Theme 2 Business

Question 1

Are sources of finance ways in which a business will seek to support its future developments?

May a start up be deciding which source of finance to use because of wanting to establish a business?

May an established business use sources of finance to grow the business?

Can sources of finance be both external and internal? Name an example of each?

Is the use of personal savings when someone invests their own money into a business?

Does owner’s capital show the proportion of the business assets’ the owner owns compare to creditors?

Are assets items owned by the business? Is stock an example of a current asset, which stays in the business for less than a year?

Is retained profit, profit kept by a business to help finance future activities? Does retained profit dilute the business ownership?

Can retained profit only be an option if sufficient profit exists?

Are assets items of value to the business? Will current assets change in value within a year?
Is an example of this stock as the amount is constantly changing?

Does the sales of assets refer more to the sale of fixed assets/ long term assets?

Can assets be sold to gain instant injection of cash?

Does a sale of asset involve any repayments?
Can assets be expensive in long run if assets need to be leased back?

Answer 1

Yes

Yes

Yes

Yes. Loans and retained profit.

Yes

Yes

Yes. Yes.

Yes. Yes.

Yes

Yes. Yes.

Yes

Question 2

Is external capital raised outside the business?

Name a provider who might be supplying the finance? State an external source of finance?

State one reason a company may want finance?

Are finances from friends and family investments from people you know and may the repayment conditions be more flexible?

Are finances from banks able to supply companies with deposits and loans, as well as provide other financial services?

Does peer to peer fundings cut out traditional intermediaries such as banks and is lending done online?

Is business angels when wealthy individuals making investments into start ups with the hope of money returned?

Can business angels be seen as high risk as the business is not yet established?

Is crowdfunding receiving money from a large number of people, each investing different amounts?

If some businesses have healthy cash balances may they wish to invest in other businesses?

Could this be done to try and have higher returns than they would if cash sat in a bank?

Answer 2

Yes

Family and friends. Banks.

To pay wages

Yes

Yes

Yes

Yes

Yes

Question 3

State four methods of finance?

Are loans money provided for a set purpose, with the money having to be repaid overtime?

Is an external source of finance considered to be better for longer-term projects?

Will this however depend upon the payment of the loan?

Are loans quick and easy to use, however must interest be paid regardless of whether it can be afforded?

Is share capital raised through the sale of shares?

Will shareholders be rewarded on their investment through dividends as well from an increasing value in their shares?

Do you only need to pay dividends if a profit is being made when receiving share capital?

If you use share capital as a method of finance are you losing more control of the business?

Is venture capital an investment from one business into another in return for a percentage equity in the business?

Will venture capitalists look for high rate of return in short time?

Does a larger business helping a smaller business encourage more sources of finance?

Is venture capital a long process?

Is an overdraft the ability to overspend on a current account to an agreed amount?

Is this good short-term source of finance?

Is this money only borrowed when essential? Is the money only available from a current bank account?

Is trade credit paying supplier of capital a set amount of time after the payment?

Answer 3

Loan, share capital, venture capital, overdraft.

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes. Yes.

Yes

Question 4

Is limited liability when an investor can only be limited to the amount to the total invested?

Are personal belongings protected?

Is unlimited liability when owner is responsible for all debt of the business?

Can personal belongings be lost?

State 2 business types that have unlimited liability?

State one business type that has limited liability?

Answer 4

Yes

Yes

Yes

Yes

Sole trader and partnership

Question 5

Will a business plan be used both internally and externally?

Will a business plan include the marketing strategy, as well as financial forecasts?

Is a business plan used to gain external finance? Are they also used to check development?

Are they used to provide, smart, measurable, achievable, realistic, and time based (SMART) expectations?

Does a business plan also involve how and when a business will pay back investors?

Will a business plan show that an entrepreneur is organised?

Is cashflow interested in the balance between cash inflow and outflow? Is a cash inflow payments from debtors and outflow paying debts?

Is a cash flow forecast important as it tells the business if they can meet daily expenses?

Does a cash flow statement show what happened to cash inflows and outflows?

Can things in the cash flow forecast be over or under estimated dependent on research?

