OxfordAQA IGCSE Business: Legislation and Competitive environment (9225) – 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 practice set is aligned to the OxfordAQA International GCSE Business (9225) specification, version 3.1, for exams from May/June 2022 onwards. It covers sections 3.2.5 Legislation and 3.2.6 Competitive environment. All businesses and figures are invented. Learn the content first from the study guide and the revision notes. For wider Topic 2 practice, see the Influences on business practice set. The course hub and printable checklist list the rest of the course, and the free diagnostics help you find weak spots.

Questions

1. A bakery keeps a daily log of oven safety checks, pays all staff at least the national minimum wage, and prints the ingredients and allergens on every pack. Identify the area of law (employment, health and safety, or consumer) linked to each of the three actions. [3]

2. Define the term market. [2]

3. Ilford Laundry Services has 9 workers paid the national minimum wage. Each works 30 hours a week for 52 weeks a year. The minimum wage rises from 5.80 to 6.30 per hour.

(a) Calculate the extra annual wage cost to Ilford. [3] (b) Explain one way Ilford could respond to this extra cost. [2]

4. Explain one advantage and one disadvantage a national minimum wage can bring to a business. [4]

5. Kintara Garments is in a developing country and exports shirts to a developed country. Its cost per shirt is labour 2.40, materials 3.60 and shipping 0.90. A rival in the developed country has labour 7.10, materials 3.60 and delivery 0.30 per shirt.

(a) Calculate Kintara’s cost advantage per shirt, in money and as a percentage of the rival’s cost (to 1 decimal place). [4] (b) Explain one reason why a lower cost per shirt may not guarantee that Kintara wins orders. [3]

6. Havelock Pharmacy is the only pharmacy in a village 40 km from the nearest town. Analyse the possible effects of this lack of competition on Havelock Pharmacy. [6]

7. Dorrit Print Works completes 2,400 jobs a year. About 2.5% are misprinted and must be redone free of charge at a cost of 38 per job.

(a) Calculate the annual cost of redoing misprinted jobs. [3] (b) Explain two ways consumer protection laws could impact on Dorrit. [4]

8. Explain two reasons why all businesses face uncertainty. [4]

9. (a) State two reasons why an entrepreneur might start a business. [2] (b) Explain how carrying out market research could reduce the risk faced by a new business. [3]

10. Draymar Logistics runs 14 delivery vans. The law requires it to keep staff safe, and an audit shows driver training is weak. A training and vehicle-check programme would cost 12,500 as a one-off. If an accident happened, managers estimate the cost at: compensation 18,000, van off the road 4,500, fine 6,000 and higher insurance 2,000. They think there is a 50% chance of such an accident in any year without the programme.

Evaluate whether Draymar should spend the 12,500 on the programme. [9]

11. Plimsoll Bakery sells 800 loaves a week at 3.00 each. A supermarket opens nearby with its own bakery counter. Plimsoll expects to lose 25% of its loaf sales.

(a) Calculate the fall in Plimsoll’s weekly revenue from loaves. [2] (b) Plimsoll could cut its price to 2.70 and expects to sell 700 loaves a week. Calculate the weekly revenue at this price. [2] (c) Recommend whether Plimsoll should cut its price. [4]

Answers

1. Oven safety checks: health and safety law [1]. Paying at least the national minimum: employment law [1]. Printing ingredients and allergens: consumer law [1]. [3] Examiner insight: Match each action to one area. Naming all three areas without linking them to the actions leaves the question unanswered.

2. A place or system where buyers and sellers come together [1] to trade a good or service [1]. [2] Examiner insight: Define the general idea. A definition naming only one product, such as a street market, is narrower than the question asks.

3. (a) Hours per worker per year = 30 x 52 = 1,560, so 9 workers work 14,040 hours [1]. Rise per hour = 6.30 - 5.80 = 0.50 [1]. Extra cost = 14,040 x 0.50 = 7,020 a year [1]. [3] (b) Raise prices to pass the cost on [1], although it risks losing customers to rival laundries [1]. (Accept cutting costs elsewhere or reducing hours, each with a consequence.) [2] Examiner insight: Show the working. A correct figure with no working can leave a reader unsure how you got it, and a response with a consequence usually earns more than one that just names an action.

4. Benefit: staff may be more motivated and stay longer [1], reducing the cost of recruiting and training replacements [1]. Drawback: the wage bill rises [1], which cuts profit or forces higher prices that may reduce sales [1]. [4] Examiner insight: One of each is required, so two advantages, however good, leave half the question unanswered.

5. (a) Kintara = 2.40 + 3.60 + 0.90 = 6.90 [1]. Rival = 7.10 + 3.60 + 0.30 = 11.00 [1]. Advantage = 11.00 - 6.90 = 4.10 [1]. As a percentage of rival cost = 4.10 / 11.00 x 100 = 37.3% [1]. [4] (b) Customers may care about quality, branding or service as well as price [1]. If the rival’s shirts are seen as better, or Kintara’s shipping is slower, buyers may stay with the rival [1] even though Kintara is cheaper, so the cost advantage does not turn into orders [1]. (Accept exchange-rate movements or transport problems, developed the same way.) [3] Examiner insight: Say which cost the percentage is taken from. On the “not guaranteed” part, a link back to this business’s situation reads better than a general remark.

