a business as a franchise can have two possible disadvantages. Firstly, the cost of the initial investment can be high, as franchisees are required to pay fees and royalties to the franchise owner. This can be a significant financial burden for small business owners. Secondly, franchising can limit the freedom of the owner in making decisions. Franchisees must adhere to the guidelines and standards set by the franchise owner, which can restrict their autonomy and ability to make independent choices for their business.Rate this question:
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- 4.
Hancock’s is a small pottery business which specialises in garden plant pots. It has the following financial information for one month. Number of pots produced and sold: 150 Average price per pot: £10 Variable cost per pot: £2 Fixed costs per month: £500 What are the total costs for Hancock’s during the month? Select one answer:
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£450
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£650
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£800
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£1500
Correct Answer
A. £800Explanation
To calculate the total costs, we need to consider both the fixed costs and the variable costs. The fixed costs for Hancock's are given as £500 per month. The variable cost per pot is £2, and the number of pots produced and sold is 150. Therefore, the variable costs for the month would be £2 x 150 = £300. To find the total costs, we add the fixed costs and the variable costs: £500 + £300 = £800. Therefore, the correct answer is £800.Rate this question:
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- 5.
The owners of Hancock’s decide to try to increase profit. Which three of the actions below will most likely achieve this, assuming it sells the same number of pots each month? Select three answers:
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Buy cheaper raw materials used to make its products.
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Increase the sales price of an average pot to £11.
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Increase the number of workers employed during the weekend.
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Buy more expensive raw materials used to make its pots.
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Increase advertising expenditure.
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Relocate to cheaper premises.
Correct Answer(s)
A. Buy cheaper raw materials used to make its products.
A. Increase the sales price of an average pot to £11.
A. Relocate to cheaper premises.Explanation
Buying cheaper raw materials will reduce the cost of production, leading to higher profit margins. Increasing the sales price of an average pot will directly increase revenue per unit sold, also contributing to higher profits. Relocating to cheaper premises will reduce overhead expenses, further increasing profitability.Rate this question:
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- 6.
Marcus Borega is a sole trader. His business imports high quality toy cars from the USA. His main customers are collectors and sports car enthusiasts in the UK. The exchange rate is very important for the business. When Marcus started the business the exchange rate was £1 = $2. After one year in business, the exchange rate changed to £1 = $1.70. Marcus decided to keep the prices he charged his customers the same. Identify two possible effects of the change in the exchange rate on the business. Select two answers:
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Lower fixed costs for the business.
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The costs of buying the toy cars from the USA will rise.
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Makes it easier for Marcus to sell his toy cars in the UK.
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Increased added value on each toy car sold by Marcus.
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Marcus will make lower profits on each sale.
Correct Answer(s)
A. The costs of buying the toy cars from the USA will rise.
A. Marcus will make lower profits on each sale.Explanation
The change in the exchange rate from £1 = $2 to £1 = $1.70 means that Marcus will have to spend more money to buy the toy cars from the USA. This will increase the costs of buying the toy cars for his business. Additionally, since Marcus decided to keep the prices he charged his customers the same, he will be making lower profits on each sale due to the decrease in the exchange rate.Rate this question:
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- 7.
Marcus used the idea of deliberate creativity to develop his ideas for the business. Deliberate creativity involves which two of the following techniques? Select two answers:
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Starting a business which provides a service.
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Brainstorming business ideas.
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Drawing lists to compare options.
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Producing a cash flow forecast.
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Preparing a business plan.
Correct Answer(s)
A. Brainstorming business ideas.
A. Drawing lists to compare options.Explanation
Marcus used deliberate creativity to develop his ideas for the business. Deliberate creativity involves brainstorming business ideas and drawing lists to compare options. These techniques help in generating and evaluating different ideas, allowing Marcus to come up with innovative and unique business concepts. Starting a business which provides a service, producing a cash flow forecast, and preparing a business plan are not mentioned as techniques of deliberate creativity in the given context.Rate this question:
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- 8.
A sole trader has unlimited liability. Identify one disadvantage of unlimited liability for a sole trader such as Marcus. Select one answer:
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The need to pay higher taxes.
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Less control of the business.
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The need to share profit with other shareholders.
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Risk of losing personal possessions.
Correct Answer
A. Risk of losing personal possessions.Explanation
Unlimited liability means that the sole trader is personally responsible for all debts and liabilities of the business. This means that if the business fails or incurs significant debts, the sole trader's personal assets, such as their house or car, can be seized to repay those debts. This poses a significant risk to the sole trader as they could potentially lose their personal possessions if the business fails.Rate this question:
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- 9.
Which two of the following taxes will Marcus have to pay in the course of running his business? Select two answers:
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Corporation tax.
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Distribution tax.
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Income tax.
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Labour tax.
