IGCSE Business: Business and ethical issues and Pressure groups (Cambridge 0264) – 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 6.4 (Business and ethical issues) and 6.5 (Pressure groups) of the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029. All businesses, groups and figures are invented. Money is in dollars and written as plain numbers. Revise with the study guide and the revision notes. See also the course hub, the printable checklist and the free diagnostics.

Questions

1. State two ethical issues which may affect a business. [2]

2. Define the term pressure group. [2]

3. Identify two ways in which a pressure group can influence a business’s decisions. [2]

4. Explain one reason why a business might choose to pay fair prices to its suppliers. [3]

5. Ardenfold Trainers makes sports shoes. An inspector discovers that a supplier in another country is using child labour to stitch the shoes. Explain two ways in which Ardenfold Trainers could respond. [4]

6. Kellbrook Foods buys 80 tonnes of sesame seed a year at 1,800 a tonne. A farmers’ group says this price is unfair, and Kellbrook agrees to pay 2,070 a tonne. Kellbrook’s sales revenue is 960,000 a year.

(a) Calculate the percentage increase in the price per tonne. [2] (b) Calculate the extra yearly cost of buying the sesame seed. [2] (c) Calculate the extra cost as a percentage of sales revenue. [1] (d) Explain one reason why Kellbrook Foods might still agree to pay the higher price. [2]

7. Sunnimere Fashion employs 150 machinists. Each works 1,900 hours a year. After a campaign about low pay, the hourly wage rises from 4.00 to 4.80. Sales revenue is 6,840,000 a year.

(a) Calculate the percentage increase in the hourly wage. [2] (b) Calculate the extra yearly wage cost. [2] (c) Calculate the extra wage cost as a percentage of sales revenue. Give your answer to one decimal place. [2] (d) Explain one benefit to Sunnimere Fashion, other than lower costs, of paying the higher wage. [2]

8. Birchfold Furniture is changing from a cheap timber supplier that clears forests carelessly to a dearer supplier that does not damage the environment. Explain one advantage and one disadvantage to Birchfold Furniture of this decision. [4]

9. Culverin Toys sells 120,000 toys a year at 15 each. The variable cost of each toy is 9. A pressure group says one of Culverin’s suppliers uses child labour, and it calls for a boycott. Culverin expects sales to fall by 8% if it does nothing. Alternatively, it could pay 35,000 a year for independent checks and 0.20 more per toy for an approved supplier, which would end the campaign.

(a) Calculate the number of toys lost if sales fall by 8%. [1] (b) Calculate the sales revenue lost. [1] (c) Calculate the contribution lost. [2] (d) Calculate the yearly cost of the alternative. [2] (e) Consider whether Culverin Toys should respond to the pressure group. [4]

10. Stoneyfield Electronics sells 50,000 devices a year at 140 each. The variable cost of each device is 95. Its casings come from a supplier whose factory pollutes a river. A different supplier does not damage the environment, and would add 2.50 to the variable cost of each device. The owner proposes to switch, raise the price to 143 and expects sales to fall by 4%.

(a) Calculate the extra yearly cost of the new supplier if sales stay at 50,000. [2] (b) Calculate Stoneyfield’s total contribution after the switch, the price rise and the fall in sales. [3] (c) Calculate the change in total contribution compared with the present position. [2] (d) Justify whether Stoneyfield Electronics should switch supplier. [5]

11. Wyndhollow Coffee buys 400,000 kg of coffee beans a year at 3.20 a kg. Its sales revenue is 5,200,000 and its profit is 390,000. A group called the Fair Beans Alliance runs a media campaign saying the growers are paid too little. The owner can pay growers a 10% premium on the bean price and raise prices by 2%. If she does nothing, she expects sales revenue to fall by 6%. Contribution is 35% of sales revenue. Assume the price rise does not change sales volume.

(a) Calculate the yearly cost of the 10% premium. [2] (b) Calculate the extra sales revenue from a 2% price rise. [1] (c) Calculate the net effect on profit of the premium and the price rise. [1] (d) Calculate the contribution lost if sales revenue falls by 6%. [2] (e) Justify whether Wyndhollow Coffee should respond to the Fair Beans Alliance. [6]

Answers

1. Any two of: child labour; paying unfair wages to employees; paying unfair prices to suppliers; using suppliers who damage the environment. One mark each [1] [1]. [2] Examiner insight: A “state” answer needs only the two issues named. Extra explanation costs time on a 2-mark item.

2. An organised group of people [1] who campaign to influence the decisions of businesses or governments [1]. [2] Examiner insight: Answers tend to gain credit when both ideas appear: organised, and trying to influence decisions.

3. Any two of: publicity in the media or on social media; calling for a boycott; petitions or protests; lobbying the government to change the law; negotiating with managers. One mark each [1] [1]. [2] Examiner insight: “Identify” asks you to name. A short phrase for each way is enough, and one idea in different words is still one way.

4. Fair prices let suppliers cover their costs and stay in business [1], so they are more likely to keep supplying [1], which gives the business a secure supply and avoids the cost of finding a new supplier [1]. [3] Examiner insight: A good “explain” has a reason, a development and a link to the business.

5. Response 1: inspect the supplier and tell it to stop using child labour [1]. This protects the brand’s reputation, but costs time and money [1]. Response 2: switch to a supplier which does not use child labour [1]. This ends the link, but the new supplier may charge more [1]. [4] Examiner insight: Answers tend to score best when each response is followed by its effect on Ardenfold.

