EDEXCEL A LEVEL BUSINESS PAPER 2 EXAM 120 QUESTIONS AND
CORRECT ANSWERS 2025 LATEST//ALREADY GRADED A+
Name 3 internal sources of finance - ANSWER-Retained Profits
Selling Assets
Owner's Capital
Name 3 external sources of finance - ANSWER-Overdrafts
Venture Capital
Bank Loans
Crowd Funding
Share Capital
Grants
Leasing
What methods of finance are appropriate for limited liability? - ANSWER-Share capital
Bank loans
Overdrafts
Leasing
Trade Credit
What methods of finance are appropriate for unlimited liability? - ANSWER-Owner's capital
Bank loan
Overdraft
Leasing
Trade credit
Family and friends loan
What are the 3 things that make up a business plan? - ANSWER-Marketing Plan
Operational Plan
,Financial Plan
What is the relationship between productivity and competitivness? - ANSWER-Businesses that
increase productivity are likely to be more competitive and businesses that are more competitive are
likely to have enough financial resources to increase productivity.
What is maximum efficiency? - ANSWER-When the cost per unit is at its lowest.
What are the 6 ways that a business can improve its efficiency? - ANSWER-Standardisation of the
production process - EOS
Relocation or downsizing - lower costs
Investment in capital equipment - machinery
Outsourcing - other specialist business can carry out the task at a lower cost
Adoption of lean production techniques - reduce wastage (Just in Time)
What is Labour-intensive production? - ANSWER-When a business mostly uses physical labour in
the production of goods/services. (Common in small-scale operations and in countries with low
labour costs).
What is Capital-intensive production? - ANSWER-When a business mostly uses machinery and
technology in the production of goods/services. (Common with standardised products and countries
with high labour costs).
What are the advantages and disadvantages of Capital-intensive production? - ANSWER-
Advantages - Low-cost production with high output, Machines are consistent and precise.
Disadvantages - High set-up and maintenance costs, breakdowns can delay production.
What are the advantages and disadvantages of Labour-intensive production? - ANSWER-
Advantages - Low-cost production with low output, oppurtuniuties for worker creativity.
, Disadvantages - Workers may be unreliable, incentives may be needed to motivate staff, high training
costs.
What is Capacity utalisation? - ANSWER-The percentage of a businesses assets which are being
used to produce output.
How do you calculate Capacity utilisation? - ANSWER-Current output / Maximum possible output
x 100
What are the implications for a business of under-utilisation of capacity? - ANSWER-Increased cost
per unit and average costs.
Opportunity to engage workers in maintenance tasks - lowers costs of future repairs.
Business can respond to sudden increases in demand.
What are the implications for a business of over-utilisation of capacity? - ANSWER-Low flexibility
to respond to increases in demand.
Overworked staff - lower productivity.
Machinery may be pushed to its limits - prone to breakdowns.
Lower average costs - increase competitivness.
Busy workers are likely to feel secure in their employment.
A busy business is likely to be well thought-of and is likely to attract customers who are willing to
wait for products to be delivered.
How can Capital utilisation be improved? - ANSWER-Increase sales - advertising
CORRECT ANSWERS 2025 LATEST//ALREADY GRADED A+
Name 3 internal sources of finance - ANSWER-Retained Profits
Selling Assets
Owner's Capital
Name 3 external sources of finance - ANSWER-Overdrafts
Venture Capital
Bank Loans
Crowd Funding
Share Capital
Grants
Leasing
What methods of finance are appropriate for limited liability? - ANSWER-Share capital
Bank loans
Overdrafts
Leasing
Trade Credit
What methods of finance are appropriate for unlimited liability? - ANSWER-Owner's capital
Bank loan
Overdraft
Leasing
Trade credit
Family and friends loan
What are the 3 things that make up a business plan? - ANSWER-Marketing Plan
Operational Plan
,Financial Plan
What is the relationship between productivity and competitivness? - ANSWER-Businesses that
increase productivity are likely to be more competitive and businesses that are more competitive are
likely to have enough financial resources to increase productivity.
What is maximum efficiency? - ANSWER-When the cost per unit is at its lowest.
What are the 6 ways that a business can improve its efficiency? - ANSWER-Standardisation of the
production process - EOS
Relocation or downsizing - lower costs
Investment in capital equipment - machinery
Outsourcing - other specialist business can carry out the task at a lower cost
Adoption of lean production techniques - reduce wastage (Just in Time)
What is Labour-intensive production? - ANSWER-When a business mostly uses physical labour in
the production of goods/services. (Common in small-scale operations and in countries with low
labour costs).
What is Capital-intensive production? - ANSWER-When a business mostly uses machinery and
technology in the production of goods/services. (Common with standardised products and countries
with high labour costs).
What are the advantages and disadvantages of Capital-intensive production? - ANSWER-
Advantages - Low-cost production with high output, Machines are consistent and precise.
Disadvantages - High set-up and maintenance costs, breakdowns can delay production.
What are the advantages and disadvantages of Labour-intensive production? - ANSWER-
Advantages - Low-cost production with low output, oppurtuniuties for worker creativity.
, Disadvantages - Workers may be unreliable, incentives may be needed to motivate staff, high training
costs.
What is Capacity utalisation? - ANSWER-The percentage of a businesses assets which are being
used to produce output.
How do you calculate Capacity utilisation? - ANSWER-Current output / Maximum possible output
x 100
What are the implications for a business of under-utilisation of capacity? - ANSWER-Increased cost
per unit and average costs.
Opportunity to engage workers in maintenance tasks - lowers costs of future repairs.
Business can respond to sudden increases in demand.
What are the implications for a business of over-utilisation of capacity? - ANSWER-Low flexibility
to respond to increases in demand.
Overworked staff - lower productivity.
Machinery may be pushed to its limits - prone to breakdowns.
Lower average costs - increase competitivness.
Busy workers are likely to feel secure in their employment.
A busy business is likely to be well thought-of and is likely to attract customers who are willing to
wait for products to be delivered.
How can Capital utilisation be improved? - ANSWER-Increase sales - advertising
