©THESTAR EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
Business a level paper 3 Exam Questions
With Correct Answers.
Define pricing - answer✔the choice of pricing strategy that a business makes when setting
prices for their products or services.
What affects consumer sensitivity to price? - answer✔- quality (higher the quality, the more
they will pay)
- desire for the product (if product is in demand, prices will be higher)
- customer income (customers buy within their income range)
What are the pricing strategies and define them? - answer✔- Cost-plus - The total cost of the
products are worked out then a fixed percentage of profit is added on top.
- Price skimming - The price is set high to start when launching a new product. This can be used
to encourage early adopters of e.g. technology products.
- Price penetration - setting prices low to start to gain a foothold in a market.
- Competitive pricing - pricing goods in line with competitors so customers will judge purchasing
on other aspects - e.g.quality, speed of service, etc.
1|Page
, ©THESTAR EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
- Predatory pricing - setting prices very low to force competitors out of the market (e.g. used by
monopolies or oligopolies)
- Psychological pricing - pricing, e.g. £1.99 so psychological barrier of £2.00 isn't broken.
Factors affecting pricing strategy - answer✔- number of USP's/amount of differentiation
- price elasticity of demand
- level of competition in the business environment
- strength of brand
- stage in product life cycle
- costs and the need to make a profit
At what phase in the product life cycle would a business use what pricing strategy? -
answer✔development > launch = skimming
growth > maturity = competitive pricing
maturity > decline = priced lower to clear stocks
What changes in price occur to reflect social trends? - answer✔- online sales: websites offer
low prices because they don't have overheads, rent and cost of running stores. customers often
look at goods in store and purchase online. Online retailers use dynamic pricing
2|Page
, ©THESTAR EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
- price comparison sites: customers can use sites to compare price, which is far more
convenient and cheaper than older methods.
Define recruitment - answer✔the process of finding people to work for (can be a company or a
new member of an organisation)
Internal recruitment - advantages and disadvantages - answer✔adv:
- quicker and cheaper
- promotion opportunities motivate staff
- staff know company culture
- company knows staff strength and weaknesses
dis:
- existing workers may not have relevant skills
- no fresh ideas to bring to company
- it creates external vacancies
External recruitment - advantages and disadvantages - answer✔adv:
- wider range of candidates
- candidates may have skills to save training costs
3|Page
ALL RIGHTS RESERVED.
Business a level paper 3 Exam Questions
With Correct Answers.
Define pricing - answer✔the choice of pricing strategy that a business makes when setting
prices for their products or services.
What affects consumer sensitivity to price? - answer✔- quality (higher the quality, the more
they will pay)
- desire for the product (if product is in demand, prices will be higher)
- customer income (customers buy within their income range)
What are the pricing strategies and define them? - answer✔- Cost-plus - The total cost of the
products are worked out then a fixed percentage of profit is added on top.
- Price skimming - The price is set high to start when launching a new product. This can be used
to encourage early adopters of e.g. technology products.
- Price penetration - setting prices low to start to gain a foothold in a market.
- Competitive pricing - pricing goods in line with competitors so customers will judge purchasing
on other aspects - e.g.quality, speed of service, etc.
1|Page
, ©THESTAR EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
- Predatory pricing - setting prices very low to force competitors out of the market (e.g. used by
monopolies or oligopolies)
- Psychological pricing - pricing, e.g. £1.99 so psychological barrier of £2.00 isn't broken.
Factors affecting pricing strategy - answer✔- number of USP's/amount of differentiation
- price elasticity of demand
- level of competition in the business environment
- strength of brand
- stage in product life cycle
- costs and the need to make a profit
At what phase in the product life cycle would a business use what pricing strategy? -
answer✔development > launch = skimming
growth > maturity = competitive pricing
maturity > decline = priced lower to clear stocks
What changes in price occur to reflect social trends? - answer✔- online sales: websites offer
low prices because they don't have overheads, rent and cost of running stores. customers often
look at goods in store and purchase online. Online retailers use dynamic pricing
2|Page
, ©THESTAR EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
- price comparison sites: customers can use sites to compare price, which is far more
convenient and cheaper than older methods.
Define recruitment - answer✔the process of finding people to work for (can be a company or a
new member of an organisation)
Internal recruitment - advantages and disadvantages - answer✔adv:
- quicker and cheaper
- promotion opportunities motivate staff
- staff know company culture
- company knows staff strength and weaknesses
dis:
- existing workers may not have relevant skills
- no fresh ideas to bring to company
- it creates external vacancies
External recruitment - advantages and disadvantages - answer✔adv:
- wider range of candidates
- candidates may have skills to save training costs
3|Page