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National Insurance contributions.
Correct Answer(s)
A. Income tax.
A. National Insurance contributions.Explanation
Marcus will have to pay income tax and national insurance contributions in the course of running his business. Income tax is a tax on the profits or income generated by the business, while national insurance contributions are social security payments made by both the employer and employee to fund various benefits and services. Corporation tax, distribution tax, and labour tax are not mentioned as taxes that Marcus will have to pay.Rate this question:
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- 10.
Mark Steel is a qualified hairdresser looking to set up in business as a sole trader. He has carried out some market research in the town where he lives. There are 11 hairdressing businesses in the town. Mark’s speciality is in creating styles which involve a high degree of skill that adds significant value. Mark’s reputation has been boosted by winning a styling competition in a leading fashion magazine. Mark has produced a market map to identify whether any gaps in the market exist. This is shown below. According to the market map, where is there a gap in the market? A business which provides: Select one answer:
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High price/traditional.
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High price/fashion.
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Low price/traditional.
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Low price/fashion.
Correct Answer
A. Low price/fashion.Explanation
Based on the information provided, the market map shows that there is a gap in the market for a business that provides low price/fashion hairdressing services. This means that there is a demand for affordable hairdressing services that are trendy and fashionable. Mark's specialty in creating styles with a high degree of skill that adds significant value may not align with this particular gap in the market.Rate this question:
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- 11.
The market map opposite has four sectors, A, B, C and D. To which part of the market map would Mark’s skills be most suited? Select one answer:
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A
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B
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C
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D
Correct Answer
A. BExplanation
Mark's skills would be most suited to sector B of the market map.Rate this question:
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- 12.
In setting up his business Mark knows he will have to take a calculated risk. Which one of the following would be an example of a calculated risk for Mark? Select one answer:
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His fixed costs are 50% of his total costs.
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There is a 40% chance of the business surviving the first year.
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Mark’s variable costs rise by 25% in the first six months.
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10% of his customers will be over 65 years old.
Correct Answer
A. There is a 40% chance of the business surviving the first year.Explanation
An example of a calculated risk for Mark would be the 40% chance of the business surviving the first year. This means that Mark is aware that there is a possibility of his business failing, but he is willing to take that risk and proceed with his venture. He has likely assessed the potential challenges and uncertainties involved in starting a business and has made a decision based on weighing the potential rewards against the potential risks.Rate this question:
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- 13.
Mark is considering different sources of finance to start his business. Which two of the following sources of finance would be most appropriate for Mark to start up his business? Select two answers:
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Personal savings.
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Selling the business’s assets.
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Issuing shares to new shareholders.
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Retained profit.
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Bank loan.
Correct Answer(s)
A. Personal savings.
A. Bank loan.Explanation
Mark is considering different sources of finance to start his business. Personal savings would be a suitable source of finance for Mark as it involves using his own money to fund the business. This is a common and often preferred option for entrepreneurs as it allows them to have full control and ownership of the business. Additionally, a bank loan would also be a suitable source of finance for Mark as it provides him with the necessary funds to start his business. Banks often provide loans to small businesses, and Mark can use this loan to cover startup costs and initial expenses. Selling the business's assets, issuing shares to new shareholders, and retained profit are not mentioned as appropriate sources of finance for Mark.Rate this question:
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- 14.
Which two of the following are sources of added value for Mark’s business? Select two answers:
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Offering late-night opening appointments.
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Asking customers to complete a questionnaire after their appointment.
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Ensuring he manages cash flow effectively.
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Providing free refreshments and drinks for customers.
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Locating in an area where other hairdressers already operate.
Correct Answer(s)
A. Offering late-night opening appointments.
A. Providing free refreshments and drinks for customers.Explanation
Offering late-night opening appointments and providing free refreshments and drinks for customers are sources of added value for Mark's business. Late-night opening appointments cater to customers who may have busy schedules during regular business hours, providing convenience and flexibility. Providing free refreshments and drinks enhances the customer experience, making them feel valued and cared for during their visit. Both of these practices differentiate Mark's business from competitors and contribute to customer satisfaction and loyalty.Rate this question:
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- 15.
Job Advertisement Print Designer Moorland is a small printing business that has a vacancy for a male print designer working as part of a busy team in a well equipped office environment. Applicants must be aged between 18 and 20 and: • have 5 GCSEs at A* – C (including maths and English) • have experience of using Graphix 2302 software • be well organised and able to meet deadlines • be able to work as a member of a team. No wheelchair users need apply. The above was the advertisement that Moorland initially planned to use. One of the managers pointed out that it contained three pieces of information which would break employment legislation. Select three answers:
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Male print designer.
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Having 5 GCSEs at A* – C.
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No wheelchair users need apply.
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Must be aged between 18 and 20.
