Unit 1

Question 1

Equation for PED

Answer 1

% change in quantity demanded/%change in price

Question 2

Equation for income elasticity of demand

Answer 2

%change in quantity demanded/%change in income

Question 3

5 stages of product life cycle

Answer 3

1. Development
2. Introduction
3. Growth
4. Maturity
5. Decline

Question 4

Factors that affect supply

Answer 4

• cost of production
  -indirect taxes
  -subsidies (money given to business from government)
  -new technology
  -weather conditions
  -external shocks

Question 5

What are the different channels of distribution

Answer 5

1. Direct selling (manufacturer to consumer)
2. Indirect selling (manufacturer to retailer - consumer)
3. Indirect 4 (manufacturer to wholesaler to retailer to consumer)

Question 6

What do entrepreneurs have to do

Answer 6

1. Create and set up business- identify gap in the market
2. Running and developing a business
3. Bringing innovation to business world
4. Overcoming barriers
5. Anticipating risk

Question 7

What is a sole trader

Answer 7

One person sets up a business, self employed.

Question 8

Adv of sole trader

Answer 8

• freedom
  -profit
  Simplicity
  -savings on fees

Question 9

Disadv of sole. Trader

Answer 9

-risk
-time
-expertise
-unlimited liability

Question 10

Private limited company

Answer 10

Have to agree before anyone buys or sells shares

Question 11

Positive impacts of MNCs

Answer 11

Create jobs
improve local standard of living
Improve infrastructure

Question 12

What are the 4 Ps

Answer 12

Product
Promotion
Price
Place