Measure size by employees, output, sales or capital employed, never by profit. Tie each point to the business in front of you: its owners, its size, its plans.
A farmer can use a field in one of three ways next year. Growing wheat would earn a profit of 5 000 dollars, growing potatoes 7 000 dollars, and renting the field to a neighbour 4 000 dollars. She decides to grow potatoes. What is the opportunity cost of her decision?
Question 4
A furniture factory divides production so that each worker does only one task, such as cutting, sanding or painting. Which is an advantage of this division of labour?
Question 5
A potter buys clay and glaze costing 6 dollars for each bowl she makes. She sells each bowl for 20 dollars. What is the added value of each bowl?
Question 6
A chocolate maker sells each box of chocolates for 12 dollars. Which action, on its own, would increase the added value of each box?
Question 7
Which best describes the purpose of business activity?
Question 8
A small printing firm has 30 000 dollars. It can either buy a new printing machine or spend the money on an advertising campaign. It chooses the advertising campaign. What is the opportunity cost of this choice?
Question 9
Which business is in the primary sector?
Question 10
A business repairs broken mobile phones for customers. Which sector of the economy is it in?
Question 11
What is meant by deindustrialisation?
Question 12
Share of employment by sector in country T
Sector
2005 (%)
2025 (%)
Primary
30
15
Secondary
35
25
Tertiary
35
60
The table shows the share of employment in each sector in country T. What does it show?
Question 13
Which of these organisations is in the public sector?
Question 14
As incomes in a country rise over many years, the tertiary sector usually becomes more important. Why?
Question 15
Which characteristic is most useful to a successful entrepreneur?
Question 16
A new business asks a bank for a loan. Why is the bank most likely to ask to see the business plan?
Question 17
Which of these would usually be included in the business plan of a new business?
Question 18
Why might a government give grants to people starting new businesses?
Question 19
Which of these is a method of measuring the size of a business?
Question 20
Information about two businesses
Business
Employees
Capital employed (dollars)
Sales (dollars)
A
40
2 000 000
3 000 000
B
400
1 500 000
2 500 000
The table shows information about two businesses. Which conclusion is correct?
Question 21
Which is an example of internal growth?
Question 22
A shoe manufacturer takes over another shoe manufacturer. What type of growth is this?
Question 23
A furniture maker takes over the sawmill that supplies it with timber. What type of growth is this?
Question 24
A coffee roasting company takes over a chain of cafes that sells its coffee. Which is the most likely benefit to the roasting company?
Question 25
Which is a problem a business may face as it grows larger?
Question 26
A business makes hand-built guitars for professional musicians. Why might it choose to stay small?
Question 27
Which is a common reason why new businesses fail?
Question 28
What is a merger?
Question 29
A supermarket chain plans to double the number of its shops. Which is the most likely reason the owners want to grow?
Question 30
What is meant by limited liability?
Question 31
Which is a disadvantage of being a sole trader?
Question 32
Which is an advantage of a partnership compared with a sole trader?
Question 33
Which is a feature of a private limited company?
Question 34
A private limited company becomes a public limited company. What is the main benefit?
Question 35
Rahul buys a franchise to run a pizza restaurant under a well-known brand name. Which is an advantage to Rahul?
Question 36
Two companies from different countries set up a new business together to sell solar panels in country K. They share the costs and the profits but each company continues separately. What is this?
Question 37
Which best describes a social enterprise?
Question 38
Two vets want to open a surgery together. They want to share the work and the decisions, keep their accounts private and avoid the cost of setting up a company. Which type of business organisation best suits them?
Question 39
What is a stakeholder?
Question 40
Which objective is a supplier of a business most likely to have?
Question 41
A company replaces 50 workers with machines to cut its costs. Between which two stakeholder groups is there most likely to be a conflict of objectives?
Question 42
A new restaurant opened three months ago in a street with many competitors. Its sales cover only just over half of its costs. Which objective is most important for it now?
Question 43
A social enterprise runs a coffee shop that trains young homeless people as baristas. Which of these is its social objective?
Question 44
A clothing business has survived its first three difficult years and now has a steady profit. How are its objectives most likely to change?
Question 45
Which objective is the government most likely to have as a stakeholder in a large business?
Question 46
A drinks business set the objective of raising its market share from 12% to 15% this year. This year its sales were 7 million dollars and total sales in the market were 50 million dollars. Did it meet its objective?
Written questions: Paper 1 and the case study
Kofi's Kayaks and a new partnerPaper 1 style · 20 marks
Kofi runs Kofi's Kayaks as a sole trader, hiring out kayaks on a lake in country R. He employs three part-time instructors and his revenue last year was 85 000 dollars. Kofi wants to open a second site on a nearby river, which will cost 40 000 dollars. His friend Ama has offered to invest 25 000 dollars and become a partner in the business.
0 words · a sentence or two
0 words · about 60 to 100 words
0 words · about 100 to 150 words
0 words · about 200 to 300 words
Marlo Foods moves its factoryPaper 1 style · 20 marks
Marlo Foods Ltd makes fruit juice in country S. Its old factory in the small town of Westbrook employs 60 people, most of whom live in the town. The directors plan to close it and move production to a new automated factory in a city 200 km away, which will need only 25 workers. They expect the move to cut costs by 300 000 dollars a year.
0 words · a sentence or two
0 words · about 60 to 100 words
0 words · about 100 to 150 words
0 words · about 200 to 300 words
Tamsin's Coffee: choosing how to growPaper 2 case study · 20 marks
Tamsin's Coffee Ltd is a private limited company that owns four cafes in the city of Port Ellis. It employs 38 people and is owned by Tamsin and her two brothers. The cafes are popular, but the price of coffee beans from its only supplier rose by 15% this year. The directors want the business to grow and have 300 000 dollars of retained profit. They are considering three options: opening two more cafes in Port Ellis, merging with a rival chain called Bean Street, or taking over their coffee bean supplier. Appendix 1 shows the cafe market in Port Ellis last year.