Business 0450 · IGCSE · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
GK Hotel is a small hotel located in the city centre. It contains 15 rooms. Most of the guests are tourists. In the previous year, customer numbers decreased because consumer spending patterns changed and competition became stronger. The Marketing manager thinks GK needs to appeal to customers from a range of market segments if the hotel wants to raise its profits. He intends to improve the GK website. He is unsure whether the cost plus pricing method he currently uses ought to be changed.
(a)[2]
What does the term ‘market segment’ mean?
(b)[2]
Identify two reasons why consumer spending patterns might alter.
(c)[4]
Using the information in Table 1, draw a break-even chart for GK Hotel on Figure 1.
(d)[6]
Identify and explain two benefits to GK Hotel of having a website.
(e)[6]
Do you think that cost plus pricing is the best pricing method for GK Hotel to use? 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 recognisable sub-group of an entire market” …