OCR A Level Business: Market forces, physical and non-physical markets, dominance (H431) – 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 the External influences content on market forces, physical and non-physical markets, competition and market dominance in the OCR A Level Business (H431) specification, Version 2.1 (January 2026). All businesses and figures are invented. Read the study guide and revision notes first if you need to. The wider External influences practice set covers the rest of the area of study. Course pages: hub, checklist and diagnostics.

Questions

1. Define the term market dominance. [2]

2. Distinguish between a merger and an acquisition. [3]

3. (a) Explain one reason why a firm might enter a market. [2] (b) Analyse one barrier to entry and one barrier to exit in a market. [4]

4. Ormsgill Bakery is a village shop. In 2024 its sales revenue was £420,000 in a local market worth £2.4m. In 2025 a rival bakery-café opened nearby. Ormsgill’s sales revenue rose to £432,000 and the market was worth £2.7m.

(a) Calculate Ormsgill’s market share in each year. [3] (b) Calculate the growth of the market from 2024 to 2025. [1] (c) Explain why Ormsgill’s market share fell although its sales revenue rose. [2]

5. Distinguish between a physical and a non-physical market, including online and digital. [3]

6. Thrushwell Books sells a paperback at £18. Each book costs £9 to buy. A shop would have fixed costs of £9,000 a month. An online store would have fixed costs of £2,500 a month and a delivery and packing cost of £2.50 a book.

(a) Calculate the monthly break-even output for the shop and for the online store (to the next whole book). [4] (b) Calculate the monthly output at which the two would give equal profit, and say what this shows. [2]

7. Stavordale Foods has 34% of a regional grocery market. It merges with Pell Fresh, which has 22%. The next three firms have 18%, 14% and 12%.

(a) Calculate the combined market share. [1] (b) Explain how the merger could lead to a dominant firm. [4]

8. Explain how market dominance is restricted and regulated in the UK. [5]

9. Brinsworth Orchards sells 70% of its apples to Stavordale Foods, which now holds 56% of the regional grocery market. Evaluate the impact of this dominant firm on Brinsworth Orchards. [8]

10. Thrushwell Books is an independent bookseller with a shop in a market town and a small website. Evaluate the impact of competition at local, national and global levels on Thrushwell Books. [9]

11. Ormsgill Bakery (Question 4) faces a new bakery-café charging about 10% less on average, and a supermarket in-store bakery on the edge of the village. Ormsgill has loyal regular customers and sells only from its shop. The owner is choosing between cutting prices by 10% and launching online ordering with local delivery. Recommend and justify which response Ormsgill should choose. [10]

Answers

1. One firm (or a very small group of firms) holds a very large share of the market [1] and has power over price, output or rivals as a result [1]. [2] Examiner insight: Answers that give only “a big firm” tend to earn less than ones that mention power over the market.

2. A merger is where two firms agree to combine into one business [1]. An acquisition is where one firm buys control of another [1]. The difference is that a merger is a joining by agreement, while an acquisition is one firm taking over the other, possibly against its wishes [1]. [3] Examiner insight: A distinction needs the contrast stated; two separate definitions can leave the final point unearned.

3. (a) A firm may enter because profits in the market are high [1], which offers a return that its current market does not [1]. [2] (b) Barrier to entry, for example high start-up costs [1], which deter small firms without finance, so fewer rivals appear [1]. Barrier to exit, for example a long lease [1], which keeps a failing firm in the market and the competition intense [1]. [4] Examiner insight: Analysis points score best when each barrier is followed by a consequence for the market, not just named.

4. (a) Market share = sales revenue ÷ market size × 100 [1]. 2024: 420,000 ÷ 2,400,000 × 100 = 17.5% [1]. 2025: 432,000 ÷ 2,700,000 × 100 = 16.0% [1]. [3] (b) (2.7 − 2.4) ÷ 2.4 × 100 = 12.5% [1]. [1] (c) Ormsgill’s sales revenue grew by only 2.9% [1], while the market grew by 12.5%, so rivals took most of the extra demand [1]. [2] Examiner insight: Showing the formula with figures before the answer helps a reader give credit even if a slip follows.

5. A physical market is one where buyers and sellers meet in a place, such as a shop [1]. A non-physical market has no shared place and trades by website, app or other digital means [1]. Online means trading over the internet, while digital is wider and includes digital products and app-based trading [1]. [3] Examiner insight: The words “including online and digital” ask for both terms to be separated, not just one.

6. (a) Shop contribution = 18 − 9 = £9 [1]; break-even = 9,000 ÷ 9 = 1,000 books [1]. Online contribution = 18 − 9 − 2.50 = £6.50 [1]; break-even = 2,500 ÷ 6.50 = 384.6, so 385 books [1]. [4] (b) 9q − 9,000 = 6.5q − 2,500, so q = 6,500 ÷ 2.5 = 2,600 books [1]. Below 2,600 the online store earns more profit; above it the shop earns more, because its contribution per book is higher [1]. [2] Examiner insight: A comparison of break-even points scores better when it goes on to say which channel suits the expected volume.

