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1.5 Understanding External Influences on Business Practice Questions

Question 1

5 marks
(a)

Which one of the following is a definition of inflation?

Select one answer.

  • A The total value of goods and services sold abroad
  • B A general rise in the price level in an economy
  • C The percentage of the workforce who are without a job
  • D The cost of borrowing money
(b)

Which two of the following are covered by consumer law?

Select two answers.

  • A Discrimination in recruitment
  • B Goods must be of satisfactory quality
  • C Health and safety at work
  • D Products must be accurately described
  • E The national minimum wage
(c)

Table 1 shows information about a small business that imports bottles of olive oil from Italy.

Item Amount
Number of bottles imported 400
Price for each bottle €9.00
Exchange rate £1 = €1.20

Table 1

Using the information in Table 1, calculate the total cost, in pounds (£), of importing the 400 bottles. You are advised to show your workings.

Total cost = £ ................

Question 2

4 marks

Read the following extract before answering the question.

Fenwick Fresh

Fenwick Fresh is a greengrocer's shop in Carlisle, owned by sole trader Hannah Nayar. Hannah opened the shop in 2018 and buys almost all of her fruit and vegetables from three farms within 20 miles of the city. She employs two part-time assistants.

Last year a large food-processing factory in Carlisle closed and 300 workers lost their jobs. Unemployment in the area has risen since the closure. Hannah has noticed that customers are buying smaller amounts and are choosing cheaper vegetables such as potatoes and carrots instead of imported fruit. Fenwick Fresh's weekly sales revenue has fallen from £4 000 to £3 400.

Table 1 shows the unemployment rate in four areas of Cumbria.

Area Unemployment rate (%)
Carlisle 6.2
Penrith 3.8
Workington 5.1
Kendal 2.9

Table 1

(a)

Identify, from Table 1, which area had the highest unemployment rate.

(b)

State one stakeholder of Fenwick Fresh.

(c)

Calculate the percentage fall in Fenwick Fresh's weekly sales revenue. You are advised to show your workings.

Percentage fall = ................ %

Question 3

5 marks
(a)

Which one of the following is an example of digital communication by a small business?

Select one answer.

  • A Taking payment from a customer by contactless card
  • B Sending customers a weekly email newsletter
  • C Keeping a record of stock on a spreadsheet
  • D Paying a supplier in cash
(b)

Which two of the following are examples of e-commerce?

Select two answers.

  • A Selling products through the business's own website
  • B Paying employees' wages by bank transfer
  • C Customers ordering products through the business's mobile phone app
  • D Advertising the business on a billboard
  • E Using a spreadsheet to record the business's costs
(c)

Table 1 shows the sales of a small business in one month.

Type of sale Value
In-store sales £27 000
Online sales £18 000

Table 1

Using the information in Table 1, calculate the online sales as a percentage of the business's total sales. You are advised to show your workings.

Online sales = ................ % of total sales

Question 4

3 marks
(a)

Which one of the following is a definition of e-commerce?

Select one answer.

  • A The use of social media to advertise a product
  • B The buying and selling of products and services using devices connected to an electronic network
  • C A system used by a business to record the hours worked by its employees
  • D The general rise in the prices of goods and services over time
(b)

Which two of the following are types of technology used by business?

Select two answers.

  • A Digital communication
  • B Market mapping
  • C Payment systems
  • D Primary research
  • E Quality assurance

Question 5

3 marks

Read the following extract before answering the question.

Pennine Frames

Pennine Frames is a small business based in Hebden Bridge, West Yorkshire. It is owned by Gary Hartley, a sole trader, who builds handmade steel bicycle frames.

Gary buys the steel tubing and the paint he uses from a supplier in Germany and pays for them in euros (€). A finished frame sells for £950 and Gary builds around eight frames each month.

Gary checks the exchange rate between the pound (£) and the euro (€) before he places an order with his German supplier. Table 1 shows the number of euros he received for each pound over a four-month period.

Table 1

Month Number of euro (€) per pound (£)
January 1.20
February 1.14
March 1.17
April 1.26
(a)

Using the information in Table 1, identify the month in which the pound was worth the fewest euros.

(b)

Using the information in Table 1, calculate the percentage change in the number of euros per pound from January to April.

You are advised to show your workings.

Question 6

3 marks
(a)

Which one of the following is a definition of unemployment?

Select one answer.

  • A The number of people who are willing and able to work but who do not have a job
  • B The general rise in the prices of goods and services over time
  • C The cost of borrowing money from a bank
  • D The number of employees who leave a business each year
(b)

Which two of the following are principles of consumer law?

Select two answers.

  • A Discrimination
  • B Goods must be fit for purpose
  • C Health and safety
  • D Goods must be of satisfactory quality
  • E Recruitment

Question 7

3 marks
(a)

Which one of the following is a definition of inflation?

Select one answer.

  • A A rise in the general level of prices in an economy
  • B The cost of borrowing money from a bank
  • C The percentage of the workforce who do not have a job
  • D The value of one currency in terms of another currency
(b)

Which two of the following are likely impacts on a small business of a fall in interest rates?

Select two answers.

  • A The cost of repaying a variable rate bank loan will fall
  • B Customers will borrow more money
  • C Customers will borrow less money
  • D Repayments on existing loans will increase
  • E Businesses will borrow less money

Question 8

3 marks

Read the following extract before answering the question.

Tilecraft is a small business based in Stoke-on-Trent, owned by Marta Hollis. It sells patterned floor and wall tiles to local builders and to customers who are renovating their homes. Marta started the business in 2017 after working as a tiler for twelve years.

Tilecraft buys almost all of its tiles from two factories in Spain and pays for them in euros. A box of tiles is bought for about €22 and is sold to customers for £32. Marta places a new order every month because she has only a small storage unit behind the shop.

Because every order is paid for in euros, the number of euros Marta receives for each pound changes the cost of her stock. Table 1 shows the value of the pound in euros over the first four months of the year.

Table 1

Month Number of euros (€) per pound (£)
January 1.20
February 1.17
March 1.14
April 1.22
(a)

Using the information in Table 1, identify the month in which it was cheapest for Tilecraft to import tiles from Spain.

(b)

Using the information in Table 1, calculate the percentage change in the number of euros per pound between January and March.

You are advised to show your workings.

Answer: ............... %

Question 9

3 marks
(a)

Which two of the following are likely impacts on a small business of an increase in unemployment?

Select two answers.

  • A Customers will have less money to spend
  • B The business will have to make its own employees redundant
  • C There will be a larger pool of workers for the business to recruit from
  • D The business will have to pay higher wages to attract new workers
  • E Interest rates will automatically fall
(b)

Which one of the following is a tax paid by a limited company on its profits?

Select one answer.

  • A Corporation tax
  • B Value Added Tax (VAT)
  • C Income tax
  • D Interest