Category: Business Studies

Bubbly Drinks manufactures a wide range of fizzy drinks that are sold around Staffordshire.

Its most popular drink is still the original Bitter Lemonade, which is a cash cow.

A cash cow is important to Bubbly Drinks because it?

Select ONE answer:

1. generates a significant amount of revenue
2. is new on the market
3. has a high market share and a high rate of growth
4. generates all of Bubbly Drink’s profits

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

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

The answer is 1

1. Correct – Cash cows are mature products with a high but stable market share/low growth. Cash cows are important because they can be ‘milked’ for cash/revenue. Bubbly Drinks bring out new flavours of fizzy drinks every year and their development is funded by the profits from the cash cow.
2. Not correct – products which are new on the market are called question marks/problem child and it is uncertain as to how successful they will be.
3. Not correct – cash cows do not have a high rate of growth as their growth tends to be slow and steady over time.
4. Not correct – cash cows do not generate all the profits for a business and star products such as Ginger Beer/other Bubbly Drinks drinks can also generate a significant amount of profit.

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Stafford Insurance operate a TQM system called KnottedQUALITY that focuses on high customer service throughout all of its insurance operations.

The use of TQM at Stafford Insurance is MOST LIKELY to lead to an increase in?

Select ONE answer:

1. labour turnover
2. lead times
3. wastage levels
4. repeat purchases

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 4

1. Not correct – labour turnover is likely to fall as employees are more motivated by the use of TQM as they are taking responsibility for the work.
2. Not correct – there should be shorter processing of claims due to increased efficiency from use of TQM .
3. Not correct – wastage levels are likely to decrease as there is a right first time culture with TQM, so employees will make less mistakes .
4. Correct – TQM is when all employees are involved in quality control and take responsibility for the work. TQM at Stafford Insurance will encourage their employees to ensure the highest customer service through its KnottedQUALITY system. This is likely to lead to satisfied customers who will continue to use Stafford Insurance because of the high quality of customer service.

This work is licensed under a Creative Commons Attribution 4.0 International License.

If the price elasticity of demand for clothing is estimated to be – 2.0, a 20% fall in the price of clothing will lead to a?

Select ONE answer:

1. 20% increase in quantity demanded
2. 20% decrease in quantity demanded
3. 40% increase in quantity demanded
4. 40% decrease in quantity demanded

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
2. Not correct
3. Correct – formula ==> % change in quantity demanded / % change in price = PED e.g. measures the responsiveness of demand for a good or service to a change in its price ==> 40 / -20 = – 2.0
4. Not correct

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In India, a country with a population of over 1 billion, the agricultural industry is labour intensive.

This is MOST LIKELY to be because?

Select ONE answer:

1. technology is cheap
2. finance is readily available
3. there is no shortage of suitable workers
4. farming is only suited to capital intensive methods

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 – machinery used in agriculture is likely to be expensive or if machinery was cheap this would lead to capital intensive production instead.
2. Not correct – because if finance is available to pay for technology it is more likely to be used.
3. Correct – Labour intensive is where a high proportion of output stems from physical workers not machinery/most costs are from paying wages to employees. India is a country with an abundance of cheap labour so it makes good economic sense to employ it (provides India with a competitive advantage). India has an abundant supply of low skilled workers which should keep labour costs down. The agricultural industry is able to keep its costs down as wage levels are likely to be low.
4. Not correct – although some farming can be done by machinery, the nature of the tasks make it more suitable for labour.

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Lego sells toys, such as Harry Potter characters, made from plastic bricks.

Each of the following is a product extension strategy that Lego could use EXCEPT?

Select ONE answer:

1. Lego video games
2. Lego books
3. Lego bricks
4. Lego clothing

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 – video games are an add-on to the original idea designed to prolong the product’s life cycle.
2. Not correct – books are designed to raise the presence of the brand in order to increase the sale of bricks.
3. Correct – product extension strategy is a marketing method which seeks to increase sales/extends the maturity stage/prevents decline in sales of an existing product. An example of product extension strategies, e.g. modification, re-packaging, re-branding. Lego bricks are the original products and therefore cannot be a product extension strategy. The original idea is unlikely to continue to increase sales over a period of time, without a further stimulus.
4. Not correct – the introduction of Lego clothing is designed as a complementary good.

This work is licensed under a Creative Commons Attribution 4.0 International License.