Country C's economy is seeing economic growth. Using secondary market research, Samuel has started a plumbing business. The business installs and repairs bathroom equipment. Samuel works as a sole trader. He put all his $500 savings into buying the tools he needed. Samuel then had to choose a suitable pricing method. He believes that offering a high-quality service might help his business add more value.
(a)[2]
Define the term ‘economic growth’.
(b)[2]
Define the term ‘secondary market research’.
(c)[4]
Outline how a high-quality service could help Samuel’s business raise added value.
(d)[6]
Explain two possible disadvantages for Samuel of running as a sole trader.
(e)[6]
Do you think penetration pricing is a better choice for a new business than cost-plus pricing? 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: “When a country's GDP goes up” …