Business Paper 1 2-mark Questions

Here are the definitions for the terms provided, formatted as answers to 2-mark questions for a Cambridge CAIE A-Level Business Studies 9609 exam:

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Define the term ‘opportunity cost’. (2 marks)

Opportunity cost is the next best alternative foregone when making a decision. It represents the benefits a business or individual misses out on when choosing one option over another.

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Define the term ‘demand’. (2 marks)

Demand refers to the quantity of a good or service that consumers are willing and able to purchase at a given price in a specific time period.

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Define the term ‘transformation process’. (2 marks)

The transformation process is the method by which inputs (such as raw materials, labour, and capital) are converted into outputs (finished goods or services) in a business.

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Define the term ‘laissez-faire leadership’. (2 marks)

Laissez-faire leadership is a management style where leaders provide minimal direction or intervention, allowing employees to make decisions and solve problems independently.

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Define the term ‘market segmentation’. (2 marks)

Market segmentation is the process of dividing a broad target market into smaller, more defined groups of consumers with similar characteristics, needs, or behaviours.

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Define the term ‘inventory reorder level’. (2 marks)

The inventory reorder level is the minimum stock level at which a business must place a new order to replenish inventory before it runs out.

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Define the term ‘co-operatives’. (2 marks)

Co-operatives are businesses owned and operated by a group of individuals for their mutual benefit, often sharing profits and decision-making equally.

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Define the term ‘job production’. (2 marks)

Job production is a method of manufacturing where products are made individually, tailored to meet the specific requirements of each customer.

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Define the term ‘contract of employment’. (2 marks)

A contract of employment is a legally binding agreement between an employer and an employee that outlines the terms and conditions of employment, such as duties, pay, and working hours.

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Define the term ‘stakeholders’. (2 marks)

Stakeholders are individuals or groups with an interest in the activities and performance of a business, such as employees, customers, shareholders, and suppliers.

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Define the term ‘economies of scale’. (2 marks)

Economies of scale refer to the cost advantages a business gains by increasing its scale of production, leading to lower average costs per unit.

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Define the term ‘labour turnover’. (2 marks)

Labour turnover measures the rate at which employees leave a business and are replaced over a specific period, often expressed as a percentage.

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Define the term ‘market research’. (2 marks)

Market research is the process of gathering, analysing, and interpreting information about a market, including customer preferences and competitors, to inform business decisions.

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Define the term ‘strategy’. (2 marks)

A strategy is a long-term plan of action designed to achieve specific goals or objectives for a business.

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Define the term ‘partnership’. (2 marks)

A partnership is a type of business organization where two or more individuals share ownership, responsibilities, and profits.

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Define the term ‘performance-related pay’. (2 marks)

Performance-related pay is a compensation system where employees are rewarded based on their individual or team performance, often through bonuses or incentives.

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Define the term ‘capital-intensive production’. (2 marks)

Capital-intensive production refers to a production process that relies heavily on machinery, equipment, and technology rather than human labour.

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Define the term ‘entrepreneur’. (2 marks)

An entrepreneur is an individual who takes on the risk of starting and running a business, often innovating and organizing resources to create new products or services.

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Define the term ‘overdraft’. (2 marks)

An overdraft is a financial facility that allows a business to withdraw more money from its bank account than it currently holds, up to an agreed limit.

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Define the term ‘scale of operation’. (2 marks)

The scale of operation refers to the size and capacity of a business’s production processes, often measured by output levels or resource usage.

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Define the term ‘marketing mix’. (2 marks)

The marketing mix refers to the combination of elements (product, price, place, and promotion) that a business uses to meet customer needs and achieve its marketing objectives.

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Define the term ‘business stakeholders’. (2 marks)

Business stakeholders are individuals or groups affected by or having an interest in the activities and decisions of a business, such as employees, customers, and investors.

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Define the term ‘published accounts’. (2 marks)

Published accounts are financial statements, such as the balance sheet and profit and loss account, that a company is legally required to make available to the public.

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Define the term ‘marginal cost’. (2 marks)

Marginal cost is the additional cost incurred by producing one more unit of a good or service.

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Define the term ‘commission’. (2 marks)

Commission is a form of payment where an individual receives a percentage of the sales revenue they generate, often used to incentivize sales staff.

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Define the term ‘customer (market) orientation’. (2 marks)

Customer orientation is a business approach that focuses on identifying and meeting the needs and preferences of customers to achieve competitive advantage.

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Define the term ‘social enterprise’. (2 marks)

A social enterprise is a business that operates to address social or environmental issues, reinvesting profits to further its mission rather than maximizing shareholder returns.

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Define the term ‘emotional intelligence’. (2 marks)

Emotional intelligence is the ability to recognize, understand, and manage one’s own emotions and those of others, often leading to better interpersonal relationships and decision-making.

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Define the term ‘Computer Aided Manufacture’ (CAM). (2 marks)

Computer Aided Manufacture (CAM) is the use of computer software and machinery to automate and control manufacturing processes, improving precision and efficiency.

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Define the term ‘piece rate’. (2 marks)

Piece rate is a payment system where employees are paid based on the number of units they produce or tasks they complete.

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Define the term ‘franchise’. (2 marks)

A franchise is a business model where an individual (franchisee) buys the rights to operate under the brand and systems of an established company (franchisor).

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Define the term ‘price elasticity of demand’. (2 marks)

Price elasticity of demand measures the responsiveness of the quantity demanded of a good or service to a change in its price.

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Define the term ‘workforce planning’. (2 marks)

Workforce planning is the process of analyzing and forecasting the workforce needs of a business to ensure it has the right number of employees with the right skills.

