AQA GCSE Business: Ethical and environmental considerations and The economic climate on businesses (8132) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover sections 3.2.2 (Ethical and environmental considerations) and 3.2.3 (The economic climate on businesses) of the AQA GCSE Business (8132) specification, for first teaching from September 2017. Read the study guide and revision notes first. Related: course hub, checklist, free diagnostics, and the technology and ethics practice set.

Questions

1. State two ways in which a business can behave ethically. [2]

2. Define ethical behaviour. [2]

3. Identify two environmental considerations named in the specification, other than recycling. [2]

4. Trentmoor Bakery uses 60,000 paper boxes a year. Recycled boxes cost 6p more each. The bakery’s yearly profit is £48,000. Calculate the extra yearly cost of recycled boxes, and express it as a percentage of profit. [4]

5. Explain one benefit and one drawback to a business of behaving ethically. [4]

6. Brantham Coaches runs five diesel minibuses. Replacing them with electric ones would cost £140,000 each instead of £95,000. Each electric minibus would cost £6,000 a year to run, against £14,000 for a diesel one. Analyse the trade-off between sustainability and profit in this decision. [6]

7. Gransden Joinery has a loan of £90,000 and an average overdraft of £20,000. The loan rate rises from 5% to 7% and the overdraft rate from 11% to 14%. Calculate the total extra interest the business pays in a year. [4]

8. Explain two ways in which higher interest rates could reduce Gransden Joinery’s sales of fitted kitchens. [4]

9. The level of employment in the town where Trentmoor Bakery trades rises sharply. Analyse how this could affect the bakery. [4]

10. Discuss how the demand for fitted kitchens and the demand for basic bread might each change if household incomes fall. [6]

11. Gransden Joinery’s yearly timber bill is £30,000. Timber from a certified sustainable source would cost 15% more. Profit is £42,000 before this change, and interest costs are about to rise by £2,400 a year (see question 7). Evaluate whether Gransden should switch to the sustainable timber. [9]

Answers

1. Any two, one mark each: paying suppliers a fair price [1]; honest advertising and labelling [1]; fair pay and safe conditions for staff, or fair treatment of customers (accept similar fair and honest actions). [2] Examiner insight: Each way must show fairness or honesty; a vague word like “being nice” gives nothing to credit, and two versions of the same idea count once.

2. Acting in ways that stakeholders consider [1] to be both fair and honest [1]. [2] Examiner insight: A definition needs both ideas; “fair” alone, or “legal”, leaves out part of the meaning.

3. Any two of: traffic congestion, disposing of waste, noise pollution, air pollution [1] [1]. [2] Examiner insight: Naming the specification’s own areas is safest; a general phrase such as “protecting nature” may not match what the question asks for.

4. Extra cost: 60,000 × 6p = 360,000p [1] = £3,600 [1]. Percentage of profit: 3,600 ÷ 48,000 × 100 [1] = 7.5% [1]. [4] Examiner insight: Convert pence to pounds before comparing with profit, and write the unit with each answer.

5. Benefit: a better reputation with customers who value fairness, so loyalty and sales may rise [1] and the business may find it easier to recruit staff [1]. Drawback: ethical choices such as fair supplier prices cost more [1], which lowers short-run profit or forces higher prices [1]. [4] Examiner insight: Each of the two points needs a reason that explains it, not just a statement; “good for the business” alone gains little.

6. Extra upfront cost: 5 × (£140,000 − £95,000) = £225,000 [1]. Yearly running saving: 5 × (£14,000 − £6,000) = £40,000 [1]. Time to recover the extra cost: £225,000 ÷ £40,000 = about 5.6 years [1]. Sustainability benefit: lower emissions that help with global warming, and a better image [1]. Profit cost: a large outlay now, which may strain cash and lower profit in the short run [1]. Judgement: worthwhile only if the firm can fund the cost and expects to keep the vehicles beyond about 5.6 years, because the benefit comes later [1]. [6] Examiner insight: Analysis improves when the figures are used in the argument; a general line about “saving the planet” without numbers stays at the level of description.

