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University of Cambridge International Examinations International General Certificate of Secondary Education

1) Party Pops sells products for children's birthday parties. The Marketing Director thinks demand is price elastic. 2) Party Pops advertises on television and sells products through its own stores and online. It is considering expanding into a new country. 3) Lowering prices could increase total revenue if it leads to a large enough increase in quantity demanded. However, it may reduce profit margins. Expanding internationally carries risks but could boost profits if successful. Market research would help Party Pops decide the best strategy.

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0% found this document useful (0 votes)

34 views12 pages

University of Cambridge International Examinations International General Certificate of Secondary Education

Uploaded by

pallavi shinde

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS

International General Certificate of Secondary Education

* 2 1 5 6 7 0 1 8 8 2 *

BUSINESS STUDIES 0450/12

Paper 1 October/November 2013
1 hour 45 minutes
Candidates answer on the Question Paper.
No Additional Materials are required.

READ THESE INSTRUCTIONS FIRST

Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
Do not use staples, paper clips, highlighters, glue or correction fluid.
DO NOT WRITE IN ANY BARCODES.

Answer all questions.

The businesses described in this question paper are entirely fictitious.

At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.

This document consists of 11 printed pages and 1 blank page.

DC (NF/JG) 63412/3
© UCLES 2013 [Turn over
2

1 Protec makes components for use in computers. The company is located in country Y where For
workers’ wages are high. Table 1 gives data about Protec. Examiner’s
Use

Table 1

Number of employees Average weekly wage Total output per

$ week [units]
400 500 2400

(a) Calculate average labour productivity for Protec.

..........................................................................................................................................

..................................................................................................................................... [2]

(b) Identify two reasons why labour productivity is important for Protec.

Reason 1: ........................................................................................................................

..........................................................................................................................................

Reason 2: ........................................................................................................................

..................................................................................................................................... [2]

Way 1: ..............................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..........................................................................................................................................

Way 2: ..............................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..................................................................................................................................... [4]

© UCLES 2013 0450/12/O/N/13

(d) Identify and explain three reasons why wages are higher in some countries than others. For
Examiner’s
Reason 1: ........................................................................................................................ Use

..........................................................................................................................................

Explanation: .....................................................................................................................

..........................................................................................................................................

Reason 2: ........................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..........................................................................................................................................

Reason 3: ........................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..................................................................................................................................... [6]

(e) The management of Protec is thinking of relocating the factory to a country where
wages are lower. Do you think that Protec would benefit from such a move? Justify your
answer.

..........................................................................................................................................

..................................................................................................................................... [6]

© UCLES 2013 0450/12/O/N/13 [Turn over

2 Party Pops is a business that sells products such as cakes and balloons for childrens’ birthday For
parties. The Marketing Director thinks that the demand for the company’s products is price Examiner’s
elastic. Party Pops advertises on television. The products are sold through the company’s Use

own retail shops. However, the Marketing Director is thinking of changing this to selling only
on the Internet.

(a) Identify two aims of advertising.

Aim 1: ...............................................................................................................................

..........................................................................................................................................

Aim 2: ...............................................................................................................................

..................................................................................................................................... [2]

(b) Identify two methods of pricing that Party Pops could use.

Method 1: .........................................................................................................................

Method 2: .................................................................................................................... [2]

Reason 1: .........................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..........................................................................................................................................

Reason 2: ........................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..................................................................................................................................... [4]

© UCLES 2013 0450/12/O/N/13

(d) Identify and explain two methods of promotion (other than advertising) that Party Pops For
could use to increase sales. Examiner’s
Use

Method 1: .........................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..........................................................................................................................................

Method 2: .........................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..........................................................................................................................................

..................................................................................................................................... [6]

(e) Do you think Party Pops should stop selling through shops and sell only on the Internet?
Justify your answer.

..........................................................................................................................................

..................................................................................................................................... [6]

© UCLES 2013 0450/12/O/N/13 [Turn over

3 Harry owns a pizza restaurant in a large city. Table 2 gives financial data for the business in For
2012. Examiner’s
Use

Table 2

Selling price per pizza $8

Variable costs per pizza $5
Weekly fixed costs $2700
Weekly sales 1500 pizzas

(a) What is meant by ‘variable costs’?

..........................................................................................................................................

..................................................................................................................................... [2]

(b) Identify two examples of fixed costs for Harry’s business.

Example 1: .......................................................................................................................

Example 2: .................................................................................................................. [2]

..........................................................................................................................................

..................................................................................................................................... [4]

© UCLES 2013 0450/12/O/N/13

(d) Harry pays his workers piece rates. Identify and explain one advantage and one For
disadvantage to Harry of using this method of payment. Examiner’s
Use

Advantage: .......................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..........................................................................................................................................

Disadvantage: ..................................................................................................................

..........................................................................................................................................

Explanation: .....................................................................................................................

..........................................................................................................................................

..................................................................................................................................... [6]

(e) Harry is planning to reduce the price of his pizzas to $7 in order to increase sales. Do
you think that this change will benefit his business? Justify your answer.

..........................................................................................................................................

..................................................................................................................................... [6]

© UCLES 2013 0450/12/O/N/13 [Turn over

4 Country A has a mix of private sector and public sector enterprises. Figures 1– 3 give some For
data about the two sectors. Examiner’s
Use

Fig. 1: Average hourly Fig. 2: Average hours Fig. 3: Number of

wage worked per week employees in public
sector

10 45 Private Sector 14
Public

millions
hours
Sector 12
8 40
$

Public
6 35 8
Private Sector
Sector
0 0 0
2000 2006 2012 2000 2006 2012 2000 2006 2012

(a) Identify two examples of public sector enterprises.

Example 1: .......................................................................................................................

..........................................................................................................................................

Example 2: .......................................................................................................................

..................................................................................................................................... [2]

(b) Identify two aims that public sector enterprises often have.