OCR A Level Business: Political, economic, social and technological factors and related topics (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 are aligned to the external influences content of the OCR A Level Business (H431) specification, Version 2.1 (January 2026), first assessment 2017, final assessment summer 2027. They cover political, economic, social and technological factors, the digital revolution, and ethical, legal and environmental factors. All businesses and figures are invented. Related pages: study guide, revision notes, External Influences practice set, course hub, checklist and free diagnostics.

Questions

1. Identify three political factors that may influence a UK business. [3]

2. Corbelstone Dental Group made a profit of £250,000. It buys a scanner priced at £840 before an indirect tax of 20% (an illustrative rate).

(a) Distinguish between direct taxation and indirect taxation. [2] (b) Calculate the price Corbelstone pays for the scanner including the tax. [2] (c) Calculate the corporation tax it pays on its profit at an illustrative rate of 25%. [1]

3. Grindlow Print sells packs of cards at £8.00. Variable cost per pack is £6.50 and fixed costs are £135,000. The government offers a subsidy of £0.25 per pack.

(a) Calculate break-even output before and after the subsidy, to the nearest pack. [4] (b) Analyse the benefits to Grindlow of receiving the subsidy. [3]

4. A UK importer buys tiles priced at 92,000 euros. The pound rises from £1 = 1.15 euros to £1 = 1.25 euros after interest rates in the UK rise.

(a) Explain the usual relationship between a rise in interest rates and the exchange rate. [2] (b) Calculate the change in the sterling cost of the order. [2]

5. Dunstrand Builders constructs new homes. A discount food retailer operates in the same town.

(a) Describe the main phases of the business cycle. [2] (b) Explain why Dunstrand is likely to be more affected than the food retailer by the business cycle. [4]

6. In the area around Corbelstone Dental Group, the proportion of residents aged 65 and over is rising and fewer young families are moving in. Analyse how this social change may affect the group and its stakeholders. [6]

7. Fallowgate Hardware has 14 stores. Store sales fell from £6.4m to £5.8m in two years, a fall of 9.4%, while online rivals grew. Fallowgate has a basic website. Evaluate why Fallowgate may be more affected by the digital revolution than a local joinery firm, and recommend one response. [9]

8. Harlowmere Knitwear sells jumpers at £30 with unit cost £18. It sells 40,000 a year. Paying suppliers a higher fair wage would add £1.50 per jumper.

(a) Calculate the profit margin before and after the change. [3] (b) Evaluate the conflict between this ethical objective and profit, and recommend and justify how Harlowmere could manage it. [6]

9. Aldwickham Cleaning employs 60 staff who use chemicals and work alone at night.

(a) Explain the purpose of health and safety legislation. [2] (b) Analyse the consequences to Aldwickham of failing to comply with such legislation. [4]

10. Glenmoray Hotel has £110,000 in cash and a lease with 7 years remaining. It could install solar panels costing £84,000 that save £14,000 a year.

(a) Explain what is meant by sustainability. [2] (b) Evaluate whether Glenmoray should install the panels, and justify your decision. [10]

Answers

1. Tax rates [1]; regulation or employment rules [1]; trade agreements or tariffs [1]. Government spending priorities, and political stability or the risk of a change of government, are equally valid. [3] Examiner insight: Three distinct factors are needed; two versions of the same idea (for example corporation tax and income tax) usually earn one mark between them.

2. (a) A direct tax goes directly to the government from the person or firm it is levied on [1]; an indirect tax is collected by a seller but paid by the consumer through the price [1]. [2] (b) Tax = 0.20 × 840 = £168 [1]; price = £1,008 [1]. [2] (c) 0.25 × 250,000 = £62,500 [1]. [1] Examiner insight: Show the tax amount as well as the total; a stated rate with no working leaves nothing to reward if the final figure slips.

3. (a) Contribution before = 8.00 − 6.50 = £1.50 [1]; break-even = 135,000 ÷ 1.50 = 90,000 [1]. Contribution after = £1.75 [1]; break-even = 135,000 ÷ 1.75 = 77,143 packs [1]. [4] (b) The break-even point falls by 12,857 packs, so profit starts sooner [1]. Lower costs per pack allow a lower price or more investment [1]. This improves its cash flow and survival if demand is weak, though dependence on the subsidy is a risk [1]. [3] Examiner insight: “Analyse” asks for a chain of reasoning, so link the lower cost to a consequence rather than stating “it saves money”.

4. (a) Higher interest rates tend to attract foreign funds, raising demand for the currency [1], so the pound appreciates [1]. [2] (b) Before: 92,000 ÷ 1.15 = £80,000 [1]; after: 92,000 ÷ 1.25 = £73,600, so the cost falls by £6,400 [1]. [2] Examiner insight: A stronger pound lowers import costs; say which way the cost moves, because a bare number without direction is incomplete.

5. (a) Any two phases accurately described, such as a boom with rising output and confidence [1] and a slump with output at its lowest and unemployment high [1]; downturn (recession) and recovery are the others. [2] (b) Homes are a high-value purchase that buyers delay when incomes or confidence fall [1], so Dunstrand’s sales drop sharply in a downturn [1]. Food is a necessity, so demand stays steadier [1]. Dunstrand’s high fixed costs and borrowing for sites add to the pressure [1]. [4] Examiner insight: Compare both businesses explicitly; an answer about builders alone does not address “more affected than”.

