Edexcel IGCSE Business: Factors of production and quality (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 cover topic 5, Business operations, sections 5.3 Factors of production and 5.4 Quality, in the Pearson Edexcel International GCSE in Business (4BS1) specification, Issue 2, February 2026. Revise first with the study guide and revision notes if needed. Course links: the Edexcel IGCSE Business hub, the printable checklist and the free diagnostics. Every business is invented and amounts are in dollars. Calculators may be used and workings should be shown. Round percentages to 1 decimal place where needed.

Questions

1. Define the term capital-intensive. [2]

2. Garrick Gardens is a garden-design business. Give two examples of capital it might use. [2]

3. Farida Garments has yearly costs of wages 45,000, materials 30,000, running costs of machinery 15,000 and rent 10,000.

(a) Calculate total costs. [1] (b) Calculate wages as a percentage of total costs. [2] (c) State, using your answers, whether Farida Garments is better described as labour-intensive or capital-intensive. [1]

4. Explain one way in which a business that closes its high-street shop and sells only online changes its use of land. [3]

5. Define the term quality control. [2]

6. Penwith Pies bakes batches of 750 pies. 6% of each batch is defective and each defective pie costs 14 to scrap.

(a) Calculate the number of defective pies in a batch. [2] (b) Calculate the cost of defective pies per batch. [1] (c) After staff training the defect rate falls to 2%. Calculate the saving per batch. [2]

7. Hallam Joinery has 9 joiners, each paid 30,000 a year. It buys a cutting machine for 180,000 that will last 5 years, with maintenance of 6,000 a year. After it is installed, the business needs only 5 joiners. Analyse how buying the machine changes the relationship between capital and labour in this business. [6]

8. Valmont Chairs expects to make 18,000 chairs a year. It has a supermarket contract for two years, after which demand is uncertain. Option A is to hire more workers: yearly costs of 126,000. Option B is to buy an upholstery machine: yearly costs of 122,400, of which the machine accounts for 62,400 (depreciation, finance and maintenance). Justify which option Valmont Chairs should choose. [8]

9. Seaview Cafe had 30 complaints from 1,250 customers last year. After introducing TQM it had 14 complaints from 1,400 customers this year. Its set lunch costs 9.90 and a rival’s costs 9.00.

(a) Calculate the complaint rate this year as a percentage of customers. [2] (b) Analyse how the higher quality of service may give Seaview Cafe a competitive advantage. [6]

10. Outline two ways in which total quality management (TQM) differs from quality control. [4]

11. Tolliver Electronics employs 40 people and makes 5,000 units a month. 5% are defective and each defective unit costs 12 to rework. The owner is considering TQM, which would cost 21,600 in staff training and is expected to cut defects to 2%. Evaluate whether Tolliver Electronics should introduce TQM. [9]

Answers

1. An activity that uses a high proportion of capital (equipment, machinery) [1] compared with labour, so capital is the main cost [1]. [2] Examiner insight: A definition that names both capital and labour and compares them is stronger than one that says only that a firm is large or uses machines.

2. For example a lawnmower [1] and a van [1]; hedge trimmers, design software or a laptop are other equipment examples. [2] Examiner insight: Give physical or technological equipment; money, staff and the owner are not capital in this sense.

3. (a) 45,000 + 30,000 + 15,000 + 10,000 = 100,000 [1]. (b) 45,000 ÷ 100,000 × 100 [1] = 45% [1]. (c) Labour-intensive, because wages (45%) are far larger than machinery running costs (15%) [1]. Examiner insight: Set out the formula before substituting. A correct final answer is easier to credit when the working is visible.

4. Less land (shop space) is needed [1]. The business can use a cheaper warehouse or smaller premises in a lower-rent place [1], which lowers its fixed costs and frees money for website and delivery costs [1]. [3] Examiner insight: For explain questions, state the point, then add two expansion points that follow on from each other.

5. Checking products or services against a set standard [1] and removing or correcting those that fail, usually by inspection [1]. [2] Examiner insight: Mention both the check and the action taken on faulty items.

6. (a) 750 × 6 ÷ 100 [1] = 45 pies [1]. (b) 45 × 14 = 630 [1]. (c) 2% of 750 = 15 pies, 15 × 14 = 210 [1]; saving 630 − 210 = 420 per batch [1]. Examiner insight: A multi-part calculation is easier to follow, and to credit, if each part’s result is labelled and carried into the next.

