17 Questions
What is the excise duty rate on alcoholic products with a strength exceeding 22 per cent ABV?
£31.64 per litre of alcohol in the product
What percentage of the total business population do small businesses (with 0 to 49 employees) represent?
99.2%
Which type of objective do most firms in the UK follow based on the text?
Profit maximisation
What is Amazon's main objective as mentioned in the text?
Revenue maximisation
Which type of objective are Netflix and Spotify following as per the text?
Sales maximisation
Which type of objective are Apple and pharmaceutical companies likely to follow according to the text?
Profit maximisation
How do Aldi and Lidl manage to offer cheaper prices compared to other supermarkets?
By purchasing a smaller range of products in bulk
What strategy is mentioned to attract consumer loyalty in the text?
Offering different prices with loyalty cards
Why do smaller shops have a higher MRP for staff as mentioned in the text?
Due to lower ratio of customers to staff
What contributes to supermarkets reducing their own costs according to the text?
Access to cheaper credit and managerial economies
How do Aldi and Lidl benefit from purchasing economy of scale?
By buying a smaller range of products in bulk
What is the main purpose of the £220m fund provided by the government to support small businesses?
To increase competition and contestability
What does the ban on selling alcohol under the price of alcohol duty + VAT in England represent?
A form of minimum price regulation
In 2018, what was the minimum price per unit for Alcohol set in Scotland?
50 p per unit
What is the purpose of the Sugar Tax imposed on soft drinks?
To reduce sugar consumption and combat obesity
When is the National Living Wage set to increase to £11.44 per hour for individuals aged 21 and over?
April 2024
What type of tax is Alcohol Duty in the UK?
Tax charged at the point of production or importation of alcoholic drinks
Study Notes
Economic Concepts
- EOS (Economies of Scale) allows retailers to reduce costs by forcing down suppliers' prices, thus reducing their own costs of sales.
- Sources of EOS for supermarkets include:
- Advertising
- Bulk buying
- Managerial economies
- Access to cheaper credit
Retail Strategies
- Aldi and Lidl's strategy:
- Cheaper due to smaller range of products, allowing bulk purchasing
- Private (white label) products are cheaper to buy
- Selling overstocked and supplied branded products
- Smaller shops with smaller rent
- Smaller ratio of customers to staff, resulting in higher MRP (Margin of Return on Production)
- Less advertising, reducing sunk costs
- Shorter opening hours to reduce night shift pay
- Low profit margin and high sales strategy
Taxation
- Corporate Tax UK: 25%
- Excise Duty UK: alcohol duty is tax charged at the point of production or importation of drinks with an alcoholic strength exceeding 1.2% abv
- Sugar tax: 18p/litre on soft drinks with 5-8g of sugar per 100ml
- VAT (Value-Added Tax) UK: 20%
Business Objectives
- Most firms in the UK are small, and are profit maximisers
- Large firms contribute the most in terms of revenue and output, and are often sales or revenue maximisers
- Examples of revenue maximisers: Amazon, Netflix, Spotify
- Examples of profit maximisers: Apple, pharmaceutical companies
Labour Market
- Labour mobility policies in the UK:
- Inactivity makes PES (Phillips Curve) of labour more inelastic
- HS2 Rail for geographical mobility
- T-Levels and apprenticeships for occupational mobility
- Free Courses for Jobs offer in April 2021 for in-demand skills
- National Living Wage from April 2024:
- 21 and over: £11.44/hour
- 18-20: £8.60/hour
Government Intervention
- Government initiatives to increase competition and contestability:
- £220m fund to support small businesses
- Tax relief for small businesses
- Government Startup Loan Scheme (£1 billion worth)
- British Business Bank
- Business Exchange (gives advice and knowledge to new startups)
- 5 UK investment hubs (to facilitate agglomeration, grants for innovation)
- Government regulations:
- England: ban on selling alcohol under the price of alcohol duty + VAT
- Scotland: minimum price for alcohol in 2018 (50p per unit)
Test your knowledge of the UK tax rate on alcoholic products and corporate objectives of firms. Includes questions on small and large businesses in the UK.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
