IGCSE Business Studies (0450)
Understanding business activity Banker
26 questions · about 16% of the marks we indexed · examined in 9 of 9 sessions.
Practice questions
Original questions written by HomiLabs in the style of the exam, with answers and mark schemes. They are not
Cambridge past paper questions and have not been reviewed by Cambridge. Try each one before opening the answer.
Q1Enterprise, business growth and size · Core · Paper 1 style · 4 marksAyesha wants to start a mobile app business in Karachi that helps families book home tutors.
- (a) Identify two characteristics of a successful entrepreneur. [2]
- (b) State two items Ayesha should include in her business plan. [2]
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- (a) Any two, e.g. willing to take risks; creative/innovative; hard-working; self-confident; good communicator; determined/resilient; able to plan and organise.
1 mark each.
- (b) Any two, e.g. description of the business idea and objectives; market research findings and target market; marketing plan (price, promotion); finance needed and sources; cash-flow forecast and forecast profit; details of the owner and staff; location.
1 mark each.
Business size can be measured in several ways.
- (a) State two methods of measuring the size of a business, other than the number of employees. [2]
- (b) Define 'internal growth'. [2]
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- (a) Any two: value of output; capital employed; market share; sales revenue (value of sales).
1 mark each. Do not accept profit.
- (b) When a business expands its existing operations, for example by opening new branches or increasing output, using its own resources rather than joining with other businesses.
1 mark: expanding existing operations. 1 mark: not by merger or takeover / organic growth.
The following decisions have been made by different businesses:1 A flour mill buys a chain of bakeries.2 A clothing retailer merges with another clothing retailer.3 A dairy company buys the farms that supply its milk.4 A cement company buys a chain of hotels.
- (a) Identify the type of integration shown in each of the four decisions. [4]
- (b) Outline one advantage to the dairy company of decision 3. [2]
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- (a) 1 Forward vertical integration; 2 Horizontal integration; 3 Backward vertical integration; 4 Conglomerate integration (diversification).
1 mark each. For 1 and 3, accept 'vertical' for the mark only if forward/backward is correct.
- (b) e.g. secure supply of milk, so it can control the quality and cost of milk and is not affected by supplier shortages.
1 mark for the advantage, 1 mark for development.
The table shows information about two businesses.Business A (a call centre): 120 employees; capital employed PKR 80 millionBusiness B (a chemical plant): 45 employees; capital employed PKR 150 million
- (a) Calculate the capital employed per employee for each business, correct to the nearest PKR 1,000. Show your working. [2]
- (b) Explain why it can be misleading to compare these two businesses using only the number of employees. [2]
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- (a) Business A: PKR 667,000; Business B: PKR 3,333,000
B1: 80,000,000 ÷ 120 = PKR 667,000. B1: 150,000,000 ÷ 45 = PKR 3,333,000.
- (b) Business A looks larger by employees, but Business B is capital-intensive (uses expensive machinery) and is larger by capital employed; different industries use different mixes of labour and capital.
1 mark: B is larger by capital employed / capital-intensive. 1 mark: industries differ in labour intensity.
Bilal opened a café in Islamabad six months ago. Sales have been lower than he expected and he is worried that the business might fail.
- (a) Identify two sources of support available to people starting a business. [2]
- (b) Explain two reasons why new businesses such as Bilal's café often fail. [6]
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- (a) Any two, e.g. government grants or low-interest loans; business advice and training schemes; business incubators/business parks; banks' small-business advisers; mentoring from experienced entrepreneurs.
1 mark each.
- (b) e.g. 1) Lack of market research: Bilal may have chosen a location or menu that customers do not want, so sales are too low to cover rent. 2) Poor cash-flow management: he may run out of cash to pay suppliers and staff even if the café could become profitable. Other: strong competition from established cafés; lack of management experience; too little capital; changes in the market.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point).
Gul Khan runs a tailoring shop in Peshawar with two employees. He has run the business for 15 years and has no plans to expand.