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Define the term ‘corporate social responsibility’ (CSR). (2 marks)

Corporate social responsibility (CSR) refers to a business’s commitment to operating in an ethical and sustainable manner, considering its impact on society and the environment.

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Define the term ‘price discrimination’. (2 marks)

Price discrimination is a pricing strategy where a business charges different prices to different customers for the same product or service, based on their willingness to pay.

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Define the term ‘efficiency’. (2 marks)

Efficiency refers to the ability of a business to use its resources (such as time, money, and labour) in the most effective way to minimize waste and maximize output.

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Define the term ‘person specification’. (2 marks)

A person specification is a document outlining the skills, qualifications, and attributes required for a specific job role.

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Define the term ‘public sector’. (2 marks)

The public sector refers to the part of the economy that is owned and operated by the government, providing services such as education, healthcare, and infrastructure.

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Define the term ‘motivation’. (2 marks)

Motivation refers to the internal and external factors that drive individuals to achieve their goals and perform tasks effectively.

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Define the term ‘ethics’. (2 marks)

Ethics are the moral principles that guide the behaviour and decision-making of individuals and businesses, ensuring actions are fair and responsible.

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Define the term ‘product life cycle’. (2 marks)

The product life cycle describes the stages a product goes through from introduction to decline, including development, growth, maturity, and decline.

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Define the term ‘induction training’. (2 marks)

Induction training is the process of introducing new employees to a business, providing them with information about the company, their role, and workplace policies.

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Define the term ‘fixed cost’. (2 marks)

Fixed costs are expenses that do not change with the level of output, such as rent, salaries, and insurance.

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Define the term ‘product differentiation’. (2 marks)

Product differentiation is the process of making a product distinct from competitors’ offerings, often through unique features, branding, or quality.

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Define the term ‘factors of production’. (2 marks)

The factors of production are the resources used in the production of goods and services, including land, labour, capital, and enterprise.

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Define the term ‘equality’. (2 marks)

Equality refers to ensuring individuals are treated fairly and have the same opportunities, regardless of their background or characteristics.

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Define the term ‘dismissal’. (2 marks)

Dismissal is the termination of an employee’s contract by an employer, often due to poor performance, misconduct, or redundancy.

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Define the term ‘mass marketing’. (2 marks)

Mass marketing is a strategy where a business targets the entire market with a single product or message, rather than focusing on specific segments.

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Define the term ‘capital intensive’. (2 marks)

Capital intensive refers to a production process that requires a high level of investment in machinery, equipment, and technology relative to labour.

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Define the term ‘job description’. (2 marks)

A job description is a document that outlines the duties, responsibilities, and expectations associated with a specific job role.

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Define the term ‘business enterprise’. (2 marks)

A business enterprise is an organization engaged in commercial, industrial, or professional activities, aiming to generate profit.

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Define the term ‘bankruptcy’. (2 marks)

Bankruptcy is a legal status where a business or individual is unable to repay their debts, often resulting in the liquidation of assets to pay creditors.

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Define the term ‘organic growth’. (2 marks)

Organic growth refers to the expansion of a business through internal means, such as increasing sales or production, rather than through mergers or acquisitions.

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Define the term ‘curriculum vitae’. (2 marks)

A curriculum vitae (CV) is a document summarizing an individual’s education, work experience, skills, and achievements, used when applying for jobs.

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Define the term ‘venture capital’. (2 marks)

Venture capital is a form of financing provided to startups and small businesses with high growth potential, often in exchange for equity.

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Define the term ‘quaternary sector’. (2 marks)

The quaternary sector includes knowledge-based activities such as information technology, research and development, and financial planning.

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Define the term ‘trade receivables’. (2 marks)

Trade receivables are amounts owed to a business by its customers for goods or services sold on credit.

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Define the term ‘outsourcing’. (2 marks)

Outsourcing is the practice of contracting out certain business functions or processes to external providers to reduce costs or improve efficiency.

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Define the term ‘salary’. (2 marks)

A salary is a fixed regular payment made by an employer to an employee, typically expressed as an annual amount and paid monthly.

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Define the term ‘industrial marketing’. (2 marks)

Industrial marketing involves the sale of goods and services from one business to another, often for use in production or operations.

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Define the term ‘takeover’. (2 marks)

A takeover is the acquisition of one company by another, often through the purchase of a majority stake in its shares.

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Define the term ‘direct cost’. (2 marks)

Direct costs are expenses that can be directly attributed to the production of a specific good or service, such as raw materials and labour.

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Define the term ‘added value’. (2 marks)

Added value is the increase in worth of a product or service as a result of the production process, often achieved through quality improvements or branding.

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Define the term ‘primary research’. (2 marks)

Primary research involves collecting original data directly from sources, such as surveys, interviews, or experiments, to address specific research questions.

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Define the term ‘zero budgeting’. (2 marks)

Zero budgeting is a financial planning method where all expenses must be justified for each new period, starting from a “zero base.”

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Define the term ‘sampling’. (2 marks)

Sampling is the process of selecting a representative subset of a population to gather data and make inferences about the entire group.

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Define the term ‘résumé’. (2 marks)

A résumé is a brief document summarizing an individual’s education, work experience, and skills, used when applying for jobs.

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Define the term ‘external stakeholders’. (2 marks)

External stakeholders are individuals or groups outside a business, such as customers, suppliers, and the community, who have an interest in its activities.

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Define the term ‘full costing’. (2 marks)

Full costing is a method of accounting that includes all fixed and variable costs in the cost of producing a good or service.

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Define the term ‘dynamic pricing’. (2 marks)

Dynamic pricing is a strategy where businesses adjust prices in real-time based on factors such as demand, competition, and market conditions.

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Define the term ‘government grant’. (2 marks)

A government grant is financial assistance provided by the government to businesses or individuals, often to support specific projects or activities.

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