IGCSE Business: Legal controls (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 section 3.4, Legal controls, of the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029. All businesses and figures are invented, and laws are described in general terms. Revise first with the study guide and the revision notes. The course hub and the printable checklist track your progress. Not sure where to start? Try the free diagnostics.

Questions

1. State two reasons why governments introduce legal controls on the marketing of goods. [2]

2. Define the term misleading promotion. [2]

3. Identify two examples of misleading promotion. [2]

4. Explain why a customer who buys faulty goods needs the protection of legal controls. [4]

5. Gillcrest Cycles sold 600 bicycles at £350 each. Five per cent had faulty brakes. The business repaired each faulty bicycle at a cost of £28.

(a) Calculate the number of faulty bicycles. [1] (b) Calculate the total repair cost. [2] (c) Calculate the repair cost as a percentage of the sales revenue from the 600 bicycles. [2] (d) Explain one other cost to Gillcrest Cycles of selling faulty bicycles. [2]

6. A cafe advertises “the best pizza in the city”. A second cafe advertises “your pizza in 10 minutes or it is free”. Explain which of the two claims is more likely to need evidence from the business. [3]

7. Mellory Audio advertises a wireless speaker with a “40-hour battery”. Independent testing shows that the speaker lasts 26 hours.

(a) Calculate the shortfall in battery life as a percentage of the advertised life. [2] (b) Analyse two ways in which this claim could harm Mellory Audio. [4]

8. Sorrel & Finch sells a lunch box with the sign “was £5.00, now £3.50”. The £5.00 price was charged on only 4 of the previous 90 days.

(a) Calculate the percentage discount shown by the sign. [2] (b) Calculate the percentage of the previous 90 days for which the £5.00 price was charged. Give your answer to one decimal place. [2] (c) Explain why the sign may be misleading promotion. [2]

9. Isling Toys will sell 25,000 puzzles at £12 each. The packaging must be reprinted to correct the age-range label, at £0.08 per puzzle. Safety testing of the design costs £6,000.

(a) Calculate the cost of reprinting the packaging. [1] (b) Calculate the total of the reprinting and testing costs. [1] (c) Calculate this total as a percentage of the sales revenue. Give your answer to one decimal place. [2] (d) Analyse one benefit to Isling Toys of paying for the testing. [3]

10. Explain two ways in which legal controls can affect a business’s decisions about promotion. [4]

11. Carrowdale Glass sold 3,000 glass bowls. Four per cent were faulty. A refund costs £40 per bowl. A replacement costs £15 per bowl. The owner must choose one policy for all faulty bowls.

(a) Calculate the number of faulty bowls. [1] (b) Calculate the total cost of each policy. [2] (c) Recommend which policy Carrowdale Glass should use, and justify your answer. [5]

12. Kestrel Wick Candles sells 20,000 candles a year at £18 each. Its label says “burns for 60 hours”. Testing shows the candles burn for 48 hours. The owner can either keep the label, or change it to “burns for up to 48 hours” at a reprinting cost of £0.10 per candle. The owner expects sales to fall by 15% if the label is changed.

(a) Calculate the fall in sales revenue if sales fall by 15%. [2] (b) Calculate the cost of reprinting the labels for 20,000 candles. [1] (c) Evaluate whether Kestrel Wick Candles should change its label. [6]

Answers

1. To protect customers from being misled by promotion [1]. To protect customers from faulty goods [1]. (Other valid reasons, for example keeping competition fair, also gain credit.) [2] Examiner insight: A “state” question wants two separate reasons. Two wordings of the same idea are likely to count as one.

2. Promotion that gives customers a false or unclear picture [1] so that they are persuaded to buy because of it [1]. [2] Examiner insight: A good definition says what the promotion does and what effect it has on the customer. “Lying” on its own is a thin answer.

3. Any two different examples, one mark each [1] [1]. For instance: a false claim about the product or its material; a “was” price that was not really charged; a hidden condition on an offer; exaggerated performance; misleading images or packaging. [2] Examiner insight: “Identify” needs short, specific examples. Naming a law instead of an example does not answer the question.

4. The customer has paid money [1] and expects the goods to work or be as described [1]. The business knows more about the goods than the customer does [1], so without protection the customer would have to pay the cost of the fault, or have no way to put it right, such as repair, replacement or refund [1]. [4] Examiner insight: “Explain” answers usually need a point and a reason. Four marks suggests two developed points, so a short list of single words is unlikely to reach full marks.

5. (a) 600 × 0.05 = 30 bicycles [1] (b) 30 × £28 [1] = £840 [1] (c) Sales revenue = 600 × £350 = £210,000 [1]. 840 ÷ 210,000 × 100 = 0.4% [1] (d) Any one cost with development: damage to reputation [1] because customers may stop buying or tell others, so sales revenue falls [1]. Other valid costs include staff time for complaints, or lost sales while bicycles are repaired. [7] Examiner insight: Show the formula and the substitution. A wrong final figure with clear working may still earn some credit, but a bare wrong figure is unlikely to.

6. The second claim is more likely to need evidence [1] because it is a checkable fact: it can be timed, and customers can see whether it is true [1]. The first is an opinion that customers understand as enthusiasm, so is less likely to be treated as misleading [1]. [3] Examiner insight: A strong answer states the difference between opinion and checkable fact. Answers that say both claims are “lies” miss the point of the question.

