This set has ten original questions, ordered from easier to harder, covering all five lessons in enterprise and business purpose. Questions 1 to 3 check need and demand, 4 and 5 opportunity cost, 6 and 7 sectors, 8 objectives, and 9 and 10 assumptions.
Attempt each question on paper before opening the answer. Write full sentences for the explanation parts, as you would in an exam.
Mark which ones you got wrong, then use the routing list at the end. The mistake log tool can help you keep track of repeats.
All businesses here are fictional. Check the Cambridge subject page for your exam year, since 0450 and 0264 can word and weight these ideas differently.
Questions
1. Sort into need or want for a school student: safe drinking water, a limited-edition phone case, a roof over the house, a premium headset.
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Needs: safe drinking water and a roof over the house. Wants: the phone case and the headset. A need is required to live or function. A want is something the student would like but could do without.
2. In Taman Indah, 250 residents like the idea of a laundry pick-up service. At RM25 a bag, 60 would use it each month. At RM35 a bag, 24 would. Find the monthly revenue at each price and say which price earns more.
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At RM25: 60 × 25 = RM1,500. At RM35: 24 × 35 = RM840. The lower price earns RM660 more (1,500 − 840 = 660). The 250 residents who “like” the idea are not the demand. Demand at each price is 60 and 24.
3. A charity says 5,000 people in a district need a clinic but cannot pay for private care. A business owner argues there is strong demand for a private clinic. Evaluate this in two or three sentences.
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The need is real, but demand requires willingness and ability to pay at a price. If these people cannot pay, the demand for a private clinic is limited, whatever the size of the need. A clinic may work with funding or a lower cost model, but the owner should test what people can pay first.
4. Hafiz has RM20,000 and three options. Option A is an online store with expected profit of RM1,500 a month. Option B is a small tuition centre with RM1,300 a month. Option C is a fixed deposit at 4% a year. He chooses A. State the opportunity cost and, for the fixed deposit, show the monthly figure.
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Fixed deposit: 20,000 × 4% = RM800 a year, so 800 ÷ 12 = RM66.67 a month. Ranking: A RM1,500, B RM1,300, C RM66.67. Hafiz chooses A. The next most valued alternative is B, so the opportunity cost is RM1,300 a month. C is not added.
5. A bakery has a single oven slot each morning. Cakes would earn RM240, bread RM180 and cookies RM150. A new owner decides to fill the slot with bread because the staff find it easier. Explain the opportunity cost of that decision and whether it is justified on profit alone.
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Choosing bread gives up the most valuable alternative, which is cakes at RM240. The opportunity cost is RM240. On profit alone it is hard to justify, because bread earns RM60 less (240 − 180 = 60). The owner may still have non-financial reasons, such as ease and fewer errors, and should say so.
6. Classify each activity as primary, secondary or tertiary: an oil palm smallholding, a factory making banana chips, a bus company, a firm building a bridge, a rubber tapper.
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Oil palm smallholding: primary, because it grows a crop. Banana chip factory: secondary, because it processes. Bus company: tertiary, because it provides a service. Bridge builder: secondary, because it builds. Rubber tapper: primary, because it takes material from trees.
7. A town has 12,000 workers: 1,500 in the primary sector, 3,000 in the secondary and 7,500 in the tertiary. Find the percentage in each sector. Five years later the tertiary sector has 8,400 of the 12,000. What is the new percentage?
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Check the total: 1,500 + 3,000 + 7,500 = 12,000. Primary: 1,500 ÷ 12,000 = 12.5%. Secondary: 3,000 ÷ 12,000 = 25%. Tertiary: 7,500 ÷ 12,000 = 62.5%. The percentages add to 100%. Later: 8,400 ÷ 12,000 = 70%, a rise of 7.5 percentage points.
8. Aina runs an online shop. In month 3 her sales are RM6,000 and costs RM6,500. In Year 2 they are RM18,000 and RM14,400. In Year 4 they are RM40,000 and RM34,000. Calculate profit and margin where possible, then suggest her objective at each point.
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Month 3: 6,000 − 6,500 = −RM500, a loss. Likely objective: survival.
Year 2: 18,000 − 14,400 = RM3,600. Margin 3,600 ÷ 18,000 = 20%. Likely objective: profit.
Year 4: 40,000 − 34,000 = RM6,000. Margin 6,000 ÷ 40,000 = 15%. Profit rose but margin fell while sales more than doubled (40,000 ÷ 18,000 ≈ 2.2), suggesting growth. The figures are a clue, not proof.
9. A new warung assumes 50 customers a day, each spending RM12, with ingredient and drink costs equal to 55% of sales. It opens 30 days a month and pays RM6,000 rent. Find the monthly profit. Then find it again if only 40 customers a day come.
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At 50 customers: daily sales 50 × 12 = RM600. Monthly sales 600 × 30 = RM18,000. Costs 55% of 18,000 = RM9,900. After costs: 18,000 − 9,900 = RM8,100. After rent: 8,100 − 6,000 = RM2,100 profit.
At 40 customers: sales 40 × 12 × 30 = RM14,400. Costs 55% = RM7,920. After costs RM6,480. After rent: RM480 profit.
A fall of 10 customers a day cuts profit from RM2,100 to RM480, so the customer number is the assumption to test first.
10. (Harder) For the same warung, find the smallest whole number of customers a day that gives no loss. Show that your answer is right and that one fewer customer a day gives a loss.
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Each customer leaves 12 × (1 − 0.55) = 12 × 0.45 = RM5.40 after costs. Rent is RM6,000 a month, so customers needed per month are 6,000 ÷ 5.40 = 1,111.1, or about 37.04 a day over 30 days.
Test 38 a day: 38 × 30 = 1,140 customers, and 1,140 × 5.40 = RM6,156. That exceeds rent by RM156, so 38 customers a day gives a profit.
Test 37 a day: 37 × 30 = 1,110 customers, and 1,110 × 5.40 = RM5,994. That is RM6 below rent, a small loss. So 38 is the smallest whole number.
If you got these wrong
- Questions 1 to 3: you may be counting wishes as demand or mixing up need and want. Revisit need versus demand.
- Questions 4 and 5: check whether you added alternatives instead of naming the single next most valued one. Revisit opportunity cost.
- Questions 6 and 7: if you classified by product, or the percentages slipped, revisit economic sectors.
- Question 8: if you stopped at “profit” without margin, revisit objectives over time. The ratio tool can check your margin arithmetic.
- Questions 9 and 10: if you tested the easy assumption or lost marks on the arithmetic, revisit assumptions that need evidence.
If repeated errors persist, a teacher in online one-to-one Business tuition can work through your written answers. Break-even is covered properly in costs, revenue and break-even.