SECTION A

1 (a) Define the term ‘marginal cost’. [2]

(b) Explain two uses of break-even analysis. [3]

Break-even analysis may be used to make comparisons on two different options.

Break-even analysis may also assit managers when taking important decisions

2 (a) Define the term ‘commission’. [2]

(b) Explain two disadvantages to a business of using empowerment to motivate its employees. [3]

3. Explain the problems a sole trader might have if they change the legal structure to a partnership. [5]

4 (a) Define the term ‘customer (market) orientation’. [2]

An outward looking approach that bases product decisions on consumer demands as established by market research.

(b) Explain two limitations to a business of using market segmentation. [3]

• Promotional costs may be high as different advertisments and promotions might be needed for different segments
• Reserach and development and production costs might be high as a result og marketing several different products variations