Are unforeseen expenses one off payments that were not expected? Can payment terms change if supplier wants payment quicker?

Do cash sales occur in the month of sale, and are receivables in the month of cash receipt?

Where do cash payments occur in the cash flow forecast, and do payables appear in the month of cash outflow?

Is net cash flow cash inflows - cash outflows? Is opening balance how much a business has at the start of a month?

Is closing balance opening balance + net cash flow?

Do transaction types involve sales and purchases? Could timings of cashflows be seasonal? Does the nature of the business determine start up capital and costs?

Will slow cash inflows cause cash flow problems? Will a firm try and speed up cash inflows if they offer penalties for late payments?

Are receivables money owed by customers? May too quick cash outflows mean trying to negotiate longer payments? Are payables money businesses owe?

Can an insufficient liquid cash fund mean inability to meet short term debts?
Can limited cash result in missed opportunities?

Can overtrading cause cash flow problems? Can internal management cause cash flow problems?

Can you improve cash flow by slowing down the timing of cash outflow?

Due to being based on predictions can they be unreliable? Can cash flows be affected by external issues?

Answer 5

Yes

Yes

Yes. Yes.

Yes

Yes

Yes

Yes. Yes.

Yes

Yes

Yes

Yes. Yes.

Yes

Month of purchase, and yes

Yes. Yes.

Yes

Yes. Yes. Yes.

Yes. Yes.

Yes. Yes. Yes.

Yes. Yes.

Yes. Yes.

Yes

Yes. Yes.

Question 6

Is sales forecasting a prediction of future sales volumes and trends?

Can sales forecasts demonstrate how easy it will be to break even?

Will sales forecasts allow us to see when we may potentially need additional promotional activity?

Can sales forecasts demonstrate when peak times will be and therefore when more staff will be needed?

Will identified busy times also need to have lots of stock so that the company never runs out?

Will goods coming in and out of fashion affect the sale forecasts?

Is it difficult to predict what the next trend will be? Will an ageing population affect the level of certain sales?

If interest rates are low, will this encourage people to spend more, potentially leading more sales and a change on the forecast?

Will the number of people in employment in an area affect the amount spent on products and services, therefore will this affect the sales forecasting?

Will a competitor lowering their prices affect the amount sold from your company if you are charging more? If competitors are able to quicker react to changes in consumer tastes will consumers be more susceptible to purchase from them, affecting the other company’s sales forecasting?

Is it difficult to create a sales forecast as there are constant changes in the external environment?

Answer 6

Yes

Yes

Yes

Yes

Yes

Yes

Yes. Yes.

Yes

Yes

Yes. Yes.

Yes

Question 7

Is sales volume the number of units sold? Is sales revenue the total amount of money spent by consumers?

Is sales volume calculated by sales revenue divided by selling price?

Is sales revenue calculated by selling price x quantity sold?

Is revenue the money coming in through the sale of goods and services?

On a graph which has revenue on the y axis and number of items on the x axis, does both the number sold and the revenue start at zero, and then the revenue starts to slope gently upwards as more items are sold?

Do fixed costs stay the same regardless of output? Does fixed cost include interest on bank loans?

To calculate the fixed interest payment per annum is the calculation necessary how much the business borrows x the annual rate of interest?

When shown on a graph of y axis revenue and x axis number of items is the fixed costs shown as a straight line?

Do fixed costs change proportionally to the number of items produced? Are total variable costs calculated by carrying out the calculation of average variable costs x number of units?

Do variable costs start at 0 and slope upwards as shown on the revenue and number of items graph?

Are total costs calculated by fixed costs + total variable costs?

Do total costs start at the fixed costs point but then slope upwards parallel to the variable cost line?

Answer 7

Yes. Yes.

Yes.

Yes

Yes

Yes

Yes. Yes.

Yes

Yes

Yes. Yes.

Yes

Yes

Yes

Question 8

Is the break even where a business is neither making a profit or a loss? At this point are total costs therefore the same as total revenue?

Is break even output the amount a business must sell to reach this point? Before break even is the business making a loss, then afterwards are they then making a profit?

In business each time a product or service is sold does it first have to pay its variable costs and then contribute towards fixed costs?

