Business decision making and command words study guide

A cost that changes in direct proportion to the level of output.

The process of dividing a broad consumer or business market into sub-groups of consumers based on some type of shared characteristics.

To examine data, identify patterns, and explain the relationships between different business elements.

An individual or group that can affect or is affected by the business’s actions, objectives, and policies.

To give a reasoned opinion or explanation that supports a particular position or decision.

Exam practice

• Which command word requires you to give a concise definition of a term?
• An independent retailer is considering expanding its product range. Analyse the potential impact on its costs and revenue.
• Which action is most likely to help an independent retailer recover from a sudden drop in footfall?
• Explain how a small manufacturer can use primary research to improve product design.
• An online subscription service has the following data for the last three years:

Year | Subscribers | Monthly Revenue per Subscriber | Total Revenue --- | --- | --- | --- 2021 | 5,000 | £10 | £50,000 2022 | 6,000 | £12 | £72,000 2023 | 7,200 | £11 | £79,200 Which statement best explains the change in total revenue from 2022 to 2023?

• Analyse the impact of a 15% price increase on the sales volume of an independent retailer that sells handmade candles. The retailer currently sells 1,200 candles per month at £5 each. Assume the price elasticity of demand for candles is –2.5.
• Which of the following best demonstrates a balanced evaluation of the impact of a price increase on an online service business’s profitability?
• Evaluate the decision of a small manufacturer to outsource its packaging to a third party.
• Which command word requires you to give a reasoned opinion?
• Analyse the impact of a 10% price increase on the sales of a small manufacturer of eco‑friendly water bottles.