Business Studies Multiple Choice Question – 24 May 2023

The price of Apple’s iPad Mini is affected by many factors.

An increase in which one of the following may lead to a decrease in the selling price of Apple’s iPad Mini?

Select ONE answer:

1. Rate of sales tax
2. Consumer incomes
3. Supply of components
4. Advertising costs

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct – because an increase in the rate of sales tax is likely to increase prices because the tax will be mostly passed on to the consumer as a higher price
2. Not correct – because increasing consumer incomes will shift the demand curve to the right therefore increasing Price
3. Correct – Definition of supply e.g. supply is the amount of goods/services that a producer is willing and able to supply at a given price at a given time. An increase in the supply of components should lead to a decrease in the price of these components which will lower the costs of production for Apple. The cost savings may be passed on to consumers in the form of lower prices.
4. Not correct - because extra advertising costs would lead to an increase in prices due to an higher overall costs

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