Until there are enough contributions to cover the fixed costs, can the business make a profit?

Once a product is sold is the difference between selling price and variable costs paid towards fixed costs?

Is contribution selling price - variable cost? Is contribution the difference between total sales revenue and total variable costs?

Can the break-even point be calculated by doing fixed cost divided by contribution?

Is margin of safety how much actual output is above the break-even level of output? Is it therefore calculated by actual output level - break-even level of output?

When plotted on a graph should break even be read off of the horizontal axis and therefore be expressed as a number of units?

Does a break-even chart have revenue on the y axis and units along the x axis? Does total revenue have a straight line from 0, proportional to the number of units, does the total costs start at the fixed costs point (above 0 on the y axis) and proportional to the increase in units, and is variable cost line parallel to total revenue line, as it starts at 0?

Can break even charts be used to read of profit and loss figures at different points?

Are revenue and costs likely to b static at the break-even level? Are businesses advised to consider the variables that might change?

Can variables such as interest rates, raw material price, and new competition all change the costs and price?

Does break-even enable a business to see what the minimum number of sales are needed to make a profit and helps the business get a target?

Does break-even ignore changes in variable costs and selling price as items are bought and sold in large quantities?

Answer 8

Yes. Yes.

Yes. Yes.

Yes

Yes

Yes

Yes. Yes.

Yes

Yes

Yes

Yes. Yes.

Yes

No. Yes.

Yes

Yes

Yes

Question 9

Are budgets forecasts or future plans for the finances of a business?

Can budgets be for the business as a whole or for specific functions such as marketing budget?

Are 2 examples of budgets income and profit?

Can budgets provide a quantifiable target for which actual outcomes can be compared against?

Does budget help make decisions on what the year’s main priorities are?

Does setting budgets motivate budget holders as increased responsibility?

Is income budget a target set for the amount of income received in a set period of time? Can income budgets be split into individual sales target for staff?

Are expenditure budgets a limit put on how much can be spent in a set amount of time? Does expenditure budgeting allow for monitoring of under spending, as well as over spending?

Are profit budgets a target set for the surplus between income and expenditure in a given period of time? Can the profit budget demonstrate which products we need to create more of?

Are promotional budgets normally limited despite new businesses having to establish their brand?

Answer 9

Yes

Yes

Yes

Yes

Yes

Yes

Yes. Yes.

Yes. Yes.

Yes. Yes.

Yes

Question 10

Is historical figures budgeting setting budgets on previous years? Can these budgets involve last year’s budget plus a percentage more (incremental)?

Is zero based budgeting setting a budget of zero? Do all departments need to justify any requests for expenditure?

Is any difference between the budgeted finance and the actual finance known as a variance? Is a variance calculated by actual - budgeted?

Is variance analysis the process of calculating and interpreting these variances?

Is an adverse budget one that is bad for the business? Are examples if the actual expenditure is more than budgeted or the actual income is lower than the budgeted?

Is a favourable budget one that is good for the business? Are examples if the actual expenditure is lower than the budget or the actual income is higher than the budget?

In a variance question is it important to identify the cause of a variance and consider the the effect of the variance, as well as look for a solution?

Could special promotions cause a favourable variance? Could a demotivated sales team cause an adverse variance? Could higher minimum wage cause an adverse variance? Would changes in price of suppliers cause an adverse variance, as well as competitors lowering prices?

To get rid of a variance could managers change their budget, offer staff training, and possibly change suppliers?

Are budgets forecasted? Are costs subjected to change, so therefore could create a variance? May managers lack experience of producing budgets?

Answer 10

Yes. Yes.

Yes. Yes.

Yes. Yes.

Yes

Yes. Yes.

Yes. Yes.

Yes

Yes. Yes. Yes. Yes.

Yes

Yes. Yes. Yes.

Question 11

Is gross profit sales revenue minus the variable (direct) costs? The variable costs that vary with output are called the cost of sales?

Is operating profit the gross profit minus expenditures?

Is net profit the operating profit minus interest?

Is gross profit the measure of the performance of the business? Is higher the gross profit the better?

