A Level Business: External influences on business activity (Cambridge 9609) – 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 section 6.1 External influences on business activity (6.1.1 to 6.1.7) of the Cambridge International AS & A Level Business 9609 syllabus for examination in 2026, 2027 and 2028, which is A Level content. All businesses and people are invented. Revise first with the study guide and the revision notes. Course links: the Cambridge A Level Business hub, the checklist and the free diagnostics.

Questions

1. Define privatisation. Identify one possible disadvantage of privatising a regional bus service. [3]

2. Tarnwick Row Bakery employs 24 staff, each working 30 hours a week for 50 weeks a year. Sales revenue is £1,260,000 a year. The legal minimum wage, which all staff receive, rises from £6.50 to £7.20 an hour.

(a) Calculate the increase in the annual wage bill. [3] (b) Analyse one way the bakery could respond. [3]

3. Ostlin Foods has a £300,000 loan at a variable rate. The rate rises from 4% to 6.5%.

(a) Calculate the rise in annual interest. [2] (b) Analyse two other ways the higher rate could affect Ostlin Foods, a restaurant supplier. [4]

4. Explain how a government might use the law to control (i) marketing behaviour and (ii) location decisions, and one effect of each on a business. [4]

5. (a) State the three key macroeconomic objectives named in the syllabus. [3] (b) A maker of luxury chocolate has income elasticity of demand of +2.5. Incomes in the economy grow by 3%. Calculate the expected change in demand. [2]

6. A chemical works pollutes a river, and the cost falls on local residents. Explain how a government might deal with this market failure. [4]

7. Drevane Textiles buys cotton priced at €80,000 per shipment. The exchange rate falls from €1.25 to €1.10 per £1.

(a) Calculate the sterling cost of a shipment before and after the change, and the percentage rise. [4] (b) Evaluate whether Drevane Textiles should switch to a domestic cotton supplier. [6]

8. The managing director of Harlow Reach Chemicals proposes giving a gift to an official to help win a waste-disposal contract.

(a) Explain why this raises a corporate social responsibility (CSR) issue. [3] (b) Explain one benefit and one cost to Harlow Reach of carrying out a social audit. [3]

9. Cobblewick Pharmacy serves a town of 50,000 people, of whom 16% are over 65. Ten years later the town has 54,000 people and 24% are over 65.

(a) Calculate the percentage increase in the number of people over 65. [3] (b) Analyse how this demographic change could affect Cobblewick Pharmacy’s decisions. [5]

10. A supermarket opens an in-store bakery near Tarnwick Row Bakery and cuts bread prices. At the same time, the bakery’s only flour supplier raises prices by 8%. Flour costs the bakery £25,000 a month.

(a) Calculate the extra annual flour cost. [2] (b) Analyse one effect of the competitor’s action and one way technology could help the bakery respond. [4]

11. Vandeline Assembly, a multinational, plans a factory in a country offering it tax incentives. It expects £12 million annual profit, taxed locally at 20%, and the factory would create 600 jobs.

(a) Calculate the tax the host government receives and the profit left after tax. [2] (b) Evaluate whether the host government should welcome the investment. [6]

12. Harlow Reach Chemicals carried out an environmental audit. Last year it used 420,000 kWh of energy to make 70,000 tonnes of product. This year it used 357,000 kWh to make 85,000 tonnes.

(a) Calculate the percentage fall in energy used per tonne. [3] (b) Justify whether Harlow Reach should publish the audit results to its stakeholders. [5]

Answers

1. Privatisation is the transfer of a business or industry from government to private ownership [1]. A private owner may cut unprofitable rural routes [1] because it seeks profit rather than wide service [1]. [3] Examiner insight: a definition scores best when it names the direction of the change; the disadvantage needs a reason, not only a label.

2. (a) Old wage bill: 24 × 30 × 50 × 6.50 = £234,000 [1]. New: 24 × 30 × 50 × 7.20 = £259,200 [1]. Increase: £25,200, about 10.8% [1]. (b) The extra cost is 2.0% of sales revenue (25,200 ÷ 1,260,000) [1]. The bakery could raise prices by about 2% [1], but whether that protects profit depends on how demand responds, since customers may switch to rivals [1]. [6] Examiner insight: “analyse” asks you to build a chain from cause to effect, and quoting the 2.0% from your own calculation shows you are using the data.

3. (a) Before: 300,000 × 0.04 = £12,000 [1]. After: 300,000 × 0.065 = £19,500, a rise of £7,500 [1]. (b) Higher rates can reduce customers’ spending on eating out, so restaurant demand for Ostlin’s products may fall [1] and orders shrink [1]. Higher borrowing cost may also lead Ostlin to delay investment in new equipment [1], which may slow growth [1]. [6] Examiner insight: two different effects are needed; a second point that only repeats the loan cost adds little.

4. Marketing: the law may ban misleading claims [1], so the firm must check adverts and may need to change packaging or slogans [1]. Location: the law may restrict where a firm may build [1], which may force it onto a dearer or less convenient site [1]. [4] Examiner insight: for “explain” with two areas, give each area its own law and its own effect so both can be credited.

