3.1.3

Question 1

External environment can be evaluated and analysed by

Answer 1

Using pest analysis model

Question 2

Total cost formula

Answer 2

Fixed cost +variable cost

Question 3

Unit cost formula

Answer 3

Total cost÷output

Question 4

Lower unit cost enable a business to increase what and or lower what

Answer 4

Increase their profits and profit margin and lower their price

Question 5

Demand

Answer 5

To be effective demand must mean that customers are willing and able to buy the product or service a business produces

Question 6

Market conditions

Answer 6

Refers to to a number of features of a market such as sales, the rate at which they are changing and the number and strength of competition

Question 7

Market conditions along with strength if competition will influence

Answer 7

Demand

Question 8

If there is more competition in the market

Answer 8

Demand may lower

Question 9

If demand lowers this may hinder a business from achieving

Answer 9

Economies of scale

Question 10

If a business cannot achieve economies if scale this may impact the ability to

Answer 10

Lower their unit costs

Question 11

Income

Answer 11

Income relates to the level of income earned by a business customers

Question 12

If incomes are high this will mean

Answer 12

That they are able to purchase more products and intern increase demand for the business

Question 13

If incomes are lower

Answer 13

There will be lower demand and higher costs

Question 14

Intrest rates

Answer 14

Outline the cost of borrowing and the reward for saving.

Question 15

If intrest rates are low

Answer 15

This means that customers are paying less towards their loans and mortgages

Question 16

If customers are paying less on loans and mortgages

Answer 16

They have more disposable income

Question 17

If a customer has more disposable income what does I mean for the business

Answer 17

This may increase the demand of a businesseading to lower costs

Question 18

If intrest rates are high this means that

Answer 18

Customers are paying more towards their loans and mortgages which may mean that businesses see a decrease in demand and therefore higher costs

Question 19

Demography

Answer 19

The study of human populations

Question 20

Demographic examples

Answer 20

Age, culture, income, gender

Question 21

If the population increases in size demand may

Answer 21

Increase

Question 22

Fair trade and environmental pros

Answer 22

Increase demand for customers who value this,

Question 23

Fair trade and environmental cons

Answer 23

High cost for raw materials and higher investment is required