6. (a) Increase = 2,070 − 1,800 = 270 [1]. 270 ÷ 1,800 × 100 = 15% [1]. [2] (b) 80 × 270 [1] = 21,600 [1]. [2] (c) 21,600 ÷ 960,000 × 100 = 2.25% [1]. [1] (d) The cost is a small share of sales revenue [1], and farmers are more likely to keep supplying and the brand’s reputation may improve [1]. [2] Examiner insight: Show the working line as well as the answer. Using the figure from part (c) in part (d) applies the data.

7. (a) Increase = 4.80 − 4.00 = 0.80 [1]. 0.80 ÷ 4.00 × 100 = 20% [1]. [2] (b) Hours = 150 × 1,900 = 285,000 [1]. Extra cost = 285,000 × 0.80 = 228,000 [1]. [2] (c) 228,000 ÷ 6,840,000 × 100 [1] = 3.3% [1]. [2] (d) Better-paid machinists may be more motivated and less likely to leave [1], so recruitment costs may fall or quality may rise [1]. [2] Examiner insight: The question says “other than lower costs”, so a reply about reduced costs does not answer it. Read the restriction.

8. Advantage: it may improve its reputation with customers who care about the environment [1], which could attract extra sales or reduce the risk of a campaign [1]. Disadvantage: the new supplier is dearer, so costs rise [1], which may force a higher price or reduce profit [1]. [4] Examiner insight: Answers tend to gain credit for one explained advantage and one explained disadvantage. Two advantages answer only half the question.

9. (a) 8% × 120,000 = 9,600 toys [1]. [1] (b) 9,600 × 15 = 144,000 [1]. [1] (c) Contribution per toy = 15 − 9 = 6 [1]. 9,600 × 6 = 57,600 [1]. [2] (d) Extra supplier cost = 0.20 × 120,000 = 24,000 [1]. Total = 35,000 + 24,000 = 59,000 [1]. [2] (e) For responding: the yearly costs are almost the same (59,000 against 57,600), but responding ends the campaign and protects the brand’s reputation beyond this year [1]. Boycotts can grow and last longer than expected [1]. Against: if the boycott fades, doing nothing could cost less than 59,000 [1]. Judgement: respond, because the costs are similar and the long-term damage from being linked to child labour is greater and harder to repair [1]. [4] Examiner insight: A “consider” answer tends to gain credit when it uses both calculated figures and reaches a decision with a reason.

10. (a) Extra cost = 2.50 × 50,000 [1] = 125,000 [1]. [2] (b) New contribution per device = 143 − (95 + 2.50) = 45.50 [1]. Sales = 96% × 50,000 = 48,000 [1]. Total = 48,000 × 45.50 = 2,184,000 [1]. [3] (c) Present contribution = (140 − 95) × 50,000 = 2,250,000 [1]. Change = 2,184,000 − 2,250,000 = −66,000 (a fall of 66,000) [1]. [2] (d) Against switching: contribution falls by 66,000, so profit falls [1], and the 4% fall in sales is only an estimate which could be larger [1]. For switching: the business avoids a link to pollution, which protects its reputation [1]; the fall of 66,000 is about 2.9% of present contribution, which may be affordable [1]. Judgement: switch, because the cost is modest and reputation matters, but first check how customers will react to a price rise [1]. [5] Examiner insight: A justify answer tends to do best when it states the size of the cost and compares it with a benefit that is harder to measure.

11. (a) Spend on beans = 400,000 × 3.20 = 1,280,000 [1]. Premium = 10% × 1,280,000 = 128,000 [1]. [2] (b) 2% × 5,200,000 = 104,000 [1]. [1] (c) 104,000 − 128,000 = −24,000, a fall in profit of 24,000 [1]. [1] (d) Lost revenue = 6% × 5,200,000 = 312,000 [1]. Lost contribution = 35% × 312,000 = 109,200 [1]. [2] (e) For responding: it costs 24,000 net, much less than the 109,200 contribution that doing nothing is expected to lose [1]. It also protects the brand’s reputation [1]. Against: the figures assume the price rise loses no customers, which may not be true [1]; the 6% loss is an estimate, and the campaign may not reach many customers [1]. Profit would fall from 390,000 to 366,000 if the response works as planned [1]. Judgement: respond, because the expected cost is small compared with the expected loss [1]. [6] Examiner insight: A “justify” response tends to gain credit when it compares figures from several parts and names an assumption that could change the result.

Where marks are usually lost

• Writing that being ethical improves the “image” without saying what that does to sales or costs.
• Giving only the final figure in a calculation.
• Treating a pressure group as if it can force a business to act.
• Leaving out one side in a “justify” or “consider” question.
• Ignoring assumptions, such as “sales do not change”.
• Writing long answers to “state” questions.

Next steps

• Re-read the revision notes and the study guide.
• See the course hub and the printable checklist.
• Take the free 10-minute diagnostics to find other weak topics.
• Book a free trial class: trial.

Frequently asked questions

Can a pressure group force a business to change? No. A pressure group has no power to order a business to act; it works by affecting sales, reputation or the law, for example through publicity, boycotts or lobbying government.

What are common mistakes on ethics and pressure group questions in IGCSE Business 0264? Students often write that being ethical improves the “image” without saying what that does to sales, give only the final figure in a calculation, treat a pressure group as if it can force a business to act, and leave out one side in a “justify” or “consider” question. Writing long answers to “state” questions wastes time.

Which sections of the Cambridge IGCSE Business 0264 syllabus cover ethics and pressure groups? In the Cambridge IGCSE Business 0264 syllabus, section 6.4 covers business and ethical issues and section 6.5 covers pressure groups.

Why should you note assumptions in ethics calculations? Calculations of the cost of a fair price or a boycott often assume that sales do not change. Saying so, and what would happen if sales did change, strengthens a comment or judgement.

Official syllabus

Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029, published by Cambridge International, sections 6.4 and 6.5.