- (a) Explain two reasons why Gul Khan's business may stay small. [6]
- (b) State two advantages to customers of buying from a small business. [2]
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- (a) e.g. 1) Owner's objectives: Gul Khan may be happy with his income and want to keep control and avoid stress, so he chooses not to grow. 2) Small market: tailored clothing is a personal service and customers want individual attention from a local tailor, so demand is limited to his area. Other: lack of finance for expansion; a skilled personal service is difficult to scale.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point).
- (b) Any two, e.g. personal service; flexibility to meet individual needs; owner knows customers; local and convenient.
1 mark each.
Nadia wants to borrow PKR 3 million from a bank to open a beauty salon in Faisalabad. The bank has asked her for a business plan.
- (a) Define 'business plan'. [2]
- (b) Explain two benefits to Nadia of writing a business plan. [6]
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- (a) A written document that describes a business, its objectives and how it will achieve them, including marketing, production and financial plans.
1 mark: written document. 1 mark: sets out the business's objectives/strategies and forecasts.
- (b) e.g. 1) Easier to get finance: the bank can see forecast revenue and how Nadia will repay the PKR 3 million, so it is more likely to lend. 2) Reduces risk of failure: planning makes Nadia research customers, competitors and costs before she spends money, so she can spot problems early. Other: gives clear aims to measure progress against; helps her to persuade suppliers or partners.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point).
Two mobile network companies in the same country have merged to form one large company.
- (a) Explain the difference between a merger and a takeover. [2]
- (b) Explain two problems the merged company might face. [6]
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- (a) A merger is when two businesses agree to join together to form one business; a takeover is when one business buys enough shares to gain control of another.
1 mark for each correct description.
- (b) e.g. 1) Different cultures: managers and staff from the two companies may have different ways of working, causing conflict and lower productivity. 2) Redundancies: duplicate shops and offices are closed, causing poor morale and possibly strikes. Other: diseconomies of scale – communication is slower in a much larger organisation; customers may lose choice and complain to the government; integrating IT networks is costly.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point).
Pak Biscuits Ltd makes biscuits. It plans to grow by buying one of its rival biscuit manufacturers.
- (a) Identify two benefits to a business of growth. [2]
- (b) Do you think horizontal integration is the best way for Pak Biscuits Ltd to grow? Justify your answer. [6]
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- (a) Any two, e.g. economies of scale (lower average costs); larger market share; higher profits; more power over suppliers; less risk of being taken over.
1 mark each.
- (b) For: quick increase in market share and fewer competitors; economies of scale in buying flour, sugar and packaging; gains the rival's brands and factory. Against: costly to buy the rival; cultural clashes; may need redundancies; competition authorities may object; risk is concentrated in one product. Alternatives: internal growth (cheaper, less risky but slow); vertical integration (secures supply of flour). Judgement, e.g. yes, because it quickly gains market share and lower costs, provided the price paid is not too high.
Up to 2 marks for knowledge/analysis of points for, up to 2 for points against, 2 marks for a justified judgement that explains why one side outweighs the other in this context.
Bread Basket owns 8 bakeries in Lahore and wants to expand. It is considering two options.Option 1 – internal growth: open 3 new bakeries, costing PKR 25 million each. Forecast annual profit: PKR 6 million per new bakery.Option 2 – take over Golden Oven, a rival with 5 bakeries, for PKR 110 million. Golden Oven's annual profit is PKR 20 million.
- (a) Which option should Bread Basket choose? Justify your answer using suitable calculations (for example, forecast annual profit as a percentage of the cost of each option). [12]
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- (a) Calculations: Option 1: 24.0%; Option 2: 18.2%. Option 1: higher return (24.0%), cheaper (PKR 75 m), keeps Bread Basket's own culture and quality, but slower and the forecast profit for new bakeries is uncertain. Option 2: lower return (18.2%) and costs PKR 110 m, but gains 5 bakeries at once with a known profit record, removes a competitor and gives more market share; may bring integration problems. Judgement, e.g. Option 1, because it gives a higher return for less money, unless Bread Basket needs to grow quickly to block competitors.
