CIE IGCSE Topical Past Paper 1

6.3 Business and the international economy

0450/13/O/N/2024

BPT manufactures bicycles in country A. It uses batch production. The Operations Director is preparing a break-even chart for one of BPT’s bicycles, as shown in Fig. 1.1. The directors are considering ways to lower BPT’s break-even level of output. BPT imports 60% of its raw materials and exports its bicycles to 8 countries. The Managing Director wants to know how a depreciation in country A’s exchange rate and the introduction of import tariffs might affect BPT.

(b) Define ‘import tariff’.[2]

(d) Explain two ways a depreciation in country A’s exchange rate might affect BPT.{4}
Way 1:
Explanation:

Way 2:
Explanation:

0450/11/M/J/2022

CTF is a public limited company. It manufactures beds using batch production. The Operations Director is using break-even analysis to calculate the margin of safety for children’s beds. An extract from CTF’s output data is shown in Table 2.1. The Operations Director wants to know how an increase in inflation might affect CTF. She knows there are many environmental pressures that a manufacturing business could respond to.

Table 2.1 Extract from CTF’s output data (children’s beds per month)
Break-even output	14 000
Current level of output	18 000
Maximum factory output	25 000

(b) Calculate the margin of safety for CTF’s children’s beds. Show your working. [2]

0450/11/O/N/2024

FSW is a multinational company with operations in 6 countries. It manufactures steel for use in the construction industry. Quality assurance is used to ensure quality production. FSW has many stakeholder groups who are interested in its activities. The Managing Director knows FSW’s business creates external costs. She is aware that pressure groups try to influence business decisions.

(d) Explain one possible benefit and one possible drawback to a country of having FSW (a multinational company) operating there. [6]
Benefit:
Explanation:

Drawback:
Explanation:

0450/12/M/J/2024

DLT manufactures cups and plates in country X. Its factory uses flow production and has 75 employees. The Human Resources Director is aware that there are many legal controls over employment. DLT exports 30% of its products to country Y where it benefits from lower rates of taxation and no import quotas. DLT’s Managing Director is considering relocating its factory to another part of country X to meet the increased demand for its exports.

(a) Define ‘import quota’.[2]

0450/12/M/J/2024

IDT manufactures clothes for the mass market. It is a multinational company with factories in 4 countries. IDT has short-term and long-term financial needs. The Finance Director is analysing IDT’s statement of financial position. An extract is shown in Table 3.1. He has been asked to calculate working capital and to explain how an increase in non-current liabilities might affect IDT.

Extract from IDT’s statement of financial position ($ million)
	2022	2023
Current assets	380	420
Current liabilities	250	280
Non-current liabilities	300	400

Table 3.1

(e) Explain two advantages to a business of being a multinational company. Which advantage do you think is likely to be the most important? Justify your answer. [6]

0450/12/F/M/2023

HCB manufactures cars in country X. It has 200 employees working in its factory. The business has changed its method of production due to new technology. HCB’s Managing Director is considering ways to become more ethical. She is aware that other businesses in country X have started to import cars. The interest rate in country X has increased due to rising inflation.

(e) Do you think manufacturing businesses will always benefit from the introduction of import tariffs? Justify your answer. [6]