Section 1 Business Activity. Section 2 Finance. Section 3 Human Resources.
Section 4 Marketing. Section 5 Production and Location. Section 6 International ...
IGCSE Paper 1: Practice questions
IGCSE Paper 1: Practice questions Section 1 Business Activity Section 2 Finance Section 3 Human Resources Section 4 Marketing Section 5 Production and Location Section 6 International Business
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Business Activity: Practice questions Section 1 Business Activity 1 The railway network in Country X is owned and run by the state. A suggestion has been made to privatise it – that is, to sell it to private investors who would finance it and appoint managers to run it. a) Why are business activities like railways often owned and run by the state? (5 marks) __________________________________________________________________________________ __________________________________________________________________________________ b) What arguments could be used to privatise the railway network in Country X?
(3 marks)
__________________________________________________________________________________ __________________________________________________________________________________ c) Over time the structure of business activities within economies often changes. The balance between primary, secondary and tertiary businesses may alter. i) Why might this happen? (4 marks) _______________________________________________________________________________ _______________________________________________________________________________ ii) Describe the main changes that have occurred in the structure of business activity in your country in recent years. Illustrate your answer with appropriate examples and data if possible. (4 marks) _______________________________________________________________________________ _______________________________________________________________________________ d) Why do some businesses operate in more than one country?
(4 marks)
__________________________________________________________________________________ __________________________________________________________________________________ (IGCSE Paper 1, June 1999, Question 1)
2 a) Explain why two companies that produce different products may benefit from a merger.
(5 marks)
__________________________________________________________________________________ __________________________________________________________________________________ b) How can small businesses compete successfully against larger ones?
(5 marks)
__________________________________________________________________________________ __________________________________________________________________________________ c) Successful businesses produce benefits to groups other than shareholders. Explain how TWO other groups may benefit from a successful business. (4 marks) __________________________________________________________________________________ __________________________________________________________________________________ d) Why might a business fail even though the market demand for its type of product still exists? (6 marks) __________________________________________________________________________________ _________________________________________________________________________________________ (IGCSE Paper 1, November 1999, Question 4)
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Business Activity: Practice questions 3 a) The state-owned railway system in County Y is to be privatised (sold to the private sector). i) How might the business objectives of the private sector differ from those of the public sector?
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) Do you think that this change in ownership will benefit the customers of the railway system? Explain your answer.
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ b) i)
What do you understand by tertiary business activities?
(3 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) Give an example of a business activity that would be classified as being tertiary.
(1 mark)
_______________________________________________________________________________ c) i)
In some countries governments give financial aid to help new businesses start up. Why might they do this?
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) Suggest some reasons why new businesses often fail.
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, May/June 2000, Question 1)
4 a) i)
State THREE objectives that a business in the private sector of an economy might try to achieve.
(3 marks)
_______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ ii) Some public sector organisations are non-profit making. Identify and explain TWO objectives that they might try to achieve.
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ b) i)
What are the main features of a business partnership?
(3 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) What advantages doe7 limited liability give to the shareholders of a limited company?
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________
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Business Activity: Practice questions c) ‘Competition between businesses in a market must be good for consumers and should always be encouraged.’ Explain whether you agree or disagree with this statement. (4 marks) __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ d) Using examples, explain the difference between secondary and tertiary business activity.
(4 marks)
__________________________________________________________________________________ __________________________________________________________________________________ (IGCSE Paper 1, May/June 2001, Question 1)
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Finance: Practice questions
IGCSE Paper 1: Practice questions Section 2 Finance 1 Company X uses a cost-plus pricing policy. It adds 50% to its unit cost to determine the price that it charges. Table 1 gives some more information about the cost structure of Company X. Table 1 Level of output per week (units)
Variable costs ($)
Fixed costs ($)
Unit cost ($)
100
600
400
10
200
1,000
400
?
300
1,400
400
6
a) Give an example of a fixed cost. Explain your answer.
(2 marks)
_________________________________________________________________________________ _________________________________________________________________________________ b) i)
Calculate the unit cost if the output is 200 units per week.
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) What price would Company X charge if it produced 200 units per week? Show your calculations.
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ c) How much profit would Company X make if it produced and sold 300 units per week?
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ d) Explain one other pricing method that Company X could use.
(2 marks)
_________________________________________________________________________________ e) When businesses increase their output their unit costs fall. Explain why this might happen.
