IGCSE Business: Business and the environment (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.

This set covers section 6.3 (Business and the environment) of the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029. Both papers are based on all the subject content. Revise with the study guide and revision notes. See also the course hub, the printable checklist and the free diagnostics. Money is in dollars. All businesses are invented, and laws are described in general terms.

Questions

1. (a) Define pollution. [2] (b) State two types of pollution. [2]

2. Identify two reasons why a business may respond to environmental issues. [2]

3. Rosevear Garden Centre has stopped selling plants in plastic pots and now uses pots made from recycled card. Explain how this change could increase the centre’s sales. [4]

4. A large clothing factory releases dye into a river and uses a great deal of water. Outline two ways the factory could respond to these environmental issues. [4]

5. Greywether Plastics makes 40,000 storage boxes a year. Fixed costs are 90,000 dollars and variable cost is 3.00 dollars per box. A new law bans a chemical used in the boxes. The replacement raises variable cost by 0.50 dollars per box. (a) Calculate the average cost per box before and after the law. [4] (b) Explain one way Greywether might respond to the higher average cost. [2]

6. Wistanbrook Cafe has annual revenue of 250,000 dollars and profit of 30,000 dollars. It switches to reusable cups and local suppliers. This adds 14,000 dollars of costs a year. Sales revenue rises by 10%, and the extra sales add 12,000 dollars of costs. (a) Calculate the profit margin before the change. [2] (b) Calculate the profit margin after the change. [4] (c) Justify whether the cafe should keep the new policy. [4]

7. Kirkbride Toys makes 25,000 wooden toys a year. A new rule bans its usual paint. The replacement paint raises variable cost per toy from 0.80 dollars to 1.10 dollars. (a) Calculate the extra variable cost per year. [2] (b) Explain how this rule affects what Kirkbride Toys produces. [3]

8. A noisy chemical works asks for permission to build a new unit next to a housing estate. The request is refused. Explain two effects this could have on the business. [4]

9. Darnall Dyeworks releases waste dye into a stream. Inspectors can fine the firm 9,500 dollars for each breach, and the owner expects five a year if nothing changes. A filter would cost 30,000 dollars a year to buy and run. The owner suggests paying the fines instead. (a) Calculate the difference between the yearly cost of the fines and the yearly cost of the filter. [3] (b) Justify whether Darnall Dyeworks should install the filter. [5]

10. Hartlebury Quarries digs stone from a hillside. It sells 120,000 tonnes a year at 14 dollars a tonne. Variable cost is 8.00 dollars a tonne and fixed costs are 420,000 dollars a year. Residents complain about dust and noise. A new law limits output at the current site to 90,000 tonnes a year. Dust control adds 0.75 dollars a tonne at any site. The owners could instead open a new site with no output limit. It would have fixed costs of 480,000 dollars a year, and moving stone would add 1.20 dollars a tonne. (a) Identify two environmental effects of the quarry’s activity. [2] (b) Calculate the yearly profit if the quarry stays at its current site under the law. [3] (c) Calculate the yearly profit if the quarry opens the new site and sells 120,000 tonnes. [3] (d) Recommend which option the owners should choose and justify your choice. [6]

11. Haldenby Furniture makes tables from hardwood bought from forests that are not replanted. Customers have begun to ask where its wood comes from. Recommend one response the firm should make and justify your choice. [6]

Answers

1. (a) Pollution is the release of harmful substances or energy into the environment [1], such as into the air, water or land, or noise that disturbs people [1]. [2] (b) Any two of air pollution [1], water pollution, land pollution, noise pollution [1]. [2] Examiner insight: A definition earns more when it says what is released and where it goes.

2. Any two of: to improve its reputation [1]; to increase sales [1]; to avoid fines or legal action; to cut costs by using fewer resources; to avoid bad publicity. [2] Examiner insight: With “identify” a short statement is enough. Repeating one idea in new words usually earns one credit, not two.

3. The change shows the centre cares about waste [1], which can improve its reputation with environmentally minded customers [1]. They may choose it over rivals still using plastic [1], so sales rise [1]. [4] Examiner insight: A chain of reasoning from the change, to the customer’s view, to sales usually earns more than a statement that sales will “go up”.

4. First way: install a treatment plant or filter to clean the dye before it is released [1], which reduces water pollution [1]. Second way: recycle and reuse water in the dyeing process [1], which reduces the amount of water taken from the environment and the amount of waste released [1]. [4] Examiner insight: “Outline” asks for the main points, so each response needs a short reason and should address the issues in the stem.

5. (a) Before: total cost = 90,000 + (3.00 × 40,000) = 210,000 dollars [1]; average cost = 210,000 ÷ 40,000 = 5.25 dollars [1]. After: variable cost = 3.50 dollars, so total cost = 90,000 + (3.50 × 40,000) = 230,000 dollars [1]; average cost = 230,000 ÷ 40,000 = 5.75 dollars [1]. [4] (b) Greywether might raise its selling price [1] to cover the extra 0.50 dollars per box and protect profit; it might instead look for cheaper suppliers to reduce costs [1]. [2] Examiner insight: Show total cost before dividing. Working shown beside a slip lets an examiner see which steps were right.

