GCSE Business (9-1) Paper 1 - Year 10 Examination February 2020
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Name:
Teacher:
GCSE
Business (9-1)
Paper 1 – Year 10 Examination
February 2020
Time allowed: 1 hour 15 minutes
Materials
For this paper you must have:
• a calculator.
• extra lined paper (if needed).
Instructions
• Use black ink or black ball-point pen.
• Fill in the boxes at the top of this page.
• Answer all questions.
• If you need extra space use lined paper. Write your name clearly on any additional sheets.
Make sure you write the question number next to your extra work.
• Do all rough work in this exam paper. Cross through any work you do not want to be
marked.
Advice
• The marks for each question are shown in brackets.
• The maximum mark for this paper is 70.Section A
Answer all questions in this section.
Circle the correct answer for Q1 to Q5. For example A .
1. A business has calculated that its unit costs are likely to fall next year, whilst it also forecasts that its
sales are likely to rise. This will lead to an increase in:
A Variable costs
B Fixed costs
C Revenue
D Profit (1 mark)
2. Which of the following is not a factor of production?
A Enterprise
B Land
C Cash flow
D Capital (1 mark)
3. Which of the following would be a key objective for a small business that is facing very tough
competition at a time when the economy is also in a recession.
A Increase in market share
B International expansion
C Survival
D Organic growth (1 mark)
4. Which of the following is an accurate description of a ‘stakeholder’?
A Someone who owns part of a business
B An individual or a group affected by the actions of a business
C A shareholder in a large public limited company
D It pays the living wage to its employees (1 mark)
5. The concept of one business using another organisation to produce products for it is called:
A A merger
B Outsourcing
C Teleworking
D Economies of Scale (1 mark)
26. Explain the term ‘unlimited liability’. (2 marks)
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7. Explain one opportunity cost of a private limited company deciding to award greater dividend
payments to its shareholders. (3 marks)
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8. Explain one benefit to a successful business of expanding through franchising. (3 marks)
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……………………………………………………………………………………………………………………………………………………………….The Nissan factory near Sunderland is one of the largest and most productive car manufacturing plants
in Europe. It was established in 1984 and has the capacity to produce over half a million vehicles a
year. The map below shows the location of the business:
9. Explain two factors that may have influenced Nissan’s decision to locate the plant in its current UK
location.
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4Section B
Answer all questions in this section.
Item A
New Opportunities
Mary was recently made redundant from her role as office manager in a small building company. She
was responsible for running the office, dealing with clients and paying suppliers. As a new
entrepreneur she would like a change of career and hopes to open up a small café in York. She intends
to use her redundancy money to pay for some of the set up costs but is aware that she will require
extra finance on top of this. Mary is aware that the local market is very competitive and, given her lack
of experience in this type of business, is debating with the idea of finding a business partner to share
both ideas and the cost of establishing the new business.
10. Suggest and explain two personal characteristics that will be essential if Mary is to succeed in her new
venture. (4 marks)
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……………………………………………………………………………………………………………………………………………………………….11. When working on the finance section of her business plan, Mary estimated the following figures for
her first year.
Her fixed costs will be £50,000
Her variable costs will be £3 per customer visit
The average customer will spend £8
She will have 12,000 customers
Calculate how much profit or loss Mary will make in her first year. (4marks)
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12. As an alternative to taking out a bank loan, Mary is thinking about finding a business partner who can
jointly fund the start up. With reference to the information in Item A, recommend whether or not
Mary should set up her business as a partnership. (9 marks)
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Section C
Answer all questions in this section.
Item B
Morgan Motor Company (Part 1)
Morgan Motor Company Ltd is a family-owned business that designs and builds cars in the UK. It
operates in the niche sports car market and was established in 1912. Last year Morgan produced
around 1300 cars, and employed around 180 highly skilled staff, many of whom have been with the
business for over 15 years.
The company prides itself on the craftsmanship and the attention to detail in its manufacturing
process. Their unique cars are assembled largely by hand, using traditional methods, with little reliance
on robots or flow production lines. Wood is still used for the structure of many of the cars they make.
Despite their high prices the cars are so popular that customers placing an order may have to wait up
to 12 months for delivery of a Morgan.
Morgan is investing heavily in research and development, with a clear focus on sustainability. It is
developing new cars (both electric and hybrid-powered vehicles) and is also finding new ways to build
its cars. It is working with suppliers and universities to find ways to build cars using magnesium (a
relatively cheap and abundant resource) to develop lighter vehicles with better fuel efficiency.
The current Managing Director, Steve Morris, had worked his way up within the company, from
production line apprentice to his previous position as Operations Director.
Sources: adapted from www.maximisepotential.co.uk and Morgan Motor Company Ltd
13. Which sector of the economy does Morgan operate within? Tick the correct box. (1 mark)
Primary sector Secondary sector Tertiary sector
14. Morgan manufacture cars. Identify two inputs into Morgan’s production process. (2 marks)
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815. Explain two advantages to Morgan Cars of operating as a private limited company. (4 marks)
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16. Explain two advantages to Morgan Cars of adopting its new approach of sustainability. (4 marks)
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……………………………………………………………………………………………………………………………………………………………….17. Nissan produces over 500,000 cars a year at its plant in Sunderland. Explain one reason why Nissan
might be able to manufacture its cars at a lower cost per unit than Morgan. (3 marks)
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18. The operations director at Morgan has recently suggested that company introduces more machines in
order to increase the efficiency of production and therefore reduce costs. Identify one stakeholder
group that might support this proposal and one stakeholder group that it likely to oppose it. Explain
the viewpoint of each. (6 marks)
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10Item C
Morgan Motor Company (Part 2)
One of the directors at Morgan has suggested that the business invests in a new factory building in order to
create more production space and capacity. The costs of this expansion are likely to be significant in the
short term. Steve Morris is aware that the company has lacked sufficient space for a long period of time but is
concerned about the level of risk involved and how this will affect the profitability of the company.
19. All businesses, regardless of size, are affected by changes in the economic environment. Analyse how
an increase in interest rates might affect Morgan Cars.
(5 marks)
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……………………………………………………………………………………………………………………………………………………………….20. Recommend whether or not Morgan should invest in the new factory building outlined in Item C.
(9 marks)
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End of the exam
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