Enterprise, Business and the Economy | Edexcel A-Level Economics B (9EB0)

Enterprise, Business and the Economy

90 questions
6 subtopics
Theme 1: markets, consumers and firms
Paper 1 and Paper 3

Enterprise, Business and the Economy is examined in Paper 1, Markets and how they work, and in Paper 3, The economic environment and business.

It covers the entrepreneur and creative destruction, adding value, entrepreneurial motives, factors of production, division of labour and specialisation and the wider economic environment and the firm.

Sample questions from Enterprise, Business and the Economy

Answer each one closed book first, then open the answer.

The entrepreneur and creative destruction

What is the main cost of creative destruction to workers?

Show the answer
Workers in declining industries lose their jobs and can face long-term structural unemployment where their skills do not transfer.
The entrepreneur and creative destruction

Why might an entrepreneur expand into a new region rather than raise output at one site?

Show the answer
A single site eventually reaches its capacity limit and saturates the local market, so a new region offers fresh demand.
Adding value

Give three ways a firm can add value to a basic product.

Show the answer
It can brand the product, improve its design or quality, and provide services such as delivery, fitting or a warranty.
Adding value

A bakery sells 1,200 loaves a week at £2.40 each and pays £1,150 a week for ingredients and packaging. Calculate the weekly value added.

Show the answer
Weekly revenue is £2,880, so the value added is £1,730.
Entrepreneurial motives

Give two examples of the aims a social enterprise might pursue.

Show the answer
Employing people who face barriers to work and supplying an affordable service in a low-income area are two such aims.
Entrepreneurial motives

Why must a business with a non-financial motive still make a surplus?

Show the answer
Without a surplus it cannot cover its costs, repay its finance or fund its mission, so it will not survive to pursue its aims.
Factors of production

What is meant by labour as a factor of production?

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Labour is the human effort, both physical and mental, used in producing goods and services.
Factors of production

What is human capital?

Show the answer
Human capital is the stock of skills, knowledge and experience held by a workforce, which raises the value of the labour it supplies.

The 6 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
The entrepreneur and creative destruction	The entrepreneur, creative destruction and Schumpeter, its benefits for living standards and cost to workers, the risks of starting a business, the entrepreneur as residual claimant, start-up decisions, organic growth and expansion, entrepreneurs against salaried managers, the opportunity cost of self-employment, and business failure.	15
Adding value	Adding value and the formula for value added, calculating it for a manufacturer and a bakery, why value added is not profit, ways to add value through branding and speed of service, adding value without raising price, the value chain, primary producers against manufacturers, and profit margins.	13
Entrepreneurial motives	Profit as an incentive and its role in allocating resources, normal and supernormal profit, social entrepreneurs and the aims of a social enterprise, an ethical stance and its commercial risk, independence, home working, why non-financial motives still need a surplus, job satisfaction, and capital gains.	14
Factors of production	The four factors of production, land, capital, labour and enterprise and the reward to each, factors against inputs, fixed and working capital, choosing premises, raw materials against capital equipment, human capital, substituting equipment for labour, and how a shortage of one factor limits output.	14
Division of labour and specialisation	The division of labour and Adam Smith's pin factory, its advantages to employers and disadvantages to employees, its hidden costs and vulnerability to disruption, reducing demotivation, the advantages and disadvantages of specialisation to a firm, the size of the market, exchange and money, and regional and overseas dependence.	16
The wider economic environment and the firm	How interest rates affect investment and highly geared firms, depreciation of the pound and its effect on exporters and importers, corporation tax, employer National Insurance and VAT, rising unemployment and a firm's recruitment and sales, inflation and costs, and the calculations for each.	18

Enterprise, Business and the Economy is 90 of the 2,933 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.