Calculations: Option 1: (3 × 6) ÷ (3 × 25) × 100 = 18 ÷ 75 × 100 = 24.0%. Option 2: 20 ÷ 110 × 100 = 18.2%. Content: Option 1 = 18 ÷ 75 × 100 = 24.0%; Option 2 = 20 ÷ 110 × 100 = 18.2%; internal growth cheaper and keeps culture/quality but slower and forecast uncertain; takeover gives 5 bakeries at once with a known profit record, removes a rival, more market share, but integration problems and higher cost. Mark bands (12; knowledge 2, application 2, analysis 4, evaluation 4): Level 3 (9–12): developed analysis of both sides / all options applied to Bread Basket, using the data, and a justified decision that explains why the rejected option(s) are weaker. Level 2 (5–8): advantages and disadvantages analysed and applied to Bread Basket, with a decision that is only partly justified or one-sided. Level 1 (1–4): relevant knowledge with little application or analysis; a decision with no reasoning earns no evaluation marks. Correct calculations count towards application and analysis; follow through an earlier calculation error.
Zain plans to open a juice bar in Multan and wants a bank loan of PKR 6 million. His business plan contains these monthly forecasts:Juices sold: 300 per day, 26 days a month; price PKR 350 per juiceIngredient cost: PKR 120 per juiceRent PKR 250,000; wages PKR 400,000; other fixed costs PKR 144,000
- (a) Do you think the bank should lend Zain the PKR 6 million? Justify your answer using suitable calculations. [12]
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- (a) Calculations: PKR 1,000,000. For: forecast profit of PKR 1 m a month (PKR 12 m a year) would easily cover repayments; plan shows he has thought about costs. Against: forecasts may be optimistic – 300 juices every day may be unrealistic for a new business, especially in winter; no evidence of market research or competitors; Zain's experience unknown; the loan is large and he may have no collateral. Judgement, e.g. lend only if Zain shows market research supporting the sales forecast and offers security, because profit is very sensitive to the number of juices sold.
Calculations: revenue 300 × 26 × 350 = 2,730,000; ingredients 300 × 26 × 120 = 936,000; fixed costs 794,000. 2,730,000 − 936,000 − 794,000 = PKR 1,000,000. Content: revenue PKR 2.73 m, ingredients PKR 0.936 m, fixed costs PKR 0.794 m, forecast profit PKR 1 m a month (PKR 12 m a year); repayments easily covered if forecasts are right; but 300 juices a day may be optimistic (new business, winter), no market research or competitor evidence, experience and collateral unknown; profit very sensitive to sales. Mark bands (12; knowledge 2, application 2, analysis 4, evaluation 4): Level 3 (9–12): developed analysis of both sides / all options applied to the bank's decision about Zain, using the data, and a justified decision that explains why the rejected option(s) are weaker. Level 2 (5–8): advantages and disadvantages analysed and applied to the bank's decision about Zain, with a decision that is only partly justified or one-sided. Level 1 (1–4): relevant knowledge with little application or analysis; a decision with no reasoning earns no evaluation marks. Correct calculations count towards application and analysis; follow through an earlier calculation error.
Saleem is a sole trader who runs a mobile phone repair shop in Quetta.
- (a) Define 'unlimited liability'. [2]
- (b) State two advantages to Saleem of being a sole trader. [2]
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- (a) The owner is personally responsible for all the debts of the business, so personal possessions can be taken to pay them if the business fails.
1 mark: owner responsible for all business debts. 1 mark: personal assets at risk.
- (b) Any two, e.g. easy and cheap to set up; Saleem keeps all the profit; he has full control and makes decisions quickly; financial information stays private; flexible working.
1 mark each.
