Why do businesses have little control over the price of their products in competitive markets?

By charging more than market price they lose out on sales

What is not a drawback of taking out a bank loan?

Bank will own part of the business

Fixed Cost + Total Variable Costs

What is a dynamic market?

A market that is constantly changing

What is the effect on a product when value is added to it? (in market segment terms)

Consumers switch to that product's brand from another brand, That product becomes successfully differentiated

What is 'surge pricing'?

Constantly changing the price in response to demand

The banking system might be at risk if...

Banks over-lend, Consumers lose confidence in it

What is a disadvantage of being a sole trader?

umlimited liability for all the debts

You can increase unit contribution without increasing price by:

Reducing variable cost per unit

What is meant by oligopoly?

limited competition, market is shared between stakeholders

What is an advantage of raising finance through share capital?

it doesn't require any interest to be paid, shares in PLCs can be sold on the stock exchange

The point at which the total revenue and total cost lines cross is used to determine

Break even revenue, Break even units

What is a market map used for?

Plots brands in the market according to customer's needs

Global Financial Crisis in 2008

Which of these is not a valid criticism of break even analysis?

It assumes that total revenue = Price x Quantity

Which one of these is not a major source of product differentiation?

Difference in the amount of imported products

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A-Level Theme 1 Revision: Combined Weeks 7-9

77 termsStudBud Administration47 plays

Economics B Theme 1 Week 7: How do firms compete? Economics B Theme 1 Week 8: sources of finance Economics B Theme 1 Week 9: The Role of Banks/The Relationship Between Revenue and Costs

