Kemala produces beauty products of high quality. Demand for her best-selling hand cream is price inelastic. She promotes her products in specialist beauty magazines. Kemala is studying her income statement. An extract is given in Table 2.1. She said: ‘When I started my business, I did not understand why cash is important’.
(a)[2]
Define the term ‘revenue’.
(b)[2]
Calculate Kemala’s profit margin, showing your working.
(c)[4]
Outline $2$ reasons why cash matters to Kemala’s business.
(d)[6]
Explain two possible reasons that demand for Kemala’s best-selling product is price inelastic.
(e)[6]
Do you think advertising in specialist magazines is the best way for a firm to promote high-quality products? 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: “Money received from selling a product during a given period of time” …