Edexcel IGCSE Business: Classification of businesses and location decisions (4BS1) – 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 follow the Pearson Edexcel International GCSE in Business (4BS1) specification, Issue 2, February 2026, sections 1.3 (Classification of businesses) and 1.4 (Decisions on location). The businesses and figures are invented. Command words follow the specification’s command-word table.

Links: the Business hub, the printable checklist, the study guide, the revision notes and the free diagnostics.

Questions

1. Define the term “primary sector”. [2]

2. State the sector (primary, secondary or tertiary) of each business activity.

(a) Cutting and styling hair in a salon. [1] (b) Growing rice on a farm. [1] (c) Assembling bicycles from bought-in parts. [1] (d) Mining copper ore. [1]

3. Delta Coast Foods catches fish (sales revenue £90,000 a year), cans the fish in its own factory (£210,000) and runs a café selling fish meals (£60,000).

Calculate the percentage of its total sales revenue that comes from the secondary sector, and the percentage from the tertiary sector. Show your working. [4]

4. Explain two reasons why a bakery might locate close to its customers. [4]

5. Dunmore Gems is a diamond-mining company. Outline why it has little choice about where to locate its mine. [2]

6. Orchard Lane Pottery makes and sells ceramics and employs four people. It is choosing between two sites. Annual forecasts:

	Site X (high street, tourist town)	Site Y (edge of city, industrial estate)
Sales revenue	£190,000	£205,000
Materials	£52,000	£52,000
Rent	£2,800 a month	£1,900 a month
Wages	4 x £20,000	4 x £22,500
Delivery of clay and goods	£6,000	£3,000

(a) Calculate the forecast annual profit at each site. [5] (b) Justify which site Orchard Lane Pottery should choose. [8]

7. Pageturner Books has one shop in a small coastal town. Local sales are falling. The owner is thinking of opening a website to sell books online. Analyse how the internet could affect the owner’s decision about location. [6]

8. Sable Footwear can make 12,000 pairs of shoes a year in Country P, which is outside a trade bloc, at an export value of £35 a pair. Its main customers are inside the bloc, which charges an 8% tariff on imported shoes. Alternatively it can make the shoes inside the bloc at £37.50 a pair.

(a) Calculate the total cost of supplying 12,000 pairs from each location, and state which is lower. [4] (b) Outline one reason why Sable Footwear might still choose to produce in Country P. [3]

9. Hollow Bay Furniture runs a noisy sawing workshop. The local authority has introduced limits on noise and on the use of buildings close to housing, and the workshop is near a housing estate. Analyse how these legal controls could affect where the business locates. [6]

10. Mirela Garments employs 85 people in a factory in the capital. It is thinking of moving to a regional town. Data:

• Average wage per employee: £14,400 now, £12,000 in the town.
• Annual rent: £96,000 now, £54,000 in the town.
• Extra transport costs to reach customers from the town: £70,000 a year.
• One-off cost of the move: £240,000.
• The directors expect about a third of experienced staff to refuse to move.

(a) Calculate the net annual saving from moving and the number of years to recover the one-off cost (to 2 decimal places). [4] (b) Evaluate whether Mirela Garments should relocate. [9]

11. Explain one advantage and one disadvantage of a business locating close to its competitors. [4]

Answers

1. Extracting raw materials from the earth [1]; for example farming, fishing, forestry or mining [1]. [2] Examiner insight: A definition earns credit when it uses the idea in the specification wording. An example on its own does not define the term, but it can support a correct definition.

2. (a) Tertiary (a service) [1]. (b) Primary [1]. (c) Secondary [1]. (d) Primary [1]. [4] Examiner insight: Classify the activity, not the type of building. Writing a one-word sector is enough when the question only asks you to state it.

3. Total revenue = 90,000 + 210,000 + 60,000 = £360,000 [1]. Secondary share = 210,000 / 360,000 x 100 [1] = 58.3% [1]. Tertiary share = 60,000 / 360,000 x 100 = 16.7% [1]. [4] Examiner insight: Working should be shown for a calculation. Answers are most secure when the formula, the substitution and a rounded result with a % sign are all visible.

4. Reason 1: bread goes stale quickly [1], so being near customers means fresh products reach them fast and less is wasted [1]. Reason 2: many customers walk in from nearby [1], so a nearby site gives more passing trade and more sales [1]. [4] Examiner insight: An explain answer is a statement plus development. A reason with no consequence is usually a statement only, so add what it does to sales, cost or waste.

5. Diamonds are found only in particular places [1], so the mine has to be built where the diamonds are, and the company cannot choose a cheaper or more convenient area [1]. [2] Examiner insight: An outline links two points in the context given. Name the business (the mine) in your answer, and connect the cause to its effect.