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Well organised and able to meet deadlines.
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Have experience of using Graphix 2302 software.
Correct Answer(s)
A. Male print designer.
A. No wheelchair users need apply.
A. Must be aged between 18 and 20.Explanation
The three pieces of information that would break employment legislation are:
1) No wheelchair users need apply - this is discriminatory against individuals with disabilities.
2) Must be aged between 18 and 20 - this is age discrimination as it excludes individuals who are older than 20.
3) Male print designer - this is gender discrimination as it specifies a preference for male candidates.Rate this question:
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- 16.
Person Profile Name: James Grant Qualifications: 5 GCSEs at A* – C (including maths and English) Skills/experience: • Used range of IT during GCSEs. • Used Graphix 2302 software. • Part-time work as a sales assistant in a petrol station. Attitudes (from interview) ‘I’m a ‘people person’…like working with others’ ‘keen to learn and to start at the bottom’ ‘never had a day off at school’ Moorland decided that the job would be offered to James Grant. Using the information, identify the two most likely reasons why James was successful. Select two answers:
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He has a degree in computing.
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Experience of specific software.
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He preferred to work alone rather than in a team.
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Relevant work experience in a print office.
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Positive attitude towards the specific job.
Correct Answer(s)
A. Experience of specific software.
A. Positive attitude towards the specific job.Explanation
James Grant was successful because he has experience of specific software, Graphix 2302, which is likely relevant to the job requirements. Additionally, his positive attitude towards the specific job, as indicated by his statement of being a "people person" and liking to work with others, likely impressed the employer and contributed to his success.Rate this question:
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- 17.
The chart shows a rise in the world price of cocoa. Cocoa is a commodity which is used by a range of industries. For chocolate producers cocoa is the main ingredient. Chocolicious is a small business making hand-made chocolates. The market it operates in is very competitive. One source of competitive advantage it holds is in the quality of its chocolates. The owners of Chocolicious are worried by the recent rise in the price of cocoa. Which three factors below are the most likely causes of the rise in price of cocoa? Select three answers:
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Lower demand for cocoa from chocolate producers.
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Increased profits made by cocoa producers.
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News reports suggesting some health benefits from cocoa.
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Greater supply of cocoa by producers.
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Poor weather leading to a poor harvest of cocoa.
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Higher demand for cocoa by chocolate manufacturers.
Correct Answer(s)
A. News reports suggesting some health benefits from cocoa.
A. Poor weather leading to a poor harvest of cocoa.
A. Higher demand for cocoa by chocolate manufacturers.Explanation
The rise in price of cocoa can be explained by three factors. Firstly, news reports suggesting some health benefits from cocoa may have increased the demand for cocoa as consumers become more interested in consuming cocoa-based products. Secondly, poor weather leading to a poor harvest of cocoa can result in a decrease in supply, causing the price to rise. Lastly, higher demand for cocoa by chocolate manufacturers, who use cocoa as the main ingredient in their products, can also contribute to the increase in price.Rate this question:
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- 18.
Chocolicious has decided that it needs to change its marketing mix in response to the rising price of cocoa. Which two changes to the marketing mix would you advise, given what is happening in this market? Select two answers:
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Reducing its Corporation Tax payments.
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Producing a new business plan.
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Contacting supermarkets to seek new retailers for its products.
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Making five members of staff redundant to cut costs.
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Using cheaper ingredients in the product.
Correct Answer(s)
A. Contacting supermarkets to seek new retailers for its products.
A. Using cheaper ingredients in the product.Explanation
The rising price of cocoa suggests that Chocolicious is facing increased production costs. To address this, the company can consider two changes to its marketing mix. Firstly, contacting supermarkets to seek new retailers for its products can help expand its distribution network and potentially increase sales. This can help offset the higher production costs. Secondly, using cheaper ingredients in the product can help reduce costs without compromising too much on quality. This can help maintain profitability in the face of rising cocoa prices.Rate this question:
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- 19.
Which two of the following are the most likely explanations for the change in revenue at Chocolicious? Select two answers:
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A rise in variable costs.
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A downturn in the business cycle.
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An improved cash flow position.
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A fall in sales.
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A rise in profits.
Correct Answer(s)
A. A downturn in the business cycle.
A. A fall in sales.Explanation
The most likely explanations for the change in revenue at Chocolicious are a downturn in the business cycle and a fall in sales. A downturn in the business cycle refers to a period of economic decline, which can lead to reduced consumer spending and lower revenue for businesses. A fall in sales directly affects revenue as it indicates a decrease in the number of products or services sold. Both factors can contribute to a decrease in revenue for Chocolicious.Rate this question:
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.PNG "The market map opposite has four sectors, A, B, C and D.
To which part of the market map would Mark’s skills be most suited?
Select one answer:")
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