Does net profit indicate how well a business is dealing with their expenses? Is higher the net profit figure the better?

When Sony’s PS4 came out did they see sales soar in that quarter of that specific year? How much did Net profit rise to after the PS4 was introduced?

Is sales revenue the income taken in, in the form of sales? Are costs of sales the costs that could change with output?

Is gross profit margin calculated by dividing gross profit by sales revenue and multiplying by 100?

Are expenses all other costs that can cost the running of the business apart from the ones that can change with output?

Can the operating profit margin also be calculated by being divided by sales revenue and being multiplied by 100? Once all fixed costs have been taken into account is this a true measure of the actual profit made from the product or service?

Is interest the fee a business pays a lender (creditor) to borrow money?

Is net profit also calculated by being divided by sales revenue and then being multiplied by, by 100?

At the end of a trading year does the owner produce a statement of comprehensive income showing a summary of its profits and losses made over the year?

Could you offshore in order to lower costs? Is raising the price in order to earn more sales revenue a risky strategy as demand may fall if product is elastic?

Is profit normally recorded straight away, whereas cash is normally recorded in a different trading year? Does a business go bust without enough profit or cash?

Answer 11

Yes. Yes.

Yes

Yes

Yes. Yes.

Yes. Yes.

Yes. 82.4bn yen.

Yes. Yes.

Yes

Yes

Yes. Yes.

Yes

Yes

Yes

Yes. Yes.

Yes. Goes bust without enough cash.

Question 12

Does a balance sheet show what a business owns (assets) and what it owes (liabilities)?

Do balance sheets also show where money is being lent from? Do sole traders and partnerships have to produce a balance sheet by law?

Does a balance sheet show that what has been put into producing these assets is equal to how much the business owns?

If a business was to buy a machine (asset) should its price match the loan required to pay for it?

Are non current assets expected to be sold within the next year of trading? Do these non-current assets involve intangible products such as trademarks, as well as tangible products such as property?

Are current assets likely to be turned to cash within the next year of trading? Do these include inventories, as well as trade and other receivables from debtors?

Are trade credits when a business receives a good or service, after it says it will pay the supplier back in a certain amount of time?

Are ordinary shares money paid by shareholders when they were first issued?

Are accumulated losses, losses from previous years of trading and does it decrease the value of equity?

Is a balance sheet a summary valuation of a business? May the value of assets stated not be the same as the price they sell for?

Is liquidity the ability to turn assets to cash? Does this measure how easy it is to sell assets? Are premises and specialist machinery the hardest to sell, meaning it will be at the top of the list on the balance sheet?

Does high liquidity enable an investor to realise how easily the business will be able to pay their debts? Will creditors be interested as they will want to know whether they will get paid the money they are owed on time?

Is current ratio also known as the working capital? Is acid test also known as the quick ratio? Is acid test a harsher test of liquidity as you can not guarantee the sale of all stock?

Can some businesses with strong cash flow be fine with a low acid test ratio?

Is one way a business could improve liquidity by reducing the amount of stock it holds onto and selling assets quicker, therefore turning it into cash faster?

Could a business also reduce the credit period of time customers have to pay up their money after purchase?

Is working capital the funds the business has in order to reach their day to day expenses? Is working capital calculated by current assets - current liabilities, and would a very low working capital such as from customers wanting a longer payback period cause issues?

Can suppliers be slow stalling selling of products and therefore generating of revenue?

Answer 12

Yes

Yes. No.

Yes

Yes

Yes. Yes.

Yes. Yes.

Yes

Yes

Yes

Yes. Yes.

Yes. Yes. Yes.

Yes. Yes.

Yes. Yes. Yes.

Yes

Yes

Yes

Yes. Yes.

Yes

Question 13

Can businesses fail due to financial reasons such as lack of funds to pay tax bills, lack of capital leading to excessive borrowing?

Is working capital a measure of efficiency that compares a businesses assets to liabilities? Is it important factor to survival?

Have many businesses been the victim of poor cash flow management, meaning that many of times companies have been unable to pay bills when demanded?

Was one piece of poor marketing that led to business failure Sunny Delight? In the 1990s was it described as high in vitamins, but was it actually very artificial?