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ f) How do small businesses compete against larger ones?
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ (IGCSE Paper 1, November 2000, Question 2)
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Finance: Practice questions 2 Company X sells its products to both consumers and business customers. Consumers pay cash immediately when they buy, but business customers are given two months’ credit. 60% of Company X’s sales are to business customers. Table 1 shows the total value of sales for Company X during the first three months of the year. Table 1
Sales ($000)
a) i)
Jan
Feb
March
20
30
40
Why do you think Company X gives credit terms to business customers?
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) Using the information given, how much cash did Company X receive in March? Show your calculations.
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ b) Explain how a bank overdraft can help a business with a cash-flow problem.
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ c) Company Y needs to raise $5 million to finance its expansion plans. The management asks a bank for a long-term loan. Identify TWO questions that you think the bank manager would ask before deciding whether to give the loan. In each case state why you think the question you ask would be helpful in making the decision. (4 marks) _________________________________________________________________________________ _________________________________________________________________________________ d) i)
Explain what is meant by a financial budget.
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) Why do businesses use financial budgets?
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, May/June 2001, Question 2)
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Finance: Practice questions 3 Table 1 Costs incurred by business V ($000s) Advertising expenditure Stock purchased
20 100
Rent
40
Wages
80
Salaries
50
Maintenance expenditure
35
Distribution costs
40
Insurance
35
a) i)
Identify ONE direct cost and ONE indirect cost from Table 1 above.
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) Explain the difference between direct and indirect costs.
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ iii) What percentage of total cost is accounted for by labour costs?
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ b) What is meant by economies of scale?
(3 marks)
_________________________________________________________________________________ _________________________________________________________________________________ c) Explain the difference between the gross profit and net profit of a business.
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ d) A profit and loss account is one of the main financial statements that has to be produced by a company. Identify ONE other major financial statement and explain what it shows about a company. (5 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________
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Human Resources: Practice questions
IGCSE Paper 1: Practice questions Section 3 Human Resources 1 Figure 2 shows a partly complete organisational chart for a company.
Figure 2
a) Place THREE of the following into the correct place in the chart. Sales Manager Company Secretary Production Supervisor Personnel Director Quality Control Manager
(3 marks)
b) Identify the span of control of the Production Director.
(1 mark)
_________________________________________________________________________________ c) How would you expect the organisational chart of the business to change as the business grows over time? Explain why these changes might be necessary. (6 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ (IGCSE Paper 1, June 1998, Question 4)
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Human Resources: Practice questions 2 Employees in Company Y are paid on a time basis as shown in Figure 1. They usually work for a 40-hour week.
Figure 1
a) What is the hourly wage rate in a normal working week?
(2 marks)
_________________________________________________________________________________ b) What is the hourly wage rate for overtime working?
(2 marks)
_________________________________________________________________________________ c) Identify and explain two payment systems for employees other than time basis.
(6 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ d) i)
What do you understand by ‘motivated employees’?
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) How might a business improve the motivation of its employees other than by increasing pay levels? (6 marks) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, November 2000, Question 3)
3 a) Explain TWO methods of internal communication with the workforce that management can use. (4 marks) _________________________________________________________________________________ _________________________________________________________________________________
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Human Resources: Practice questions b) What problems could poor communication cause for a business?
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ c) i)
What are the differences between an autocratic leadership style of management and a democratic leadership style of management? (4 marks) _______________________________________________________________________________ _______________________________________________________________________________
ii) Under what circumstances would you advise management to use a democratic leadership style? (3 marks) _______________________________________________________________________________ _______________________________________________________________________________ d) A business currently pays its employees on an hourly wage rate basis. It is thinking of changing to a piece rate system. Explain the problems that such a change might cause for the business. (5 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ (IGCSE Paper 1, May/June 2001, Question 4)
4 a) State TWO methods of communication that could be used within a business.
(2 marks)
_________________________________________________________________________________ b) When would you advise the management of a business to use the methods of communication that you have stated in part a)? Explain your answer. (4 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) i)
What is meant by span of control?
(2 marks)
_______________________________________________________________________________ ii) Do you think that a span of control can become too large? Explain your answer.
(3 marks)
_______________________________________________________________________________ _______________________________________________________________________________ d) In large organisations tasks often need to be delegated. i) Explain what is meant by delegation.