Many businesses in Pakistan are organised as companies or franchises.
- (a) Define 'franchise'. [2]
- (b) State two features of a public limited company. [2]
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- (a) A business arrangement where the franchisor gives the franchisee the right to use its brand name, logo and business methods in return for a fee and/or a share of sales (royalty).
1 mark: right to use another business's name/brand/methods. 1 mark: in return for a fee or royalty.
- (b) Any two, e.g. shares can be sold to the general public, e.g. on the stock exchange; shareholders have limited liability; separate legal identity; must publish its accounts; owned by shareholders and run by directors.
1 mark each.
Dr Farah and Dr Imran are dentists. They plan to set up a dental clinic together in Lahore as a partnership.
- (a) Define 'partnership agreement'. [2]
- (b) Explain two advantages to the dentists of forming a partnership instead of each operating as a sole trader. [6]
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- (a) A written legal document setting out the terms of a partnership, such as how much capital each partner invests, how profits are shared and what happens if a partner leaves.
1 mark: written/legal agreement between partners. 1 mark: an example of what it contains.
- (b) e.g. 1) More capital: both dentists invest, so they can afford expensive dental chairs and X-ray equipment. 2) Shared workload and skills: they can cover each other's patients during holidays or illness, and one could specialise in children's dentistry, attracting more patients. Other: shared decision-making; losses shared.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point).
Rizwan runs a successful furniture shop in Islamabad as a sole trader. He plans to borrow money to open a large showroom and is thinking of forming a private limited company with his brother.
- (a) Explain two advantages to Rizwan of forming a private limited company. [6]
- (b) Outline one disadvantage of a private limited company compared with a sole trader. [2]
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- (a) e.g. 1) Limited liability: if the large showroom fails, Rizwan would only lose the money he invested, not his house or savings. 2) More capital: he can sell shares to his brother (and other family or friends) to raise finance for the showroom. Other: separate legal identity, so the company continues if an owner dies; may appear more creditworthy to suppliers and banks.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point).
- (b) e.g. more legal formalities and costs to set up and run; accounts must be filed and are less private; profits shared with other shareholders; Rizwan loses some control.
1 mark for the disadvantage, 1 mark for brief development.
QuickBite is a burger chain with 30 outlets run by franchisees. Each franchisee pays QuickBite a royalty of 6% of sales revenue. One franchisee in Rawalpindi had sales revenue of PKR 24 million last year.
- (a) Calculate the royalty paid to QuickBite by the Rawalpindi franchisee. Show your working. [2]
- (b) Explain two benefits to QuickBite (the franchisor) of growing by franchising. [6]
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- (a) PKR 1,440,000
M1: 6% × 24,000,000. A1: PKR 1,440,000.
- (b) e.g. 1) Low-cost growth: franchisees pay to open their outlets, so QuickBite can expand to 30 outlets without raising large amounts of capital. 2) Regular income: QuickBite receives royalties (e.g. PKR 1.44 m from one outlet) with less risk than running the outlets itself. Other: franchisees are motivated owners, so outlets are well run; brand awareness grows.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point). Answers about benefits to the franchisee gain no marks.
Hassan Foods Ltd is a family-owned private limited company that makes cooking oil. The directors are considering becoming a public limited company to raise finance for a new refinery.
- (a) Outline one reason why a public limited company can usually raise more capital than a private limited company. [2]
- (b) Do you think Hassan Foods Ltd should become a public limited company? Justify your answer. [6]
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- (a) It can sell shares to the general public on the stock exchange, so many more investors can buy shares.
1 mark: sells shares to the public. 1 mark: on the stock exchange / much larger pool of investors.
- (b) For: raises large amounts of capital for the refinery without interest payments; higher status helps with suppliers and banks; shares easy to sell. Against: the family may lose control if outsiders buy many shares, including risk of takeover; costly and complicated to convert; must publish detailed accounts; shareholders may want short-term dividends. Judgement, e.g. yes if the family keeps more than half of the shares and the refinery cannot be financed by loans; otherwise use a bank loan to keep control.