7. Loan interest before: £90,000 × 5% = £4,500; after: £90,000 × 7% = £6,300; extra £1,800 [1]. Overdraft before: £20,000 × 11% = £2,200 [1]; after: £20,000 × 14% = £2,800 [1]. Extra £600. Total extra = £1,800 + £600 = £2,400 a year [1]. [4] Examiner insight: Show each rate calculation; a wrong total can still gain credit for correct working, but a bare wrong figure cannot.

8. Customers who borrow to pay for a kitchen face higher repayments [1], so some delay or cancel the purchase [1]. Households with mortgages or loans have less spare income after paying more interest [1], so they spend less on non-essential home improvements [1]. [4] Examiner insight: Each way needs a link from the rate rise to customers’ behaviour, not just “people spend less”.

9. More people have jobs and wages, so more households can afford to buy bread and cakes, raising demand [1] [1]. The bakery may find it harder to recruit staff [1] and may need to pay more to attract and keep them, which raises costs [1]. [4] Examiner insight: A chain of cause and effect (jobs, then incomes, then sales) is stronger than naming an effect alone, and one effect on demand plus one on human resources shows breadth.

10. Fitted kitchens: expensive, and usually put off when incomes fall [1], so demand is likely to fall sharply [1]. Bread: a basic item that households keep buying [1], so demand falls little, though some may trade down to cheaper loaves [1]. Business response: Gransden might offer cheaper ranges or finance deals, while the bakery may promote value lines [1]. Judgement: the fall is likely to hit the kitchen business harder because it sells a high-cost, non-essential item [1]. [6] Examiner insight: Discussion questions reward a contrast between products and a short conclusion; treating both products the same loses the comparison.

11. Extra timber cost: £30,000 × 15% = £4,500 [1]. Profit after timber and interest: £42,000 − £4,500 − £2,400 = £35,100, a fall of about 16% [1]. For switching: a better reputation with environmentally aware customers [1]; protects the supply of a scarce resource for the long term [1]. Against: profit is already under pressure from interest, and £6,900 of extra cost is a large share of profit [1]; if customers will not pay more, the cost may not be recovered [1]. If it raises prices, sales of non-essential kitchens could fall [1]. Judgement: switching is sensible if Gransden can pass part of the cost to customers who value sustainability [1] or phase the change in over time [1]; with interest costs rising and demand sensitive to income, a gradual move is the more prudent decision. [9] Examiner insight: An evaluation needs figures from the case, both sides and a judgement with a reason; a one-sided list of benefits stays in the lower levels of response.

Where marks are usually lost

• Writing “legal” instead of “fair and honest” when defining ethical behaviour.
• Giving only benefits or only costs of an environmental or sustainable choice.
• Not using the figures in the case when analysing or evaluating.
• Forgetting to convert pence to pounds, or leaving off the unit.
• Explaining why interest rates change when the question asks about the effect.
• Saying “people have less money” without linking it to a purchase decision.
• Treating all products as equally sensitive to a change in incomes.
• Finishing an evaluate answer with a summary instead of a judgement.

Next steps

• Revision notes for this unit
• Study guide for this unit
• AQA GCSE Business hub and checklist
• All free 10-minute diagnostics: diagnostics
• Book a free trial class: trial

Frequently asked questions

What does ethical behaviour mean in AQA GCSE Business (8132)? The specification defines it as acting in ways that stakeholders consider both fair and honest. Writing “legal” instead of fair and honest is a common way to lose the definition marks.

Do I need to explain why interest rates change for AQA GCSE Business? No. The specification says economic theory about how or why interest rates change is not required; questions ask about the effect of a change on businesses and spending.

How do I work out the effect of an interest rate rise on a business? Calculate interest as the amount borrowed times the rate at the old and new rates, subtract to find the extra cost, then compare it with the business’s profit.

How should I answer an evaluate question on an ethical or environmental choice? Use the figures in the case to show both the cost and the benefit, then reach a judgement that depends on the business and its customers. Giving only benefits or only costs limits the marks.

Official syllabus

AQA GCSE Business (8132) specification, for first teaching from September 2017, published by AQA. Sections 3.2.2 and 3.2.3.