Was one piece of failure to innovate which led to business failure Kodak? Although they knew digital world was coming, were they too slow to react and were the people who wanted to innovate quicker not listened to?

Does a strong pound mean that companies who rely on exports from other nations will be affected as less people will want to pay the premium prices?

Can Uber the relatively new cab app drive traditional black cabs in London out of business?

May demand for products be driven down due to governmental policies, such as the placement of tax on more expensive products?

May there be a lack of production because of natural events such as the Japan 2011 tsunami affecting the UK’s production system with Toyota?

Was the reason blockbuster failed because they failed to realise that an originally small and niche market (online video streaming) would soon takeover and succeed?

Was the reason Modelzone failed because of their ridiculous expansion attempt which led to them not being able to pay back creditors and going out of business?

Answer 13

Yes

Yes. Yes.

Yes

Yes. Yes.

Yes. Yes.

Yes.

Yes.

Yes.

Yes.

Yes.

Yes.

Question 14

Is job production producing one item at a time? Does this type of production normally involve very skilled workers?

Does job production normally mean very motivated workers? Is a con that skilled labour and craftsmen are expensive?

Is batch production when a business wants to create more than one item at a time? Can goods be switched over to make something different on same production line, for example bread factory makes crumpets?

Is a pro of batch production that production can be changed to meet customer needs? Is a con that small batches carry higher average costs per unit?

Is flow production when the production of a product flows around an assembly line in a factory?

Is a pro of flow production that average costs are lower because higher volumes are being made, achieving economies of scale? Is a con high set up costs to buy factory and machinery?

Is cell production when workers of different skills are put into teams and work at a station until the completion of the product?

Is a pro of cell production that there are less lead times? Is a con possible tension in the cell if gets too competitive?

Is productivity how efficient a firm is? Is labour productivity the amount a worker produces? Is measurement hard to quantify on larger scale?

State 2 ways to increase productivity?

Does total quality management involve the same level of quality all the way through the production process, so there is no waste and redos? Does the organisation of workplace lead to more production due to people knowing exactly what they are meant to do?

Is labour productivity calculated by output (per time period) divided by number of employees (per time period)? Is capital productivity calculated by output divided by capital employed?

Can faulty inputs in the production line halt the production process? Can having the right number of staff on at each shift increase productivity?

If businesses can produce goods more economically efficient than competitors then can they charge lower prices?

Will production aim to operate at the lowest possible cost per unit so can take advantage of economies of scale? Is average cost total cost divided by output?

Can being more efficient lead to prices per item made being lower than competition as they are asking for more raw materials due to making products quicker?

Can quality suffer due to trying to produce products so quickly?

Is labour productivity more manual work, whereas capital intensive is more technological?

Answer 14

Yes. Yes.

Yes. Yes.

Yes. Yes.

Yes. Yes.

Yes.

Yes. Yes.

Yes.

Yes. Yes.

Yes. Yes. Yes.

Lean production (reduction in waste) and TQM (total quality management).

Yes. Yes.

Yes. Yes.

Yes. Yes.

Yes.

Yes. Yes.

Yes.

Yes.

Yes.

Question 15

Is capacity utilisation the most beneficial way of turning inputs into outputs for the business?

Is a business at full capacity when it can no longer increase its output? For an airline is one way to improve capacity utilisation reducing the amount of off peak time flights?

Is capacity utilisation high when fixed costs are spread, and is low capacity utilisation when costs are too high to continue to produce that product?

Can capacity utilisation be measured by current output divided by maximum output, multiplied by 100?

Running at 80% capacity would be fine because it can ensure that there are left over products for any additional orders?

Can capacity under utilisation for a sports team mean not all tickets have been sold, whereas is capacity over utilisation when too many tickets have been sold?

Can under utilisation negatively affect the brand image? May the business need to make some staff redundant as a result of a lack of revenue?

Can over utilisation mean there is no available time to maintain machinery or train staff?

Can capacity utilisation be increased by price cutting in order to increase demand?

Could a business move to a smaller premises in order to rationalise (increase efficiency)?

