Business 0450 · IGCSE · Production of goods and services
Production of goods and services — practice question
SOLS manufactures 5 styles of luxury men’s shoes using job production. SOLS operates in a niche market. Quality assurance matters. All inputs, including leather, are imported. SOLS uses cost plus pricing. The shoes are sold directly to customers through its website. The Managing Director said: ‘We can sell our shoes for $100 less a pair than our competitors because we have no shops.’ Demand is rising and the Managing Director must decide whether to switch to batch production.’
(a)[2]
What does the term ‘niche market’ mean?
(b)[2]
Identify two advantages to SOLS (excluding lower prices) of selling its products on a website.
(c)[4]
Explain, with reference to SOLS, how quality assurance differs from quality control.
(d)[6]
Identify and explain one advantage and one disadvantage to SOLS of using cost plus pricing.
(e)[6]
Do you think SOLS should alter its method of production? 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 highly specialised section of a large market” …