6. (a) Profit margin = 30,000 ÷ 250,000 × 100 [1] = 12% [1]. [2] (b) New revenue = 250,000 × 1.10 = 275,000 dollars [1]. Old costs = 250,000 − 30,000 = 220,000 dollars, so new costs = 220,000 + 14,000 + 12,000 = 246,000 dollars [1]. New profit = 275,000 − 246,000 = 29,000 dollars [1]. Profit margin = 29,000 ÷ 275,000 × 100 = 10.5% [1]. [4] (c) Reasons to keep it: revenue is higher and the cafe’s reputation may improve [1], so sales could keep rising [1]. Reasons against: profit has fallen by 1,000 dollars and the margin has fallen from 12% to 10.5% [1]. Judgement: keep the policy for now because the profit loss is small, but check whether the extra sales continue next year [1]. [4] Examiner insight: A “justify” answer is stronger when it uses the figures from part (b) and then makes a decision. A decision with no evidence from the case tends to earn little.

7. (a) Extra cost per toy = 1.10 − 0.80 = 0.30 dollars [1]; extra yearly cost = 0.30 × 25,000 = 7,500 dollars [1]. [2] (b) The rule forces the firm to stop using its usual paint [1], so the product must be made with a different, safer material [1]. The toys may change in colour or finish, and the firm may need to explain this to customers [1]. [3] Examiner insight: The question is about what is produced. Answers about higher cost alone miss the change to the product.

8. First effect: the firm cannot build where it planned [1], so it must find another site, which may be further from its workers or customers and may cost more [1]. Second effect: it may lose or delay the planned extra output [1], so sales and growth may be lower than the owners hoped [1]. [4] Examiner insight: Two separate effects are needed. Each should link the refusal to a business result such as costs or output.

9. (a) Cost of fines = 9,500 × 5 = 47,500 dollars [1]. Cost of filter = 30,000 dollars [1]. Difference = 47,500 − 30,000 = 17,500 dollars [1]. [3] (b) For the filter: it is 17,500 dollars cheaper each year than paying the fines [1]; it stops the stream being polluted, which protects the firm’s reputation with local people [1]; it avoids the risk of forced closure if breaches continue [1]. Against: 30,000 dollars is a large yearly cost for a small firm, and the fines figure is only an expectation [1]. Judgement: install the filter, because it is cheaper and ignoring the rule would keep harming the stream and the firm’s name [1]. [5] Examiner insight: Strong answers use the figures and also look beyond cost, to the harm and the risk to the business.

10. (a) Any two of: dust pollution [1]; noise pollution; depletion of a resource, since stone is taken from the hillside and cannot be replaced [1]; damage to land. [2] (b) Contribution per tonne = 14 − (8.00 + 0.75) = 5.25 dollars [1]; contribution = 5.25 × 90,000 = 472,500 dollars [1]; profit = 472,500 − 420,000 = 52,500 dollars [1]. [3] (c) Variable cost per tonne = 8.00 + 1.20 + 0.75 = 9.95 dollars, so contribution per tonne = 14 − 9.95 = 4.05 dollars [1]; contribution = 4.05 × 120,000 = 486,000 dollars [1]; profit = 486,000 − 480,000 = 6,000 dollars [1]. [3] (d) Recommendation: stay at the current site [1]. Reasons: profit is 52,500 dollars, far higher than 6,000 dollars at the new site [1]; the new site has higher fixed costs and moving stone costs more [1]; opening a new site may bring delay, risk and extra cost not shown in the figures [1]. Against: the law cuts output from 120,000 to 90,000 tonnes [1], while the new site would keep full output and sales. Judgement: staying is better on current figures [1]. [6] Examiner insight: A reasoned choice supported by both options’ figures usually earns more than a list of facts. State the decision, give evidence, then consider the alternative.

11. Recommendation: buy wood only from certified or replanted forests (or replant trees itself) [1]. Reasons: this reduces depletion of resources, because the supply of trees continues [1]; customers who ask where the wood comes from may prefer a firm with a responsible source, so its reputation and sales may improve [1]; it may protect the firm against future rules on timber [1]. Against: such wood may cost more, raising variable cost and forcing a higher price or lower profit [1]. Judgement: the firm should make the change, because customers are already asking and hardwood supply is harder to guarantee if forests are not replanted [1]. [6] Examiner insight: A recommendation should fit the case. Using the detail that customers are asking about wood shows application.

Where marks are usually lost

• Writing “pollution” or “damage” without naming a type of harm or linking it to the business.
• Forgetting that legal controls can affect what and where a business produces, not only how.
• Leaving out the cost of a response, or assuming it always pays.
• Mixing up fixed and variable costs in calculations.
• Leaving out units in a calculation.
• Giving a one-sided answer to a justify or recommend question, or ending with no decision.
• Ignoring the case numbers when asked to justify.

Next steps

• Review the study guide and the revision notes.
• Return to the course hub and checklist.
• Try all free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

What are common mistakes on business and the environment questions in IGCSE Business 0264? Students often write “pollution” or “damage” without naming a type of harm or linking it to the business, forget that legal controls can affect what and where a business produces, and assume an environmental response always pays. Mixing up fixed and variable costs and leaving out units in calculations also lose marks.

How do you calculate the effect of an environmental law on average cost? Work out total cost before and after the change as fixed costs plus variable cost per unit multiplied by output, then divide each total by output. Put new equipment into fixed costs and dearer materials into variable costs.

How should you answer a justify question on an environmental decision? Use the figures in the case, such as the cost of a filter compared with likely fines, weigh both sides, and finish with a clear decision and reason. A one-sided answer, or one with no decision, loses marks.

Which syllabus section covers business and the environment? Business and the environment is section 6.3 of the Cambridge IGCSE Business 0264 syllabus.

Official syllabus

Aligned to section 6.3 of the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029, published by Cambridge University Press & Assessment (Cambridge International Education).