Up to 2 marks for knowledge/analysis of points for, up to 2 for points against, 2 marks for a justified judgement that explains why one side outweighs the other in this context.
Omar wants to open a fried-chicken restaurant in Karachi. He could open it under his own brand, or buy a franchise from an international chain. The franchise would cost an initial fee of $40,000 plus a royalty of 5% of sales each year. Omar forecasts first-year sales of $300,000. He has never run a restaurant before.
- (a) Should Omar buy the franchise or open under his own brand? Justify your answer using suitable calculations. [12]
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- (a) Calculations: $55,000. Franchise: well-known brand attracts customers from the first day; training and support useful as Omar has no restaurant experience; proven menu and suppliers; banks may lend more readily. But costs $55,000 in year 1 and royalties every year; less control over menu, prices and decor; must follow franchisor rules. Own brand: keeps all profit and full control, but higher risk of failure and must build customer awareness. Judgement, e.g. franchise, because Omar's lack of experience makes failure likely without support, and the brand reduces risk despite the $55,000 cost.
Calculations: royalty 5% × 300,000 = $15,000. 40,000 + 15,000 = $55,000. Content: first-year payment 40,000 + 5% × 300,000 = $55,000; franchise — known brand, training and support for an inexperienced owner, proven menu and suppliers, easier bank loans, but fees every year and less control; own brand — keeps all profit and control, but higher risk of failure and must build awareness. Mark bands (12; knowledge 2, application 2, analysis 4, evaluation 4): Level 3 (9–12): developed analysis of both sides / all options applied to Omar, using the data, and a justified decision that explains why the rejected option(s) are weaker. Level 2 (5–8): advantages and disadvantages analysed and applied to Omar, with a decision that is only partly justified or one-sided. Level 1 (1–4): relevant knowledge with little application or analysis; a decision with no reasoning earns no evaluation marks. Correct calculations count towards application and analysis; follow through an earlier calculation error.
Mehran Motors is a private sector car parts manufacturer.
- (a) Identify two objectives that a private sector business might have. [2]
- (b) Define 'stakeholder'. [2]
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- (a) Any two: survival; profit; growth; increasing market share; social/ethical objectives (e.g. helping the community).
1 mark each.
- (b) Any person or group with an interest in the activities and performance of a business.
1 mark: person or group. 1 mark: with an interest in/affected by the business.
The following groups have an interest in Faisal Textiles:employees; customers; shareholders; the local community; managers; the government
- (a) Classify each of the six groups as an internal or an external stakeholder. [4]
- (b) State one objective that customers of Faisal Textiles might have. [2]
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- (a) Internal: employees, shareholders (owners), managers. External: customers, the local community, the government.
4 marks for all six correct; 3 for five; 2 for four; 1 for two or three.
- (b) e.g. good-quality cloth at reasonable prices / reliable delivery / good after-sales service.
2 marks for a clear objective; 1 mark for a vague one.
Sapphire Paints plans to extend its factory near a residential area in Gujranwala. The extension will double output and create 80 new jobs, but will increase lorry traffic and fumes.
- (a) Identify two stakeholder groups that would support the factory extension. [2]
- (b) Explain two conflicts between stakeholder objectives that the extension might cause. [6]
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- (a) Any two, e.g. shareholders (higher profit); managers (business growth); unemployed local people/workers (more jobs); government (more tax, jobs); suppliers (more orders).
1 mark each.
- (b) e.g. 1) Shareholders vs local community: shareholders want higher profits from doubled output, but residents want clean air and quiet roads, so they may protest and delay planning permission. 2) Workers vs shareholders: new jobs are welcome, but workers may want higher wages from the increased profits while shareholders want higher dividends. Other: customers want low prices vs owners want high profit; government wants jobs but also environmental protection.
