Business 0450 · IGCSE · Business and the international economy
Business and the international economy — practice question
VVA is a business located in country X. It makes school backpacks (bags). VVA sells through retailers as its distribution channel. The Managing Director is aware that demand can be influenced by many factors, including the stage of the business cycle and the degree of competition in the market. VVA imports 45% of its raw materials. The Managing Director is concerned that import tariffs and import quotas being introduced, together with an appreciation in country X’s exchange rate, will have an impact on VVA.
(a)[2]
Define ‘import tariff’.
(b)[2]
Identify two reasons why some markets may become more competitive.
(c)[4]
State the four stages of the business cycle.
(d)[6]
Explain one possible effect of each of the following changes on VVA when it imports raw materials:
If import quotas are introduced in country X:
If country X’s exchange rate appreciates:
(e)[6]
Do you think retailers are the most suitable channel of distribution for a manufacturing business? 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: “A tax levied on imported goods as they enter a country” …