Question 1

Which of the following is a correct definition of value added?                               [1]

A    The difference between selling price and total unit cost of production B    The profit earned per unit

C    The difference between selling price and cost of sales per unit

D    The revenue earned from the sale of each unit sold

Question 2

Which of the following includes only industries from the primary sector?              [1]

A    Farming, Banking, Coal Mining

B    Fishing, Oil refining, Farming,

C    Fishing, Farming, Diamond Mining

D    Food processing, Farming, Fishing

Question 3

In the acronym SMART, the letter S is:                                                              [1]

A    Short-term

B    Specific

C    Strategic

D    Social

Question 4

Which of the following includes only internal stakeholder?                                   [1]

A    Employees, Suppliers, Lenders

B    Consumers, Suppliers, Managers

C    Government, Shareholders, Local Community

D    Shareholders, Managers, Employees

Question 5

Which of the following is not an acceptable measure of business size?                  [1]

A    Revenue

B    Market Share

C    Profit

D    Capital employed

Question 6

Energol had a revenue in 2020 of £46.7 million from which they earned an     [1]

operating profit of £8.7 million. The total revenue value of the market in which Energol operates for 2020 was £178 million. Energol’s market share in 2020 was?

A    2.6%

B    26.2%

C    4.88%

D    18.63%

Question 7

Which  of  the  following   could   be  a  segment   in  demographic   market     [1]

segmentation?

A    Age of consumers

B    Location of consumers

C    Consumer values

D    Consumer life-styles

Question 8

Which of the following is an element of the total product concept?

A    Speciality product

B    Consumer product

C    Unsought product

D    Core product

Question 9

At which stage of a product’s life cycle is it most likely extension strategies will be introduced?

A    Introduction

B    Growth

C    Maturity

D    Decline

Question 10

The labour productivity of a business increases from 200 units per worker per week to 205 units per worker per week. The effect of this increase in labour productivity will be to:

A    Increase wages

B    Reduce average costs

C    Reduce wages

D    Increase average costs

Question 11

Peter owns a mobile dog grooming franchise in Sheffield. He visits clients in their own homes to wash and clip their dogs.

On average, Peter receives a fee of £16 per client visit. In 2020 he had 1600 client visits which was  185 fewer than the previous year. He forecasts that client visits in 2021 will be 10% below the 2020 numbers.

Competition for dog grooming in the Sheffield area has increased significantly over the past few years. Peter estimates the price elasticity of demand for dog grooming services to be -1.5 and, because of the intense competition in the local market, he is considering the following two options:

Option 1: reduce his fees in 2022 by 5%

Option 2: increase promotional activities

(a)    Explain one advantage and one disadvantage to Peter of buying a               [4]

franchise.

(b)    Using the data above, calculate the number of clients Peter might expect     [4]

to have in 2022 if he reduces his price by 5%.

(c)     Using your calculations or your knowledge of price elasticity of demand,      [2] explain one reason why Peter should reduce his fees.

(d)    Recommend appropriate methods of promotion that Peter could use to   [10] increase demand for his dog grooming services.