For each conflict: 1 mark for the two groups/objectives, 1 mark for application, 1 mark for development.
Roshni Solar is a social enterprise in Sindh. It sells low-cost solar lamps to villages without electricity and trains local women to sell and repair them.
- (a) Define 'social enterprise'. [2]
- (b) Explain two objectives Roshni Solar is likely to have. [6]
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- (a) A business that has social objectives, such as helping people or the environment, as well as making a profit, and uses most of its profit to meet those social aims.
1 mark: business with social/environmental objectives. 1 mark: also needs profit / reinvests profit in its aims.
- (b) e.g. 1) Social: provide light to homes without electricity so children can study at night and families stop using dangerous kerosene lamps. 2) Economic: make enough profit to survive and expand to more villages, and provide income for the local women it trains. 3) Environmental: reduce pollution by replacing kerosene with solar power.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point).
Fizz Up is a new soft-drinks business. In its first year it had sales of PKR 4.2 million in a market where total sales were PKR 35 million. It made a small loss.
- (a) Calculate Fizz Up's market share. Show your working. [2]
- (b) Do you think profit should be the most important objective for Fizz Up at this stage? Justify your answer. [6]
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- (a) 12%
M1: 4.2 ÷ 35 × 100. A1: 12%.
- (b) For profit: needs profit for long-term survival and to repay loans; owners want a return. Against: as a new business, survival is more important – it must build cash flow and customers first; increasing market share (already 12%) and brand awareness may require low prices and heavy advertising that reduce short-term profit; profit becomes more important later. Judgement, e.g. no – survival and market share matter more now, because a new drinks brand must win customers from established brands before it can earn profit; objectives change as the business grows.
Up to 2 marks for knowledge/analysis of points for, up to 2 for points against, 2 marks for a justified judgement that explains why one side outweighs the other in this context.
Sana makes celebration cakes at home in Lahore. The ingredients and box for one cake cost PKR 750, and she sells the cake for PKR 1,800.
- (a) Define 'added value'. [2]
- (b) Calculate the added value of one cake. Show your working. [2]
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- (a) The difference between the selling price of a product and the cost of the bought-in materials and components used to make it.
1 mark: selling price minus. 1 mark: cost of bought-in materials/components.
- (b) PKR 1,050
M1: 1,800 − 750. A1: PKR 1,050.
Al-Haq Motors assembles cars on a production line where each worker does one task, such as fitting doors or installing seats.
- (a) Define 'specialisation'. [2]
- (b) Explain one advantage and one disadvantage to Al-Haq Motors of specialisation on its production line. [6]
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- (a) When people, businesses, regions or countries concentrate on what they are best at producing, for example workers concentrating on one task (division of labour).
1 mark: concentrating on one task/product. 1 mark: what they are best at / division of labour.
- (b) Advantage: each worker becomes skilled and quick at one task, so more cars are assembled per day and the cost per car falls. Disadvantage: the work is repetitive and boring, so workers may be demotivated, make mistakes or leave; also, if one worker is absent, the whole line may stop.
Advantage: 1 identify, 1 apply, 1 develop. Disadvantage: 1 identify, 1 apply, 1 develop.
Hill Valley Tea buys loose tea for PKR 1,100 per kg. It packs it into branded 250 g packs which sell for PKR 520 each. The packaging for each pack costs PKR 40.
- (a) Calculate the added value per kg of tea. Show your working. [2]
- (b) Explain two ways Hill Valley Tea could increase its added value. [6]
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- (a) PKR 820 per kg
M1: 4 packs per kg: selling price 4 × 520 = PKR 2,080; bought-in costs 1,100 + 4 × 40 = PKR 1,260. A1: 2,080 − 1,260 = PKR 820.
- (b) e.g. 1) Stronger branding and advertising, e.g. stressing that the tea comes from hill gardens, so customers will pay a higher price per pack without costs rising much. 2) Attractive or premium packaging, e.g. gift tins, which allows a much higher price than the extra packaging cost. Other: add flavours (cardamom, green tea) to create premium products; reduce the cost of bought-in materials by buying in bulk; sell directly online at a higher price.