Could businesses promote off peak sales in order to increase capacity utilisation?

Answer 15

Yes

Yes. Yes.

Yes, and yes.

Yes

Yes

Yes

Yes. Yes.

Yes.

Yes.

Yes.

Yes.

Question 16

Does stock control, control the flow of stock in the business, concerning the management of raw materials?

Does just in case stock control require buffer stock just in case additional is needed?

Is the re-order level the time the business must purchase more supplies so that they are always replenished when running low?

Is the lead time how long suppliers will take to supply stock when the order is put in?

Are buffer stocks held in order to cope with unforeseen rises in demand?

Is one limitation of just in time stock control that if the supplies do not arrive on time it will be very costly to stop production?

Does too much money caught up in holding old stock mean new raw materials cannot be bought?

Are raw materials in a just in time production process ordered as the production develops?

Due to parts only being ordered when needed does this fit the TQM theory of zero wastage?

If a manufacturer does not have a good relationship with supplier will JIT not work due to suppliers possibly being late?

As a manufacturer moves more towards a JIT system will they need more training?

State 2 deadly wastes lean production aims to eliminate? Will over production lead to a reduction in quality of finished goods, and will excess processing lead to the usage of large machines, rather than small flexible ones?

Is lean production’s aim to reduce resources used in production? Can the reduction in the use of resources lead to quicker development? Is this identified as GM takes 50% longer than Toyota does to develop a car model?

Will the ability to get an idea to a product quicker increase the chances of getting a competitive advantage? Does a short lead time from start of production to final production mean a business can respond fast to changes in tastes?

Answer 16

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Over production and excess processing. Yes, and yes.

Yes. Yes. Yes.

Yes. Yes.

Question 17

Does quality control involve checks of quality at the end of the process? Could there be a lot of wastage if fault only detected at the end?

Is quality control the traditional way to check quality? Does quality control involve detecting rather than preventing?

Is quality assurance designing ways a product is produced in order to minimise the chances of be sub-standard? Is quality therefore built in to the development stages?

Is every worker responsible for reaching certain quality levels? Could ensuring quality in every stage mean more time consuming?

Is quality at the heart of a Toal quality management process in a business?

Did Crown Cork, a company in England and France have to ensure they had high quality at the heart of everything they did due to intense international competition?

Does TQM involve quality circles where small groups meet to solve work problems? Does TQM involve employees being empowered and being allowed to make decisions of their process?

Do quality circles meet to suggest improvements to current systems? Did the idea start in the US where Japanese companies adopted it?

Does TQM involve no payment to inspectors, and empowered employees become more motivated?

Will the TQM strategy take time to introduce and may some staff not welcome extra responsibility?

Is Kaizen the constant addition of new features to a business in order to improve quality and efficiency? Does this process involve employees spotting room for improvement? Will employees want to be rewarded for their input?

Are small changes involved in Kaizen (lean production) likely to be less expensive than a large change?

Do ideas come from the workforce rather than other factors, reducing the costs?

Does Kaizen stand for unending improvement? May continuous improvement in a furniture business involve constant additions to bespoke furniture?

Is quality shown in every stage from the best raw materials, to best manufacturing methods?

After WW2 did the Japanese quickly gain a competitive advantage through producing high quality products?

Does one Smith Army Knife manufacturer say that all knives are made of first class stainless steel?

Answer 17

Yes. Yes.

Yes. Yes.

Yes. Yes.

Yes. Yes.

Yes

Yes

Yes. Yes.

Yes. Yes.

Yes

Yes

Yes. Yes. Yes.

Yes

Yes

Yes. Yes.

Yes

Yes

Yes

Question 18

Is inflation a sustained rise in general price level?

Does the annual rate of inflation show how much higher or lower the prices of products were the same time a year before?

Due to inflation rates increasing causing a price rise on cost of suppliers, will businesses have to increase their price in order to make a profit?

Will a rise in inflation lower the labour wage and increase unemployment?

Can exchange rates (one currency in exchange for another) change in value due to supply and demand of a currency?

Is inflation when a rise in pound can buy more foreign currency?

Does a weak pound (depreciation) mean the pound can buy less foreign currency?