7. (a) 34 + 22 = 56% [1]. [1] (b) The merger removes a rival from the market [1]. The combined share is over three times that of the next largest rival (56 ÷ 18 = 3.1) [1]. A larger firm may gain economies of scale and lower costs [1], and it may have greater power over suppliers and prices, so rivals struggle to compete [1]. [4] Examiner insight: Use the figures from the stem to show scale; a general statement that mergers create dominance is not enough.

8. In general terms, the UK has a competition authority and sector regulators that set and apply competition rules [1]. They can investigate proposed mergers [1] and can block them or allow them with conditions [1]. They can investigate anti-competitive behaviour, such as agreeing prices or abusing a strong position [1], and penalise firms found to have broken the rules [1]. [5] Examiner insight: Describe the powers in general terms; naming exact thresholds or Acts you are unsure of can cost credibility.

9. Dependence: 70% of Brinsworth’s output goes to one buyer [1], so it has little bargaining power and may have to accept lower prices [1]. Benefit: a large, regular order gives stable sales revenue and planning certainty [1], and it may let Brinsworth afford investment [1]. Risk: if Stavordale delists Brinsworth, 70% of sales revenue is lost [1]. Brinsworth could reduce the risk by finding other buyers or selling direct to customers [1]. Judgement: the impact is probably more negative than positive in the long term, because the power imbalance is large [1]; the result depends on whether Brinsworth can build other outlets quickly [1]. [8] Examiner insight: Evaluation earns credit when the judgement depends on a named factor in the case, such as the 70% share.

10. Local: a rival bookshop or a charity shop nearby attracts shoppers and can force a price cut [1]; loyal customers and personal service reduce the effect [1]. National: chains and supermarkets use scale to offer lower prices and wider range [1], and Thrushwell’s small website cannot match their marketing [1]. Global: global online retailers offer wide choice, fast delivery and easy price comparison [1], which can pull away customers who are price sensitive [1]. Stakeholders: lost sales revenue may threaten jobs and the owner’s profit, while customers gain from lower prices [1]. Judgement: global online competition is likely to be the greatest threat because customers compare prices easily and Thrushwell has little pricing power [1]; the effect is smaller if Thrushwell’s customers value local events and advice [1]. [9] Examiner insight: Naming all three levels is only the start; the judgement must say which matters most and why.

11. Price cut option: a 10% cut means Ormsgill needs about 11% more customers just to keep the same sales revenue (1 ÷ 0.9 = 1.11) [1], so profit will probably fall [1], and rivals may cut again [1]. Online option: it reaches new customers beyond the village [1], and loyal customers may like delivery [1], but there are set-up costs and delivery costs, and fresh bread may be harder to deliver [1]. Recommendation: choose online ordering and local delivery, not the price cut [1]. Justification: the market is growing at 12.5%, so Ormsgill needs a way to reach extra demand, not just defend existing sales [1]. Risk: if online orders stay low, the fixed costs will not be covered, so test it with a small trial first [1]. Judgement: the choice is better because it adds a channel rather than giving away margin, as long as the extra volume is high enough to cover the extra costs [1]. [10] Examiner insight: A recommendation needs a choice, a reason tied to the case data and a weakness; options listed without a choice tend to limit the credit.

Where marks are usually lost

• Defining market dominance as being large, without power over price, output or rivals.
• Giving two definitions for a distinction question without stating the difference.
• Naming a barrier to entry or exit without saying what it does to the market.
• Judging a firm on sales revenue growth alone and ignoring market growth.
• Forgetting delivery or returns when calculating online contribution.
• Stopping a calculation at break-even without interpreting what it means.
• Describing regulation using invented Acts or limits.
• Writing balanced points but no judgement in an evaluate question.
• Recommending an option without a justification from the case data.

Frequently asked questions

Are these OCR A Level Business H431 past paper questions? No. They are original practice questions written for Marlbridge on market forces, physical and non-physical markets, competition and market dominance. Use them alongside OCR’s own past papers.

Should you name specific competition laws when answering regulation questions? No. Describe the powers of UK regulators in general terms. Naming exact thresholds or Acts you are unsure of can cost credibility, and inventing them loses marks.

What is easy to forget when calculating online contribution? Delivery or returns costs. Include every variable cost of selling online before working out contribution per unit and break-even.

What should you do after calculating a break-even point? Interpret it, for example by saying which sales channel suits the expected volume. Stopping at the break-even figure leaves the comparison unfinished.

How do you evaluate competition at local, national and global levels? Naming all three levels is only the start. The judgement must say which level matters most to the business in the case and why.

Next steps

• Review with the revision notes and the study guide.
• Go to the OCR A Level Business hub and the printable checklist.
• Try the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

OCR, OCR Level 3 Advanced GCE in Business (H431) Specification, Version 2.1 (January 2026), External influences: Market forces; Physical and non-physical markets; Competition; Market dominance.