3.1.3

Question 1

Give three factors of market conditions that can affect demand for a product?

Answer 1

-political factors: if economy is too low government reduce taxes to increase people’s disposable income

-labour supply: labour supply has an effect on costs when labour supply is high that’s good supply of labour

-income and economic factors: in a recession businesses aim to reduce costs. In a boom wages rise and more people are employed more disposable income.

Question 2

Two ways in which environmental factors affect businesses costs

Answer 2

-legislation: eg pollution
-environmentally friendly