Podcast
Questions and Answers
Which business sector is involved in the extraction of natural resources?
Which business sector is involved in the extraction of natural resources?
In a franchise model, the franchisee has total autonomy over the business operations.
In a franchise model, the franchisee has total autonomy over the business operations.
False
What type of tax do unincorporated businesses pay on their profits?
What type of tax do unincorporated businesses pay on their profits?
income tax
A __________ business model allows individuals to operate under an established brand.
A __________ business model allows individuals to operate under an established brand.
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Match the following business objectives with their descriptions:
Match the following business objectives with their descriptions:
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What happens when the local currency strengthens?
What happens when the local currency strengthens?
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Increased income levels typically decrease the demand for luxury goods.
Increased income levels typically decrease the demand for luxury goods.
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What are some factors that affect demand for goods and services?
What are some factors that affect demand for goods and services?
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Which of the following is a characteristic of the tertiary sector?
Which of the following is a characteristic of the tertiary sector?
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What effect does a stronger local currency typically have on imports?
What effect does a stronger local currency typically have on imports?
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Which of the following is NOT a typical objective set by businesses?
Which of the following is NOT a typical objective set by businesses?
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How is the total repayment amount calculated when taking a loan?
How is the total repayment amount calculated when taking a loan?
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What is an advantage of franchising for a franchisee?
What is an advantage of franchising for a franchisee?
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Which factor would most likely decrease the demand for a product?
Which factor would most likely decrease the demand for a product?
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What type of businesses are subject to personal liability for debts?
What type of businesses are subject to personal liability for debts?
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Which of the following factors can affect business decisions from an economic perspective?
Which of the following factors can affect business decisions from an economic perspective?
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Study Notes
Industry Sectors
- Businesses are classified into three main sectors:
- Primary: Extracts natural resources (e.g., agriculture, mining).
- Secondary: Manufactures and produces goods (e.g., factories).
- Tertiary: Provides services and distribution (e.g., retail, healthcare).
Exchange Rate Calculations
- Exchange rates show the value of one currency in another currency.
- Businesses use these rates to convert currencies in international trade.
- Example: If £1 = 1.30,then£500equals1.30, then £500 equals 1.30,then£500equals650 (£500 x $1.30/£1).
Franchising
- Franchising is a business model where a franchisee obtains the rights to operate an existing brand.
- Benefits: Well-established brand, support from the franchisor.
- Drawbacks: Initial setup fees, limited decision-making autonomy.
Unincorporated Businesses' Tax Liabilities
- Unincorporated businesses (sole traders, partnerships) don't have separate legal identities.
- Owners pay income tax on business profits.
- Business owners have personal liability for business debts.
Business Objectives
- Businesses establish goals to guide their operations:
- Maximize profits.
- Drive growth.
- Fulfill corporate social responsibility (CSR) responsibilities.
- Survive, especially for new businesses or during crises.
Factors Affecting Demand
- Demand for goods or services is influenced by:
- Price: Higher prices usually decrease demand.
- Income: Increased income often increases demand for luxury goods.
- Trends and Preferences: Popular trends can raise demand.
- Substitute Goods: The availability of alternatives affects demand.
Interest Rate Calculations
- Interest rates are the cost of borrowing or the return on savings.
- Example: 10,000borrowedat510,000 borrowed at 5% interest per year leads to 10,000borrowedat5500 in interest ($10,000 x 0.05).
- Total repayment: $10,500.
Impact of Exchange Rate Changes
- Stronger local currency: Exports become more expensive, imports become cheaper.
- Weaker local currency: Exports become cheaper, imports become more expensive.
External Factors Affecting Business Decisions
- Economic factors: Include interest rates, inflation, and unemployment.
- Social factors: Reflects changing consumer preferences and demographics.
- Technological factors: Covers new innovations and automation.
- Legal factors: Encompass changes in regulations, laws, and taxes.
- Environmental factors: Include sustainability expectations and climate change.
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Description
Test your knowledge on industry sectors, exchange rates, and franchising. This quiz covers the classification of businesses, the role of exchange rates in trade, and the advantages and disadvantages of franchising. Perfect for students exploring business fundamentals.