Would higher interest rates cause higher exchange rates?

Is this because higher interest rates will a increase a country’s currency value, then foreign investment would come in and would this cause higher demand for currency, making it more expensive compared to others?

If the pound increased against other currencies would this make imported supplies cheaper?

Does SPICED stand for: strong pound imports cheaper, exports dearer?

Would consumer spending fall if interest rates rose, as they would be borrowing less? Will interest rates rise if inflation happens in the UK?

Does a fall in interest rates encourage economic growth?

Would interest rates and cost of borrowing increasing, rise the cost of supplies?

When it costs less to borrow is there less to payback?

Answer 18

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes, Yes. Yes.

Yes

Yes

Yes

Question 19

Can government control laws such as taxes?

Will a decrease in taxes lead to higher output?

Is income tax taken off an employee’s salary? Is VAT added to goods and services? Is corporation tax a tax on a company’s profits? Is national insurance a tax on earnings and self-employed profits?

Are monetary policies when government makes decisions affecting the economy?

Will an increase in VAT lead to a business putting more tax on their products or to lead to them absorbing the costs and making less of a profit?

Is the economic state the overall state of the economy as it goes through 4 stages? Can factors such as GDP determine the current economic change?

Are the 4 stages of an economic cycle, boom (high consumer spending), recession (low profits), slump (low consumer spending), recovery (consumers start to spend more)?

As incomes rise does the demand of normal goods, and luxury goods or inferior goods rise?

If there is uncertainty about future economic conditions, may some employees or businesses be uncertain of what will occur?

Can businesses delay investments to wait to see how economic conditions change? How might a business involved in exporting and importing protect themselves over uncertainties?

Could businesses potentially take out a long term loan at fixed rate of interest as the cost will not change with an inflation?

Answer 19

Yes

Yes

Yes. Yes. Yes. Yes.

Yes

Yes

Yes. Yes.

Yes

Normal goods and luxury goods.

Yes

Yes. Foreign exchange can be bought and sold in advance (forward market).

Yes

Question 20

Does consumer protection involve laws against unfair selling practices? Does the consumer have legal rights if the product has a misleading description?

Did the consumer protection act in 1987 make the manufacturer responsible for any damage it may have caused?

Did the unfair trading regulations in 2008 make it an offence if a product was falsely described?

Is an example of a product being falsely described the Burger King Wopper?

Does the data protection act involve the storage of customer information?

Does the sale of goods act in 1979 say that all goods have to be of satisfactory standard?

Does the employment rights act state the duties and rights of an employer and employee such as the ability to go on paternity leave?

Did the working time regulations act state rules such as all employees should have 11 hours rest a day? Did NHS struggle to implement this law?

Did the national minimum wage act in 1998 aim at providing suitable standards in the workspace?

Does the action of the environmental protection act in 1990 now mean if a business fails to stand by recycling they will face criminal penalties?

Was the competition act in 1998 put in place to prevent any collusion ( businesses making an agreement to imbalance the sales in the market)?

Does the health and safety at work act in 1974 aim to increase the standards of safety for individuals at work?

Did the factories act come into action in 1961?

Answer 20

Yes. Yes.

Yes

Yes

Yes

Yes

Yes

Yes

Yes. Yes.

Yes

Yes

Yes

Yes

Yes

Question 21

Will competition in the market have an effect on decisions such as pricing?

If a business has to enter a new market due to new entrants will they have to become a plc and sell shares due to high R&D costs?

Will lots of competition lead to the differentiation of products?

In a competitive market will a business need to consider range of products, as they will need to attract more customers?

Will competition cause businesses to lower their prices?

In a competitive market will a business need to be more innovative with their marketing to better reach out?

Has Tesco been highly regarded on the streets due to the differentiation of their services they have to offer?

Has TONI&GUY expanded in response to a single more competitive market?

Is the market size the number of buyers and consumers in a particular market? Can large markets bring lots of competition?

Do successful entrepreneurs understand target markets and weigh up competition, in order to find the best solution of making revenue?

Is sales turnover amount of money taken from business by customers?

Answer 21

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes. Yes.

Yes

Yes