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3 (a) Which one of the following is a characteristic of a sole trader? Select one answer: A They require a business qualification B They have unlimited liability C They can sell shares to raise finance D They do not employ staff Figure 1 shows the total costs for a business between May and July - Edexcel - GCSE Business - Question 3 - 2020 - Paper 1
Question 3
3 (a) Which one of the following is a characteristic of a sole trader? Select one answer: A They require a business qualification B They have unlimited liability ... show full transcript
Worked Solution & Example Answer:3 (a) Which one of the following is a characteristic of a sole trader? Select one answer: A They require a business qualification B They have unlimited liability C They can sell shares to raise finance D They do not employ staff Figure 1 shows the total costs for a business between May and July - Edexcel - GCSE Business - Question 3 - 2020 - Paper 1
Step 1
Which one of the following is a characteristic of a sole trader?
Answer
The correct answer is B - They have unlimited liability. This is a fundamental characteristic of a sole trader, signifying that the owner's personal assets can be used to settle business debts, distinguishing them from a limited liability company where personal assets are protected.
Step 2
Using the information in Figure 1, calculate the percentage change in total costs between May and July.
Answer
To calculate the percentage change in total costs:
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Identify the total costs for May and July from Figure 1. Let’s assume total costs were 10,000 in July.
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Use the formula for percentage change:
ext{Percentage Change} = rac{ ext{Final Value} - ext{Initial Value}}{ ext{Initial Value}} imes 100
Substituting the values:
ext{Percentage Change} = rac{10,000 - 6,000}{6,000} imes 100 = rac{4,000}{6,000} imes 100 = 66.67 ext{%}
Thus, the percentage change in total costs is approximately 66.67%.
Step 3
Explain one reason why new business ideas come about.
Answer
New business ideas often arise due to changing consumer needs. For instance, as society evolves, consumer preferences shift, leading to a demand for new products or services. Entrepreneurs must identify these changes to provide solutions that meet contemporary needs, creating opportunities in the market.
Step 4
Explain one advantage to a small business of using market mapping.
Answer
One significant advantage of market mapping for a small business is that it allows for a clearer understanding of the competitive landscape. By visually representing market data, businesses can identify gaps in the market and position themselves effectively to meet unmet needs, ultimately enhancing their strategic planning.
Step 5
Discuss how the decision making of a small business may be affected by increased competition.
Answer
Increased competition can significantly impact the decision-making process of a small business in several ways:
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Pricing Strategy: Businesses may need to adjust their prices to remain competitive, which could lead to reduced profit margins.
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Marketing Efforts: With more competition, a small business may need to invest more in marketing to distinguish itself from rivals and attract customers.
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Product Development: Increased competition often drives innovation, as businesses must continually improve or adapt their offerings to keep pace with competitors.
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Customer Engagement: Small businesses may enhance customer service and engagement to retain clientele in a more crowded market.
In summary, increased competition prompts small businesses to reevaluate their strategies to maintain a competitive edge.