business and the external environment

Question 1

define market conditions

Answer 1

a broad term which includes all the factors that can affect a market

Question 2

what is competition?

Answer 2

a key part of the market conditions and includes the number and power of rivals that a firm faces

Question 3

what are real incomes?

Answer 3

people’s incomes adjusted for inflation

Question 4

define gross domestic product (gdp)

Answer 4

the total value of all good and services produced in an economy- the income of a country

Question 5

interest rates are…

Answer 5

the cost of borrowing money for firms and consumers

Question 6

what are demographics?

Answer 6

the size and structure of the population in terms of age, sex, race etc

Question 7

what’s the environment in business?

Answer 7

this deals with the environmental effect of any form of business activity

Question 8

define fair trade

Answer 8

this a movement which promotes improved trading terms for producers in ledc’s to give them higher incomes. it has a labelling system for accredited firms

Question 9

what are the effects of a change of interest rates on demand and costs?

Answer 9

interest rates are reduced: people are more inclined to borrow as the cost is cheaper and people are more likely to spend
interest rates are increased: people are less inclined to borrow and are likely to save and therefore consumer spending falls

Question 10

a firm took a £100,000 loan to finance when the interest rate was 5.25% calculate their annual interest payments when the interest rate was increased to 6%

Answer 10

£6000

Question 11

what’s the age structure of the uk population?

Answer 11

population is ageing. over 7.85 million people aged over 70 and 2025 is forecasted to have 10.44 million

Question 12

what is net migration?

Answer 12

numbers entering the uk minus those leaving the country

Question 13

what’s a way that business activity has an effect on the environment?

Answer 13

deforestation
fuel for deliveries- pollution
killing animals and habitats
using resources

Question 14

what would be a disadvantage of recycling and an advantage of recycling?

Answer 14

recycling costs money, however it would give the business a good brand image which may increase customer sales

Question 15

what is demand?

Answer 15

the amount of a particular good or service that a consumer or firm want and can afford to buy at a particular price