5. (a) Low unemployment [1], low inflation [1], economic growth [1]. (b) Change in demand = 2.5 × 3 [1] = +7.5% [1]. [5] Examiner insight: show the multiplication and give the sign; a bare number may leave the direction unclear.

6. Pollution is a cost imposed on others, which the firm ignores [1]. A tax per unit of pollution makes the firm pay for the harm [1] and gives it a reason to cut output or pollution [1]. Alternatively, regulation or fines can cap the discharge, or a subsidy can help fund cleaner equipment [1]. [4] Examiner insight: name the market failure and link the tool to it, rather than listing tools alone.

7. (a) Before: 80,000 ÷ 1.25 = £64,000 [1]. After: 80,000 ÷ 1.10 = £72,727 [1]. Rise: £8,727 [1], which is 13.6% [1]. (b) A domestic supplier removes exchange rate risk [1] and gives cost certainty [1]. But its price may be higher or its quality lower [1], and switching may damage an existing relationship [1]. The decision depends on whether the pound’s fall looks lasting and how the domestic price compares [1]. On balance, Drevane should switch only if the domestic price is below £72,727 equivalent, or it values certainty enough to pay a premium [1]. [10] Examiner insight: an evaluation needs a judgement with its condition; ending on a list of points does not answer “evaluate”.

8. (a) A gift to win a contract is an incentive for the award of a contract [1], which is unethical and may be illegal [1], and it puts private gain ahead of fair treatment of rivals and society [1]. (b) Benefit: a social audit may show problems early and improve reputation with the community [1]. Cost: it takes time and money [1], and it may reveal problems the firm must then fix [1]. [6] Examiner insight: give one benefit and one cost separately, each with development, as the question asks for both.

9. (a) Before: 50,000 × 0.16 = 8,000 [1]. After: 54,000 × 0.24 = 12,960 [1]. Increase: 4,960 ÷ 8,000 = 62% [1]. (b) Older customers often need more medicines, so demand for prescriptions may rise [1]. Cobblewick could widen its range or offer home delivery [1], open at times and in places easy for older people [1], or recruit staff trained in advising on long-term conditions [1]. The effect is limited if other customer groups shrink or rivals respond [1]. [8] Examiner insight: state the group’s size before and after, then link it to a specific decision such as range, delivery or staffing.

10. (a) 25,000 × 0.08 = £2,000 a month [1], so £24,000 a year [1]. (b) The competitor’s price cut may pull customers away [1], forcing the bakery to match prices or differentiate on quality [1]. An ordering app could let customers pre-order, building loyalty [1] and reducing waste through better demand forecasts [1]. [6] Examiner insight: each effect is credited when it is tied to this bakery’s decisions, not to businesses in general.

11. (a) Tax: 12 × 0.20 = £2.4 million [1]; profit after tax: £9.6 million [1]. (b) Gains: 600 jobs [1], tax revenue and export earnings [1], possible transfer of skills [1]. Concerns: most profit may leave the country [1] and local firms may lose out [1]. Judgement: the host should welcome it if the jobs and skills outweigh the incentives given, and if safeguards on the environment and local suppliers are agreed [1]. [8] Examiner insight: use the figures; showing tax is a small share of profit gives a reason for the weighing.

12. (a) Before: 420,000 ÷ 70,000 = 6.0 kWh per tonne [1]. After: 357,000 ÷ 85,000 = 4.2 [1]. Fall: 1.8 ÷ 6.0 = 30% [1]. (b) For: publishing builds trust with customers and regulators [1] and supports sustainability claims [1]. Against: it may expose areas where performance is still weak [1], and rivals or pressure groups may use it [1]. Judgement: with a clear 30% improvement, publishing with a plan for further cuts is justified [1]. [8] Examiner insight: “justify” needs a decision supported by reasons and a recognised risk, not reasons for one side alone.

Where marks are usually lost

• Describing a factor without linking it to the business in the stem.
• Making only one point where the question asks for two.
• Reversing the direction of an exchange rate effect.
• Giving a percentage change without dividing by the original figure.
• Leaving out units or signs in calculations.
• Listing advantages of privatisation or nationalisation without weighing them.
• Treating CSR or sustainability as costless.
• Ending evaluation without a judgement.

Next steps

• Review the revision notes and the study guide.
• Check coverage on the Cambridge A Level Business hub and the checklist.
• Try the free 10-minute diagnostics.
• Book a free trial class: /trial/.

Frequently asked questions

Which section of Cambridge AS and A Level Business 9609 do these questions cover? Section 6.1 External influences on business activity, from 6.1.1 to 6.1.7, which is A Level content. All businesses and people in the questions are invented.

What is the most common mistake with exchange rate questions? Reversing the direction of the effect. Work out the cost in the home currency before and after the change, then say whether imports or exports have become dearer or cheaper.

How do you calculate a percentage change correctly? Divide the change by the original figure and multiply by 100. Dividing by the new figure, or leaving out the sign, are common errors.

Is corporate social responsibility costless for a business? No. CSR and sustainability can bring benefits such as reputation and trust, but they also carry costs, so answers should weigh both sides before judging.

Official syllabus

Cambridge International AS & A Level Business 9609 syllabus for examination in 2026, 2027 and 2028, published by Cambridge University Press & Assessment (Cambridge International), section 6.1.