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________
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Human Resources: Practice questions ii) Give an example of a task that a shop manager might delegate to a sales assistant. Explain why you think your example is appropriate. (3 marks) _______________________________________________________________________________ _______________________________________________________________________________ e) What functions should the management of any business perform?
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ (IGCSE Paper 1, October/November 2001, Question 2)
5 a) Suggest THREE reasons why people might leave their jobs.
(3 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ b) What problems might a company have if a high percentage of its workforce left each year?
(5 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) Explain what is meant by: i) over time rate of pay
(2 marks)
_______________________________________________________________________________ ii) productivity bonus (2 marks) _______________________________________________________________________________ d) ‘A motivated workforce is a productive one.’ i) What is meant by motivation?
(2 marks)
_______________________________________________________________________________ ii) Why might improved workforce motivation increase productivity?
(3 marks)
_______________________________________________________________________________ _______________________________________________________________________________ iii) State and explain ONE method a business could use which might increase the motivation of its workforce. (3 marks) _______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, October/November 2001, Question 5)
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Marketing: Practice questions
IGCSE Paper 1: Practice questions Section 4 Marketing 1 Questionnaires are often used in market research. a) Explain the disadvantages of this method of gathering data.
(5 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ b) Figure 1 shows a common distribution channel for products. Manufacturer → Wholesaler → Retailer → Customer Figure 1
Why do manufacturers use the services of wholesalers?
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ c) Figure 2 shows the amount of advertising expenditure and the value of sales for Company B for the years 1993–98.
Figure 2
i)
Describe the main features shown in Figure 2.
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) Are these results what you would expect? Explain your answer.
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________
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Marketing: Practice questions iii) Explain the extension strategies that could be used by a business to extend a product life cycle.
(5 marks)
_______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, November 1999, Question 2)
2 ‘Product Z is at the end of the maturity stage of its product life cycle,’ said the Marketing Manager. a) Explain what the Marketing Manager means by this. (2 marks) _________________________________________________________________________________ _________________________________________________________________________________ b) The management of the business has to decide what to do with Product Z. Identify two different options that could be followed and explain their advantages. (6 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) A business is planning to launch a new brand of chocolate bar. Recommend a suitable channel of distribution for this product giving reasons for your choice.
(5 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ d) Figure 2A and Figure 2B show two possible relationships between advertising expenditure and the level of sales revenue of a product.
Figure 2A
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Figure 2B
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Marketing: Practice questions i)
Explain the relationship between sales revenue and advertising expenditure as shown in each of the two graphs, Figure 2A and Figure 2B. (4 marks) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________
ii) Explain one way a business could increase its sales for a product other than by advertising.
(3 marks)
_______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, November 2000, Question 5)
3 a) i)
Why do many businesses carry out market research?
(3 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) What is the difference between primary and secondary market research?
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ b) In order to increase sales, businesses usually spend money on advertising. Explain how advertising can influence the buying decisions of potential customers.
(5 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) i)
Label the main stages of the product life cycle shown in Figure 1.
(2 marks)
Figure 1
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Marketing: Practice questions ii) Explain why an understanding of the product life cycle can be important in determining the marketing mix for a product. (6 marks) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, May/June 2001, Question 3)
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Production and Location: Practice questions
IGCSE Paper 1: Practice questions Section 5 Production and Location 1 Company X makes cans from sheet metal. It buys the metal from a supplier. It costs $200 per kilo. Figure 1 shows the different levels of stock held over a typical 6-month time period.
Figure 1
a) i)
What is the maximum and minimum level of stock that Company X holds in a typical 6-month period?
(2 marks)
_______________________________________________________________________________ ii) How much stock does Company X receive with each delivery?
(1 mark)
_______________________________________________________________________________ iii) How much stock is used in a typical 6-month period?
(3 marks)
_______________________________________________________________________________ iv) What is the total cost of the stocks used in 6 months?
