Kemala produces high-quality beauty products. Demand for her best-selling hand cream is price inelastic. She promotes her products in specialist beauty magazines. Kemala is examining her income statement. An extract is shown in Table 2.1. She commented: ‘When I started my business, I did not understand why cash matters’.
(a)[2]
Define ‘revenue’.
(b)[2]
Calculate Kemala’s profit margin and show your working.
(c)[4]
Outline two reasons why cash matters for Kemala’s business.
(d)[6]
Explain two possible reasons that demand for Kemala’s best-selling product is price inelastic.
(e)[6]
Do you think using specialist magazines is the best way for a business to promote high-quality products? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Cash received from selling a product during a particular period of time” …