6. (a) Site X costs: rent 2,800 x 12 = £33,600; wages 4 x 20,000 = £80,000; materials £52,000; delivery £6,000. Total = £171,600 [1]. Profit X = revenue - total costs = 190,000 - 171,600 [1] = £18,400 [1]. Site Y costs: rent 1,900 x 12 = £22,800; wages 4 x 22,500 = £90,000; materials £52,000; delivery £3,000. Total = £167,800 [1]. Profit Y = 205,000 - 167,800 = £37,200 [1]. [5] (b) Recommend Site Y [1]. On the forecasts, Y gives £37,200, which is £18,800 more than X’s £18,400 [1]. Y has lower rent (£22,800 against £33,600) [1] and lower delivery costs (£3,000 against £6,000), probably because of its closeness to roads and suppliers [1]. Y’s wages are £10,000 higher [1], but this is smaller than the rent and delivery savings combined. The risk is that Y’s revenue of £205,000 is only a forecast [1]; revenue could fall £18,800 (about 9.2%) to £186,200 before Y’s profit drops to X’s level [1]. X’s strengths are the footfall of a tourist high street [1]. Judgement: Y is the better choice because the profit advantage is large relative to the revenue risk, unless the owner thinks tourist trade is far more reliable than the forecast shows. [8] Examiner insight: A justify answer recommends one option and gives reasons using the data. Answers tend to gain more when they compare figures on both sites and say what could make the recommendation wrong.

7. A website lets the shop sell outside the small town [1], which widens the market and can replace falling local sales [1]. The owner could move to cheaper, smaller premises, since online customers do not need a busy shop front [1], which lowers rent and so fixed costs [1]. However, postage, packaging and returns would add to costs [1], and some customers enjoy browsing in a shop, so closing it fully could lose them, which means many owners keep a shop and a website together [1]. [6] Examiner insight: An analyse answer builds chains of reasoning in the context. Link each internet feature to something specific about this shop, such as a small town with falling sales.

8. (a) Outside: 12,000 x 35 = £420,000 [1]; tariff = 8% of 420,000 = £33,600 [1]; total = £453,600 [1]. Inside: 12,000 x 37.50 = £450,000, which is lower by £3,600 [1]. [4] (b) The factory in Country P may have skilled workers in footwear [1], so quality could be higher and fewer pairs rejected [1], which could outweigh the small £3,600 cost difference [1]. [3] Examiner insight: Add the tariff before you compare. If the comparison is close, mention what other factors could change the choice.

9. The limits on noise may stop the workshop operating at some hours [1], so output and sales could fall [1]. The firm may need soundproofing or quieter machinery [1], which raises its costs [1]. If it cannot comply, it may have to move to an industrial area away from housing [1], which brings one-off moving costs and a risk of losing staff or customers who cannot reach the new site [1]. [6] Examiner insight: Describe the effect of the control on this business. Naming or describing a specific law is not needed, and detail you are not sure of can distract from the point.

10. (a) Wage saving = 85 x (14,400 - 12,000) = £204,000 [1]. Rent saving = 96,000 - 54,000 = £42,000 [1]. Net annual saving = 204,000 + 42,000 - 70,000 = £176,000 [1]. Years to recover = 240,000 / 176,000 = 1.36 years [1]. [4] (b) For moving: net saving of £176,000 a year [1]; the one-off cost is recovered in about 1.36 years, roughly 16 months [1]; wage costs fall 16.7% (2,400 / 14,400) [1]; rent falls by 43.8% (42,000 / 96,000) [1]. Against: about a third of experienced staff may refuse to move [1], which could cut quality and output while replacements are trained [1]. The move also disrupts production and orders [1], and the £70,000 transport figure could rise [1]. Judgement: relocate [1], because even if some savings are lost the one-off cost is recovered quickly, but only with a plan to keep or replace key staff. [9] Examiner insight: Evaluate answers reach a supported conclusion. They do better when they use calculated figures, weigh them against the non-financial risks and say what the decision depends on.

11. Advantage: customers are used to visiting that area to compare shops [1], so the business receives more potential customers [1]. Disadvantage: customers can compare prices easily [1], so competitors may take sales or force the business to cut prices [1]. [4] Examiner insight: Give one of each, and develop each. Two advantages or two disadvantages do not answer the question.

Where marks are usually lost

• Stating a sector from the business name when the activity described points elsewhere.
• Giving a list of location factors with no link to cost, sales or convenience.
• Treating the closeness of competitors as only good or only bad.
• Forgetting to add the tariff to the outside cost before comparing.
• Leaving out a calculation step, such as annual rent from a monthly figure.
• Ignoring the one-off cost in a relocation question.
• Writing a recommendation with no supporting figures, or figures with no recommendation.
• Writing about “the business” in general when the case names a specific business, product and site.
• Writing the answer to an explain question using case details, or to an analyse question with no case details.

Next steps

• Recap with the revision notes and the study guide.
• Course hub: Business and the printable checklist.
• Take the free diagnostics.
• Book a free trial class.

Frequently asked questions

What do these classification and location practice questions cover? They follow Pearson Edexcel International GCSE Business (4BS1) sections 1.3 and 1.4: classifying activity as primary, secondary or tertiary, location factors, the impact of the internet, legal controls and trade blocs, and relocation.

How do you classify a business into a sector? Look at the activity described rather than the business name. Verbs such as “grows” or “digs” point to primary, “makes” or “processes” to secondary, and “sells”, “delivers” or “repairs” to tertiary.

What do students forget in tariff and relocation calculations? Adding the tariff to the cost of producing outside a trade bloc before comparing, turning monthly rent into an annual figure, and including the one-off cost of a move.

What is the difference between Explain and Analyse in Edexcel IGCSE Business? The specification’s command-word table says Explain is a statement of fact with two expansion points and no context, while Analyse is an extended answer placed in the context of the question.

Official syllabus

Pearson Edexcel International GCSE in Business (4BS1), Specification, Issue 2, February 2026, published by Pearson Education Limited. Topic 1: Business activity and influences on business, sections 1.3 Classification of businesses and 1.4 Decisions on location.