For each of the two points: 1 mark for identifying the point, 1 mark for applying it to the business, 1 mark for developing the consequence (max 3 per point).
Print Pro, a printing business in Karachi, has PKR 10 million to invest. It can either buy a new digital printing machine, expected to add PKR 2.2 million to profit each year, or buy two delivery vans, expected to save PKR 1.6 million a year in courier costs. It can afford only one.
- (a) Define 'opportunity cost'. [2]
- (b) Print Pro chooses the printing machine. State the opportunity cost of this decision and explain why opportunity cost is important when Print Pro makes decisions. [4]
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- (a) The next best alternative that is given up when a choice is made.
1 mark: next best alternative. 1 mark: given up/forgone.
- (b) Opportunity cost: the two delivery vans (and the PKR 1.6 million a year saving they would have brought). It is important because resources are scarce; comparing the benefit given up helps Print Pro choose the option with the greatest benefit (here PKR 2.2 m is more than PKR 1.6 m), although it should also consider risk and non-financial factors such as reliable delivery.
1 mark: vans/the saving forgone. Up to 3 marks for explanation: scarce resources (1); compare benefits of alternatives (1); development using the figures or a non-financial factor (1).
Businesses can be classified into three sectors of economic activity.
- (a) Define 'primary sector'. [2]
- (b) State the sector for each of these businesses: a fish farm in Thatta; a bank in Islamabad; a fertiliser factory in Multan; a coal mine in Balochistan. [2]
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- (a) The sector of the economy that extracts natural resources, such as farming, fishing, mining and forestry.
1 mark: extracting/using natural resources. 1 mark: example(s).
- (b) Fish farm – primary; bank – tertiary; fertiliser factory – secondary; coal mine – primary.
2 marks for all four correct; 1 mark for two or three correct.
The table shows the number of workers (in millions) in each sector in Country Z.2005: primary 18; secondary 6; tertiary 62025: primary 15; secondary 10; tertiary 15
- (a) Calculate the percentage of workers employed in the primary sector in 2005 and in 2025. Show your working. [2]
- (b) Explain two reasons why the importance of the tertiary sector has grown in Country Z. [4]
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- (a) 2005: 60%; 2025: 37.5%
B1: 18 ÷ 30 × 100 = 60%. B1: 15 ÷ 40 × 100 = 37.5%.
- (b) e.g. 1) Rising incomes: as people become richer they spend more on services such as restaurants, banking, education and tourism, creating more service jobs. 2) Mechanisation of farming: fewer workers are needed in agriculture, so people move to towns to work in services. Other: growth of IT and telecoms; tourism; global outsourcing of call centres.
For each reason: 1 mark for the reason, 1 mark for development.
The government of a country owns the national railway. It is losing money, and some politicians want to sell it to private sector businesses (privatisation).
- (a) Explain the difference between the public sector and the private sector. [2]
- (b) Do you think the railway should be privatised? Justify your answer. [6]
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- (a) Public sector businesses are owned and controlled by the government; private sector businesses are owned by private individuals or shareholders.
1 mark for each sector correctly described. Do not accept 'private limited company' as a definition of the private sector.
- (b) For: private owners aim for profit, so may cut waste and improve efficiency; may invest more in new trains; government stops paying for losses and receives money from the sale. Against: private owners may close unprofitable routes that villages depend on; fares may rise; safety may be reduced to cut costs; the railway is a strategic service that benefits society (external benefits such as less road congestion). Judgement, e.g. privatise only with government rules on fares, safety and keeping essential routes, because efficiency gains are useful but the social service must be protected.
Up to 2 marks for knowledge/analysis of points for, up to 2 for points against, 2 marks for a justified judgement that explains why one side outweighs the other in this context.