7. Wages fall from 270,000 (9 × 30,000) to 150,000 (5 × 30,000), a drop of 120,000 [1]. Machine costs are 36,000 depreciation (180,000 ÷ 5) plus 6,000 maintenance, 42,000 a year [1]. The net saving is 78,000 a year [1]. Capital has replaced some labour, so the business becomes more capital-intensive [1]. The machine’s costs are fixed, so they must be paid even if orders fall, which adds risk for the owner [1]. Four joiners lose jobs or need retraining, and the remaining five may need new skills to run the machine [1]. [6] Examiner insight: An analysis answer that stays with the numbers given and then follows each effect to its consequence for this business is stronger than one with general statements about machines.

8. Cost per chair: A = 126,000 ÷ 18,000 = 7.00 [1]; B = 122,400 ÷ 18,000 = 6.80 [1]. B is cheaper by 3,600 a year [1]. B has 62,400 of machine costs that do not change with output [1], so if demand falls after the contract ends, Valmont still pays them [1]. Option A is more flexible, because workers can be laid off or moved more easily [1]. Recommendation: Option B [1], because the saving of 0.20 a chair is secured for the two-year contract and the machine’s cost is spread over a large guaranteed output; it should plan for the risk after the contract [1]. [8] Examiner insight: A justification must pick one option and use the figures given. Quoting the contract details shows you have used the information in the stem.

9. (a) 14 ÷ 1,400 × 100 [1] = 1.0% [1]. (b) Complaint rate fell from 2.4% (30 ÷ 1,250) to 1.0% [1], so customers are happier with service [1] and more likely to return and recommend the cafe [1]. Customers may be willing to pay more for good service: the cafe’s lunch is 0.90 above its rival, 10% higher [1]. The number of customers rose from 1,250 to 1,400, which suggests quality is helping win custom [1]. Conclusion: better service gives it a way to stand out from rivals, so long as quality is maintained [1]. [6] Examiner insight: Use the data in the stem, such as the lower complaint rate and higher customer numbers, to build each stage of the analysis.

10. First difference: quality control is carried out by inspectors or a quality department, but in TQM everyone is responsible for quality [1]; this makes quality part of every job and not just a final check [1]. Second difference: quality control finds faults, often at the end, whereas TQM aims to prevent faults throughout the process [1]; this reduces waste of materials and labour that detection alone cannot [1]. [4] Examiner insight: An outline needs two linked points for each difference: the contrast, then its effect on the business.

11. Current defect cost: 5,000 × 5% = 250 units × 12 = 3,000 a month [1]. With TQM: 5,000 × 2% = 100 units × 12 = 1,200 [1]. Saving 1,800 a month [1]. Payback 21,600 ÷ 1,800 = 12 months [1]. Benefits beyond money: fewer faulty products reach customers, giving a better reputation and fewer returns [1]. Risks: the 2% target may not be reached, training takes staff time and some staff may resist change, so the saving could be lower [1]. Once payback is complete, the saving continues, and quality could keep improving [1]. Judgement: yes, introduce TQM [1], since the cost is recovered in a year, the gains continue and a small business of 40 staff can train its team; the decision depends on staff commitment and on the target being met [1]. [9] Examiner insight: An evaluation reaches a supported conclusion. Weigh the payback figure against the risks and say what the decision depends on.

Where marks are usually lost

• Writing capital means money rather than equipment and technology.
• Calling a firm capital-intensive without comparing capital and labour costs.
• Giving a percentage without showing the division.
• Answering “explain” with one point and no expansion.
• Treating quality control and TQM as if they were the same.
• Recommending an option without quoting figures from the stem.
• Ignoring the costs and risks of change when evaluating.
• Finishing an evaluation without a clear judgement.

Next steps

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

Frequently asked questions

What do these factors of production and quality questions cover? They follow Pearson Edexcel International GCSE Business (4BS1) sections 5.3 and 5.4: the four factors of production and how their mix changes, capital-intensive and labour-intensive activities, quality, quality control, TQM and competitive advantage.

Does capital mean money in this topic? No. In factors of production, capital means equipment, machinery, vehicles, tools, software and fitted buildings, not simply money. Writing that capital means money is a common error.

How do you decide if a business is capital-intensive? Compare the cost of capital with the cost of labour in the data given, rather than judging by the size or type of business alone.

What should an evaluation of a quality change include? Quote figures from the case, weigh the costs and risks of the change, such as training, against the savings, and finish with a clear judgement.

Official syllabus

Pearson Edexcel International GCSE in Business (4BS1), Specification, Issue 2, February 2026, published by Pearson Education Limited. Topic 5 Business operations: section 5.3 Factors of production and section 5.4 Quality. The specification lists headings only for these sections, so the definitions of the four factors, quality, quality control, TQM and competitive advantage, the lists of TQM features and the payback and defect-cost methods on this page are written in Marlbridge’s own standard wording.