6. Benefit chain: with no nearby rival, customers have few alternatives [1], so Havelock can charge higher prices or keep a high margin [1] and earn higher profit [1]. Risk chain: with no pressure from rivals it may have less reason to improve service or keep prices fair [1], which could upset customers and attract complaints or criticism [1]. A new pharmacy, or online sellers, could enter if profits look high, ending the protected position [1]. [6] Examiner insight: Analysis means a chain of reasoning. Stating “no competition means high profit” with no link between the steps earns less than the full chain.

7. (a) Misprinted jobs = 2,400 x 0.025 = 60 [1]. Cost = 60 x 38 [1] = 2,280 a year [1]. [3] (b) Cost: Dorrit must check work, replace faulty jobs and handle complaints, which adds to costs [1] [1]. Benefit: clear rules on quality build customer trust, which can bring repeat orders, and rivals cannot win work by making false claims [1] [1]. (Accept consequences of failing to comply, such as compensation or reputation damage, developed in two stages.) [4] Examiner insight: Two ways means two different impacts. Cost and benefit count as different points, but repeating “refunds” in different words does not.

8. Reason 1: customer tastes can change, so a product that sells well now may not sell next year [1], which makes sales difficult to forecast [1]. Reason 2: rivals can act, for example by cutting prices or launching new products [1], which the business cannot control [1]. (Accept changes in costs, the economy, exchange rates or technology, each developed once.) [4] Examiner insight: Each reason needs its own development. Two reasons in a single sentence with no explanation usually earn the point marks only.

9. (a) Any two of: to make a profit; to be their own boss or have independence; to turn an idea or skill into a business; to meet a need they have spotted [1] [1]. [2] (b) Market research collects information on customers’ needs and what rivals offer [1]. The business can find out whether enough people will buy at a price that covers costs [1], so it avoids investing in a product nobody wants [1]. [3] Examiner insight: Part (b) rewards explaining how the research lowers risk, not just what research is.

10. Cost if an accident happens = 18,000 + 4,500 + 6,000 + 2,000 = 30,500 [1]. With a 50% chance a year, the expected yearly cost is 15,250 [1], which is more than the one-off 12,500 [1]. For: fewer accidents and less absence, better morale, and a lower chance of fines and rising insurance [1]. Complying with the law also protects Draymar’s reputation with customers and recruits. Against: 12,500 is a large sum for a business with 14 vans, it takes time to train drivers, and the 50% chance is only an estimate, so the saving may be smaller [1] [1]. Judgement: Draymar should spend the money [1], because one accident costs more than twice the programme, the legal duty to protect staff applies regardless, and the programme’s cost is paid once while its benefits continue [1]; the decision would change only if the real chance of an accident were much lower than estimated [1]. [9] Examiner insight: The strongest responses use the numbers, set both sides against each other, and finish with a judgement tied to Draymar rather than a general statement.

11. (a) New sales = 800 x 0.75 = 600 loaves [1]. Revenue falls from 2,400 to 1,800, a fall of 600 a week [1]. [2] (b) Revenue = 700 x 2.70 [1] = 1,890 a week [1]. [2] (c) For: the price cut leaves revenue 90 a week higher than doing nothing (1,890 against 1,800) [1], and it keeps more customers loyal in the face of a new rival [1]. Against: revenue is not profit, and a lower price cuts the margin on every loaf, so profit could be lower even though revenue is higher [1]. Recommendation: cut the price only if the cost per loaf is low enough to keep a positive margin on the extra loaves, otherwise compete on freshness and quality instead [1]. [4] Examiner insight: A recommendation should give a reason and a condition. Revenue figures alone cannot show whether profit improves, so note what extra information you would want.

Where marks are usually lost

• Naming a law or a risk without explaining how it affects the business in the question.
• Giving only costs of legislation, or only benefits, when the question asks for both.
• Leaving out units or the calculation steps, such as hours per year.
• Writing “no competition means no risk” when a business with little competition still faces other risks.
• Writing a general conclusion that would suit any business instead of using the figures in the stem.
• Treating revenue as profit when comparing a price cut with doing nothing.
• Giving two similar points and expecting them to count as two different ones.
• Forgetting that a cost advantage can be offset by delivery, quality or brand.

Frequently asked questions

Does a business with little competition face no risk? No. A business with minimal competition can still face other risks, such as changing tastes, rising costs or new entrants, so writing “no competition means no risk” is a common error.

How do you avoid a generic conclusion in an evaluate question? Use the figures and facts in the stem to support your judgement, such as the size of a cost compared with revenue or profit. A conclusion that would suit any business earns fewer marks.

Which part of OxfordAQA IGCSE Business 9225 do these questions cover? They cover sections 3.2.5 Legislation and 3.2.6 Competitive environment of OxfordAQA International GCSE Business (9225).

Next steps

• Revise with the revision notes and re-read the study guide.
• Browse the OxfordAQA IGCSE Business hub and tick off topics on the printable checklist.
• Try all the free 10-minute diagnostics at /diagnostics/.
• Book a free trial class at /trial/.

Official syllabus

OxfordAQA International GCSE Business (9225) specification, version 3.1, OxfordAQA, for International GCSE exams May/June 2022 onwards. Sections 3.2.5 Legislation and 3.2.6 Competitive environment.