6. Older residents may buy more health and maintenance treatments, raising demand [1]. Fewer families may cut demand for child dental care [1]. The group may need different opening hours, accessibility and communication [1]. Staff recruitment may be harder if younger people leave the area [1]. Owners may gain if demand rises, but face adaptation costs; patients benefit from suitable services [1]. Judgement: the change is gradual and predictable, so the impact is moderate and manageable if the group plans early [1]. [6] Examiner insight: Name at least two stakeholders and say how each is affected; a one-sided list of “customers will change” stays at a lower level.

7. Fallowgate sells products customers can compare and buy online [1]; sales have already fallen by 9.4%, so the threat is real [1]. A joinery firm sells made-to-order work that needs local visits, so it is less exposed [1]. A basic website means Fallowgate cannot yet use opportunities such as wider markets and customer data [1]. Rivals with lower costs can undercut prices [1]. Counter: some customers still want advice and same-day collection [1]. Recommend: improve the website and offer click-and-collect from the 14 stores [1], because it uses existing assets, though it needs investment and staff training [1]. Judgement: Fallowgate is more affected as it competes directly with digital rivals, but a combined online and store approach limits the damage [1]. [9] Examiner insight: Use the data in the stem (the 9.4% fall) in the argument, and finish with a judgement that states why the firm is more or less affected.

8. (a) Margin before = 12 ÷ 30 = 40% [1]; unit cost after = £19.50 [1]; margin after = 10.50 ÷ 30 = 35% [1]. [3] (b) Extra cost = 40,000 × 1.50 = £60,000 a year, cutting profit from £480,000 to £420,000 [1]. Conflict: the ethical aim reduces profit [1]. Against paying: shareholders may expect higher returns [1]. For: a better ethical profile may build loyalty and ease recruitment [1]. Recommend phasing the change and raising the price modestly, with clear communication about the reason [1], because a 35% margin remains healthy and the reputation gain may repay the cost over time, though not guaranteed [1]. [6] Examiner insight: Quote the effect in £ and percentage points, then justify the recommendation by weighing it against the profit loss.

9. (a) Health and safety legislation protects workers and others from harm at work [1] by setting duties on employers to assess and reduce risks [1]. [2] (b) Fines or compensation raise costs [1]. An injury to a lone night worker may bring legal action and lost working time [1]. Loss of contracts or reputation among clients may follow [1]. In serious cases the business could be forced to close, harming staff and owners [1]. [4] Examiner insight: Tie each consequence to Aldwickham’s chemicals and night working instead of listing general penalties.

10. (a) Sustainability means using resources so that today’s needs are met and future generations can still meet their own [1], for example by using resources in ways that can continue [1]. [2] (b) Payback = 84,000 ÷ 14,000 = 6 years [1], inside the 7-year lease. Over 7 years savings are £98,000, a net gain of £14,000 [1]. Cash falls to £26,000, which may limit other spending [1]. For: lower energy costs, a green image that may attract guests and staff, and less exposure to energy prices [1][1]. Against: the margin of gain is small, and panels may not stay useful if the lease ends [1]. A cheaper plan, such as phased installation, could cut risk [1]. Ignoring environmental pressures may lose guests to greener rivals [1]. Judgement: install in stages or secure a lease extension first [1], because the narrow gain does not justify using most of the cash at once [1]. [10] Examiner insight: A calculation that is not turned into a decision earns little; state what the payback figure means for this lease.

Where marks are usually lost

• Writing generally about a factor without using the business or figures in the stem.
• Mixing up the direction of an exchange rate effect.
• Stopping at a benefit without saying what it leads to.
• Confusing a subsidy with a loan, or direct with indirect tax.
• Giving only one side in an “evaluate” question.
• Making a recommendation with no justification.
• Naming no stakeholders when asked about stakeholders.
• Forgetting to state units and percentages.

Frequently asked questions

What external factors are tested in OCR A Level Business H431? The external influences content of OCR A Level Business (H431) covers political, economic, social, technological, digital, ethical, legal and environmental factors. Most questions end by asking you to evaluate the impact and importance of a change in one of these factors for a named business.

How do you approach a question on exchange rates and a business? Work out the cost or revenue in pounds at each exchange rate, showing the conversion, then explain what the change means for the business’s prices or margins. Then judge how important the change is, for example by considering how much of its costs or sales are in foreign currency.

What is the difference between a direct and an indirect tax? A direct tax is paid directly to the government by the person or business it is levied on, such as income tax or corporation tax. An indirect tax is added to the price of goods and services and collected by the seller, such as VAT.

Next steps

• Review the revision notes and study guide.
• Tick off topics on the OCR A Level Business checklist and visit the course hub.
• Try all free 10-minute diagnostics.
• Book a free trial class at /trial/.

Official syllabus

OCR, OCR Level 3 Advanced GCE in Business (H431) Specification, Version 2.1 (January 2026), Area of Study: External influences.