(2 marks)
_______________________________________________________________________________ b) Company X always holds at least a minimum level of stock. Why do you think it does this? (3 marks) _________________________________________________________________________________ _________________________________________________________________________________ c) The supplier decides to offer a 10% discount if the order size is doubled. Draw a diagram on graph paper to show what the level and pattern of stock holding of metal would be if Company X decided to accept this offer. (4 marks) d) What factors should Company X consider in deciding whether to accept the discount offer from its supplier? (5 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ (IGCSE Paper 1, November 1998, Question 1)
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Production and Location: Practice questions 2 A property developer plans to build a major new shopping complex on the edge of a town. People are unsure whether this is a good idea. The town council has decided to do a cost-benefit analysis of the plan. a) i) What is a cost-benefit analysis? (2 marks) _______________________________________________________________________________ _______________________________________________________________________________ ii) What are likely to be the major external costs and benefits resulting from the planned development?
(10 marks)
_______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ b) i)
To finance the shopping development, the property company would need to raise $10 million. Should the state lend the money to finance this kind of development? (4 marks) _______________________________________________________________________________ _______________________________________________________________________________
ii) Apart from a state loan, how could a business in the private sector raise such a large sum of money? (4 marks) _______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, November 1998, Question 5)
3 A television manufacturer is looking for a suitable location for a new factory. a) Identify TWO factors you think should be considered before a decision is taken. Explain your answer.
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ b) Why do governments often pass laws that restrict businesses from locating factories in certain areas?
(5 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ (IGCSE Paper 1, October/November 2001, Question 1)
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International Business: Practice questions
IGCSE Paper 1: Practice questions Section 6 International Business 1 The following data provides information about foreign tourism in the country of Kandex.
Number of visitors (millions)
1985
1991
1996
3.2
5.5
9.1
a) What benefits do you think that the business sector in Kandex would have received from this growth in tourism? (5 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ b) Explain what social costs might result from such an increase in tourism.
(5 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) In addition to the added costs of distribution, identify and explain TWO other problems that a business might face in exporting its products to other countries. (6 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ d) Why do governments often provide assistance to help them export?
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ (IGCSE Paper 1, June 1997, Question 4)
2 The directors of a company are planning to expand production. A decision must be made between building a new factory in their own country or building one overseas in Country B. Country B is seen as a potential new market for the company’s products. a) What could be the advantages to the company of exporting its products to Country B rather than producing them there? (4 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________
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International Business: Practice questions b) ‘Our products have always sold well in our country so I think that they will sell in Country B,’ said the Marketing Director. Explain why this may not be true. (5 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) Governments often intervene in the location decisions of companies. Why do you think this happens? (5 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ d) In addition to location decisions, governments often intervene in other aspects of business behaviour. Use an example to explain: i) how governments do this ii) why they might do it.
(6 marks)
_______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, November 1997, Question 4)
3 a) Identify THREE major factors that a business might take into account when deciding where to locate. Explain why these factors matter. (6 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ b) Should governments intervene in the location decisions of businesses? Justify your answer.
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ (IGCSE Paper 1, May/June 1998, Question 4)
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International Business: Practice questions 4 a) Explain what is meant by a: i) financial cost
(2 marks)
_______________________________________________________________________________ ii) social cost
(2 marks)
_______________________________________________________________________________ b) Using an example to illustrate your answer, explain why a business is more likely to take financial costs into account than social costs when making decisions.
(4 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) In many countries, governments pass laws to help protect certain groups against decisions of businesses. i) How are the interests of shareholders protected by such laws? (3 marks) _______________________________________________________________________________ _______________________________________________________________________________ ii) State two other groups that are often protected from business activity by government laws.
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ d) The flow of imports into an economy can be limited by government action. i) State TWO methods that can be used to restrict imports into a country.
(2 marks)
_______________________________________________________________________________ _______________________________________________________________________________ ii) Do you think that such methods benefit the business community of the country imposing the restrictions. Explain your answer. (5 marks) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, May/June 2000, Question 5)
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International Business: Practice questions 5 a) A multinational oil company is planning to build an oil distribution depot in a coastal resort in Malaysia. Public opinion is divided about the proposal. Explain the social costs and benefits that you think the Malaysian government should consider before allowing the depot to be built. (8 marks) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ b) Identify and explain TWO problems that you think a business would face when exporting goods to another country.
(6 marks)
_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ c) The government in Country Z is introducing a minimum wage law that stops businesses paying wages below a certain level. i) Why do you think the government is introducing this law? (2 marks) _______________________________________________________________________________ ii) What effects might this have on the business community?
(4 marks)
_______________________________________________________________________________ _______________________________________________________________________________ (IGCSE Paper 1, May/June 2001, Question 5)
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