Five years ago, Manisha began baking cakes for celebrations such as weddings and birthdays from her home. She now runs a small shop and employs 3 staff. Product quality matters greatly to her business. Manisha said: ‘I have benefited from the economic boom but I did not expect demand to increase by 500% each year. Somehow I have managed to cope with higher interest rates and all the challenges of being a sole trader. The business is profitable at last but I have to work every day.’ A friend has offered to become Manisha’s business partner.
(a)[2]
What does the term ‘economic boom’ mean?
(b)[2]
Identify two factors which may influence demand for Manisha’s products.
(c)[4]
Identify and explain two ways in which higher interest rates could affect Manisha’s business.
(d)[6]
Identify and explain two reasons why product quality may be important to Manisha’s business.
(e)[6]
Do you think Manisha should take on a business partner? 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 strong and rapid increase in the level of economic activity” …