7. (a) 40 − 26 = 14 hours [1]. 14 ÷ 40 × 100 = 35% [1] (b) Any two developed points: customers may demand refunds or complain [1], which raises costs and cuts sales revenue [1]; the firm may be made to stop the advert or change it, which wastes the money already spent on promotion [1]; reputation falls, so customers distrust other products from the firm [1]. Credit is for two different effects, each with a consequence. [6] Examiner insight: “Analyse” asks for a chain from cause to consequence. Naming an effect without saying what it does to the business tends to earn less.

8. (a) (5.00 − 3.50) ÷ 5.00 × 100 [1] = 30% [1] (b) 4 ÷ 90 × 100 [1] = 4.4% [1] (c) The “was” price was charged for very little of the time [1], so customers may believe the saving is real when the normal price was close to £3.50 [1]. [6] Examiner insight: Part (c) needs the numbers from part (b) used as evidence. A general comment about “tricking customers” without reference to the data is less convincing.

9. (a) 25,000 × £0.08 = £2,000 [1] (b) £2,000 + £6,000 = £8,000 [1] (c) Sales revenue = 25,000 × £12 = £300,000 [1]. 8,000 ÷ 300,000 × 100 = 2.7% [1] (d) Testing shows the puzzles are safe, so the business can promote them with confidence [1]. This builds trust with parents and shops, leading to repeat purchases [1]. The cost is small compared with a recall or lost reputation, so it is good value [1]. [7] Examiner insight: Rounding to the stated decimal place matters. In an analysis part, comparing the cost with the possible loss shows judgement.

10. Any two developed effects, two marks each. For example, adverts must be checked and claims supported [1], so the business spends more time and money before launching a campaign [1]. Or strong headlines that cannot be proved may be dropped [1], so the promotion may be less eye-catching but safer [1]. Or price offers must be honest, so the business cannot invent a high “was” price. [4] Examiner insight: Both effects must be about promotion. Answers that drift into production or finance are unlikely to earn credit for the effect asked.

11. (a) 3,000 × 0.04 = 120 bowls [1] (b) Refund: 120 × £40 = £4,800 [1]. Replacement: 120 × £15 = £1,800 [1] (c) Recommendation: use replacement [1]. It is £3,000 cheaper than refunds (4,800 − 1,800) [1]. It keeps the customer, and the sale, with the business [1]. Against this: a customer who wants the money back may be unhappy with a replacement, and a second faulty bowl would damage trust further [1]. Judgement: replacement is the better policy if the fault is fixed, and the firm should offer a refund if a replacement also fails, because trust matters for future sales [1]. [8] Examiner insight: “Recommend” and “justify” need a clear decision backed by figures and by a counter-argument. A decision with no reasoning, or reasoning with no decision, usually earns little.

12. (a) 20,000 × 0.85 = 17,000 candles [1]. Fall in sales revenue = (20,000 − 17,000) × £18 = £54,000 [1] (b) 20,000 × £0.10 = £2,000 [1] (c) For changing the label: the claim is not true, so keeping it is misleading promotion and risks refunds, forced withdrawal and bad publicity [1]. An honest label builds trust and protects future sales [1]. The reprint cost of £2,000 is small [1]. Against: sales may fall by £54,000 in revenue, far more than the reprint cost [1]. “Up to 48 hours” is still a strong claim, so the fall may be smaller than expected [1]. Judgement: change the label, because a false claim is a long-term risk to the whole brand, and a possible loss of revenue is the price of honest promotion [1]. [9] Examiner insight: In “evaluate” questions, both sides need support and the final judgement should follow from them. A conclusion that repeats one side without weighing the other tends to stay in the lower levels of response.

Where marks are usually lost

• Describing the effect on customers only, when the question asks about the effect on the business.
• Naming laws from memory instead of explaining purpose and effect.
• Treating every strong or enthusiastic claim as misleading, without separating opinion from checkable fact.
• Leaving out the formula or the units in a percentage or cost question.
• Rounding to the wrong number of decimal places when the question states one.
• Confusing faulty goods with a customer who has simply changed their mind.
• Giving costs or benefits only in an “evaluate”, “justify” or “recommend” answer, with no judgement.
• Not using the figures in the case study as evidence.
• Giving two versions of the same point when two different points are asked for.

Next steps

• Review the revision notes for the quick-recall tables.
• Reread the study guide for the worked examples.
• Open the course page and tick off the checklist.
• Take the free 10-minute diagnostics to find your next topic.
• Book a free trial class if you want help with evaluation answers.

Frequently asked questions

Is every strong advertising claim misleading? No. A clear opinion such as “the best pizza in the city” differs from a false factual claim that can be checked, such as a battery life that testing does not support. Treating every enthusiastic claim as misleading is a common error.

What are common mistakes on legal controls questions in IGCSE Business 0264? Students often describe the effect on customers only when the question asks about the business, name laws from memory instead of explaining purpose and effect, confuse faulty goods with a customer who has changed their mind, and leave out the formula or units in calculations. Giving only costs or only benefits in an evaluate answer also loses marks.

Do you need to know named consumer protection laws? No. The Cambridge IGCSE Business 0264 syllabus does not ask for named laws, so explain the purpose of legal controls and their effects on the business in general terms.

Which syllabus section covers legal controls on marketing? Legal controls are section 3.4 of the Cambridge IGCSE Business 0264 syllabus, covering misleading promotion, faulty goods and the effects of legal controls on marketing.

Official syllabus

These questions follow the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029, published by Cambridge University Press & Assessment (Cambridge International), section 3.4 Legal controls.