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Questions 77

Answers

1
Why do businesses have little control over the price of their products in competitive markets?
Regulators stop businesses from overcharging
By charging more than market price they lose out on sales
They cannot charge more due to law restrictions
manufactures of the products decide the set prices for them
2
What is not a drawback of taking out a bank loan?
Banks usually require collateral
Need to pay interest
Future repayments can damage longer term cashflow
Bank will own part of the business
3
Is the electronic devices market a...
Homogeneous market
niche market
Stable market
Dynamic market
4
Which of these is another word for sales revenue?
Turnover
Net Income
Net Revenue
Gross Profit
5
Equities is another name for...
stock market
shares
capital
loan
6
Which of these is not a crowdfunding model?
Price Based
Rewards Based
Donation Good Cause
Equity Based
7
What does IPO stand for?
initial potential offering
initial public offering
initial public offertory
investment public offering
8
Total Cost is
Fixed Cost
Fixed Cost + Revenue Cost
Fixed Cost + Unit Variable Cost
Fixed Cost + Total Variable Costs
9
Credit acts like...
Benedict Cumberbatch in Sherlock
An Invisible Hand
Paraffin on a canal
Lighter fluid on charcoal
10
What is a dynamic market?
A flexible market
A market that changes its customer base frequently
A market which targets a large range of customers
A market that is constantly changing
11
Which TV program is based around venture capital?
Watchdog
The Apprentice
Secret Shopper
Dragons' Den
12
Mr Ryan does not (and never will)own any music by...
Van Morrison
The Waterboys
Queen
The Beatles
13
Which of these is an internal source of finance?
Overdraft
Retained profits
Venture capital
Shares
14
Break-even point will increase when costs increase and selling price stays the same
True
False
15
Another word for collateral on a bank loan is...
Security
Warranty
Guarantee
Depreciation
16
What is the effect on a product when value is added to it? (in market segment terms)
People are less likely to pay a higher price
Produces repeat sales
Consumers switch to that product's brand from another brand
That product becomes successfully differentiated
17
What is 'surge pricing'?
Energy pricing
Higher prices for people at the front of a queue
Randomly changing the price
Constantly changing the price in response to demand
18
Break even point will decrease when selling price decreases and costs stay the same
False
True
19
The banking system might be at risk if...
Banks over-lend
Banks restrict lending
Banks over-capitalise
Consumers lose confidence in it
20
What is a disadvantage of being a sole trader?
full control of the business
umlimited liability for all the debts
have to share the profits
more regulations
21
You can increase unit contribution without increasing price by:
Reducing price
Reducing variable cost per unit
Increasing overheads
Reducing fixed costs
22
What is meant by oligopoly?
limited competition, market is shared between stakeholders
Stakeholders influence the business to sell certain products
The business is controlled by shareholders
the business changes markets due to insufficient customers
23
When a business combines factors to produce something more desirable to the customer:
Competitive advantage
Profiteering
Pure luck
Adding value
24
Which line is not drawn on the break-even chart?
Variable Cost line
Fixed Cost Line
Total Cost
Total Revenue
25
Banks act as financial intermediaries between...
Shops and offices
Shareholders and businesses
The government and taxpayers
Lenders and borrowers
26
Structural change is...
Temporary
Related to buildings
Not very important
A one-off and permanent
27
Another word for borrowing is...
Capital
Debit
Equity
Credit
28
Which of the following is not a source of internal finance?
overdrafts
working capital
trade credit
asset sales
29
VC = 40p per unit; sales =6,000 units at £2 each. FC = £4,000. Calculate unit contribution.
£9600
£2500
£1.60
£5600
30
What is the market where shares in Microsoft Inc can be bought and sold?
NASDAQ
London Stock Exchange
New York Stock Exchange
Wall Street
31
What is the market where shares in Sainsburys plc can be bought and sold?
New York Stock Exchange
NASDAQ
Wall Street
London Stock Exchange
32
What is an advantage of raising finance through share capital?
new shareholders will expect to receive dividends as rewards
it doesn't require any interest to be paid
shareholders must be consulted in decision
shares in PLCs can be sold on the stock exchange
33
Selling price is £10 , Variable Cost is £5 , Fixed Cost is £500. What is the break -even point?
£10
100 items
1000 items
£100
34
Which of these is a fixed cost for an advertising agency?
Factory workers wages
Office Desks
Packaging materials
Electricity
35
Which of these is not a variable cost at Airsprung?
Workers wages
Cost of springs
Cost of mattress stuffing
Telephone bills
36
when costs fall, break even point is lower and profits higher
No effect
False
True
37
The point at which the total revenue and total cost lines cross is used to determine
Break even revenue
Break even units
Only break even units
Break even cost
38
Which of these is not a reason why break even analysis is used?
To predict profit
To show banks/investors
To inform pricing decisions
To identify a target market
39
Fixed Cost remains the same even whether you make or sell a product or not
False
True
40
What is a market map used for?
Plots brands in the market according to customer's needs
Displays the way in which customers view a brand
Plots brands in the market according to product features
Shows where each brand is according to its target market
41
GFC refers to the...
Great Financial Crash in 2010
Great Financial Crash in 2006
Global Financial Crisis in 2008
Global Financial Crisis in 2012
42
Hire purchase is not...
method of renting goods
method of buying goods
method of leasing goods
method of selling shares
43
Which of these is not a valid criticism of break even analysis?
It assumes fixed costs and variable costs are known
It assumes that price will remain the same
It assumes that total revenue = Price x Quantity
It assumes that the business only sells one product
44
Variable Cost does not change with output level
False
True
45
Which one of these is not a major source of product differentiation?
Difference in quality combined with difference in price
Differences in availability
Differences in functional features or design
Difference in the amount of imported products
46
Selling price per unit - variable cost per unit is known as
Fixed Cost
Break -even
Contribution
Profit
47
Which of these is not a crowdfunding site?
Pledge
Kickstarter
Indiegogo
BrightIdea
48
Which of these is an external source of finance?
Retained profits
Crowdfunding
Selling Assets
Working capital
49
When break-even is low a business needs to sell more to make a profit
No effect
True
False
50
Gross Profit = Total Revenue - ?
Gross Costs
Total Costs
Fixed Costs
Total Variable Costs
51
Contribution per unit is the same as gross profit per unit.
True
False
52
The formula for calculating break-even point is...
(P-VC)/FC
(P-VC)/Q
Q/(P-VC)
FC/(P-VC)
53
When the Total Revenue line is below the total cost line, the business has made a profit
False
True
54
Markets which are always changing can be described as...
Ecstatic
Efficient
Static
Dynamic
55
Which of these is another word or phrase for variable costs?
Production Costs
Cost of Sales
Overheads
Indirect Costs
56
Which of these businesses is not an interface business
AirBnB
Uber
AliBaba
Argos
57
Competitive Advantage can come from...
Innovation
Consumer Sovereignty
Relationships with suppliers
Reputation
58
Which of these is not a role of banks?
Financing business's growth plans
Spreading investment risks
Facilitating trading
Paying high salaries
59
Which of these is not an example of product differentiation?
Improved product packaging
Establishing a strong brand image for a good or service
Lowering the products or services price
Making the USP of a good or service clear
60
At break-even, which two lines cross?
Units and Cost
Fixed and Total Revenue
Fixed and Total Cost
Total Revenue and Total Cost
61
What is an advantage of private limited companies?
full control of the business
founding owner receives all profits
unlimited liability for the business debts
limited liability for the business debts
62
Mortgages are a...
medium term source of finance
short term source of finance
long term source of finance
63
Which of these is not a benefit of break-even analysis?
Helps to calculate potential Revenue
Help to set selling price
None
Helps to identify fixed and variable cost linked to products
64
Which of these is another word or phrase for fixed costs?
Indirect costs
Direct costs
Overheads
Cost of Sales
65
Price = £10; VC=£8; FC=200; Actual Production = 250. What is the Margin of Safety?
150 units
250 units
£500
100 units
66
What is break-even?
When there is profit and loss
When there is loss
When there is profit
When there is no profit or loss
67
A disadvantage of market mapping for a bakery
Tastes change and so it may quickly become out of date
High quality and low prices aren't viable
Location much more important than aspects of product
It helps them to find a gap in the market
68
What is Mr Ryan's favourite film?
Groundhog Day
Star Wars
The Shawshank Redemption
Live and Let Die
69
Venture capital...
is raised by selling shares to the public
is long-term investment in high risk/high reward businesses
is short-term loans to a business start-up
is cash held by the business
70
What is Margin of Safety?
Difference between Actual Output and B/E output
The amount by which break even falls to make a loss
Both of these
None of these
71
Which of these is not a way in which businesses compete?
Collaboration
Branding
Product differentiation
Pricing
72
Competitive Advantage is how a business...
Gains an edge over its rivals
Prices its products
Uses on-pack competitions
Beats other businesses through unfair competition
73
What does repositioning mean?
Changing the brand name
Changing the product to appeal to a different market segment
Changing the location of the business
Paying the employees more money
74
When the Total Cost line is above the Total Revenue line, the business has made a profit
True
False
75
Internal finance is likely to be used by...
new, unknown businesses
stable businesses
well established businesses that want to expand
small up and coming businesses
76
At Break even, Total Cost =Total Revenue
True
False
77
what term offers a link between investors and savers?
financial intermediaries
equity
PLCs
external finance

A-Level Theme 1 Revision: Combined Weeks 7-9 Flashcards | StudBud